IT Department Rejects Coke's Plea for Lower Tax Rate
NEW DELHI: The income tax department has rejected a request by beverages
giant Coca Cola India Inc for levying a lower rate of tax on its income
of over Rs 100 crore earned by providing services to three sister
concerns in the country.
The department, while dismissing the application by Coca Cola India
Inc (CCII), also accused the Coke entities in India of re-entering
into similar contracts with same entities "only to take advantage
of new tax regimes".
"The appeal made by Coca Cola India Inc to tax its income from the
three sister concerns at 2.01% has been rejected. It has been asked
to pay taxes at the rate of 30, 20 and 20% on income from its three
sister concerns for the assessment year 2009-10," said a senior tax
official closely concerned with the case.
CCII, a company incorporated in the US, operates in India through
its branch office and provides services to three concerns Coca Cola
India Pvt Ltd (CCIL), Hindustan Coca Cola Beverages Pvt Ltd (HCCBPL)
and Hindustan Coca Cola Marketing (HCCMCPL).
CCII had asked the IT department to tax a total of Rs 100.5 crore
it earned from its sister concerns -- CCIL, HCCBPL and HCCMCPL --
for providing services at a rate of 2.01%, saying it had charged only
five per cent service on cost incurred by it in rendering the services.
When contacted a company spokesperson said: "We do not wish to comment
at this time, but we will be happy to provide you with updates when
we are in a position to do so."
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