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The Income Tax Department has served a Rs 138-crore tax demand on Redington India related to transfer pricing in a deal that happened in November 2008.
The Chennai-based company in a communication to the BSE said that to facilitate investment by a private equity investor, Investcorp Gulf Opportunity Fund Company, Redington transferred its 100 per cent shareholding in Redington Gulf FZE, Dubai, which was formed for this purpose.
While transferring the investment without consideration, the company took cognisance of the applicable laws and regulatory approval and the transaction was executed after taking legal and accounting opinions.
However, based on the directive of the Transfer Pricing Officer, the Assessment Officer plans to bring to tax the ‘imputed’ profits of transfer of shares to Redington India to a potential demand of Rs 138 crores, excluding interest.
Redington will be given an opportunity to represent the Dispute Resolution Panel against the proposed move. The authority, after hearing the representation, will direct the Assessment Officer to pass an order, which would take in the company’s view , said the communication.
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