IT Department Rejects Coke's Plea for Lower Tax Rate
Times of India
February 1, 2009

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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