PwC India to challenge ED’s Rs 230-crore penalty

Multi-national accounting firm PricewaterhouseCoopers (PwC) will challenge Rs 230 crore fine it was slapped with by the Enforcement Directorate (ED) for allegedly breaching several provisions of the Foreign Exchange Management Act (FEMA). PwC is going to file an appeal at the tribunal level over the course of the next few days challenging the grounds on which ED has interpreted the law and imposed the fine, The Economic Times reported. The probe agency said that the notice was issued under FEMA after completion of an investigation by the Special Director (Eastern Region) of ED. ED said investigations had found that the firm and some of its functionaries allegedly received huge foreign investments from abroad disguised as ‘grants.’ According to sources, many Indian multinationals have been receiving such amounts from foreign arms which are invested in the Indian business. "The adjudicating authority during the course of adjudication has held the company guilty of violation of section 10(6), 6(2), 6(3) and 9(b) of FEMA, 1999 for receiving investments in the guise of purported grants in non-permitted sector without the approval of the RBI," the order said. The ED had taken over the probe against the firm on the direction of the Supreme Court which asked it to look into the affairs of the company from the point of view of FEMA. In most cases, the companies pay an income tax on such an amount. The ED’s claim to not treat such a transaction as a grant would mean that the company will not be required to pay any income tax on such an amount. Industry trackers said most multinational professional services firms had taken a stand to treat transactions as grants based on a 2018 committee of experts report by MCA. The report goes on to define how such grants can be received by Indian arms of foreign firms. 

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