Microsoft faces IT demand notice

Infotech Lead India: The Income Tax department has sent a demand notice to software giant Microsoft’s Indian arm.

IT department has sent notice to Microsoft seeking details of its income from Indian operations for four years beginning with the 2005-06 fiscal, PTI reported.

Details have been sought about income from work done at Microsoft’s Indian research and development sites on several softwares, which were marketed globally.

Microsoft India said it has approached appellate forums for the resolution of the issue.

“Microsoft complies with the tax laws in each jurisdiction in which we operate. We are seeking relief against the transfer pricing (TP) adjustments through the appropriate appellate forums,” it said in an e-mail statement.

The IT department notice reportedly does not quantify the amount of profits earned by its US-based parent Microsoft Corp that are attributable to the work performed at its R&D centers in India.

The company said: “Since the matter is sub judice, we are unable to provide further details or comments regarding the same. We are hopeful that the Rangachary Committee recommendations on R&D Centers and Safe Harbours will help facilitate resolutions to TP litigations in the IT industry.”

Last year, the government had set up a panel, headed by former Central Board of Direct Taxes ( CBDT) Chairman N Rangachary, to address issues like approach to taxation of development centers, tax treatment of ‘onsite services’ of domestic software firms and those related to finalizing Safe Harbour provisions.

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