As per an ET report, the Income Tax Department says that “these companies [शाओमी, ओप्पो] did not comply with the regulatory orders prescribed under the Income Tax Act, 1961 for transactions with associated enterprises. Such omission makes them liable to penal action under the Income Tax Act 1961(A). which may be in the range of more than Rs 1,000 crore.
The report says that one of the two companies inflated its expenses by making payments on behalf of the respective enterprises, thereby reducing the taxable profit of the company. There could be an amount of more than Rs 1,400 crore in this.
Apart from this, the department is also questioning both the companies for fraudulent borrowings of over Rs 5,000 crore. One of the two companies used the service of another unit based in India, but did not comply with the provisions for deduction of tax at source, which makes them liable to Rs 300 crore ($40 million) in tax (TDS) .
At present, the whole matter is under investigation and no final decision has been taken yet, but this statement of the Income Tax Department indicates somewhere that Xiaomi and Oppo may face legal action or punishment in the future.