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PwC India to challenge ED’s Rs 230-crore penalty

PwC would file an appeal at the tribunal level in the next few days that would challenge the basis on which ED has interpreted the law and levied the fine.

, ET Bureau|
Sep 24, 2019, 07.01 AM IST
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pwc
The ED’s claim to not treat such a transaction as a grant would mean that the company will not be required to pay any income tax on such an amount.
Mumbai: PriceWaterhouseCoopers (PwC) India is challenging Rs 230-crore fine slapped by Enforcement Directorate for allegedly violating various provisions of Foreign Exchange Management Act (FEMA), two people with direct knowledge of the matter said.

PwC would file an appeal at the tribunal level in the next few days that would challenge the basis on which ED has interpreted the law and levied the fine.

ED said investigations had found that the firm and some of its functionaries allegedly received huge foreign investments from abroad disguised as ‘grants.’ According to sources, many Indian multinationals have been receiving such amounts from foreign arms which are inves-ted in the Indian business.

In most cases, the companies pay an income tax on such an amount.

The ED’s claim to not treat such a transaction as a grant would mean that the company will not be required to pay any income tax on such an amount.

making-an-appeal


Industry trackers said most multinational professional services firms had taken a stand to treat transactions as grants based on a 2018 committee of experts report by MCA. The report goes on to define how such grants can be received by Indian arms of foreign firms. The report, which ET has accessed, had also taken comments from RBI on the issue.

“In view of the claim by the audit firm that the foreign funds have been received by it in the form of grants and not as capital, RBI has stated that then it is not a question of violation or enforcement of FEMA per se,” the report said.

An email seeking comment to PwC did not elicit any response.

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