Wipro Ltd, which had filed an appeal against the income-tax assessment order demanding a tax of Rs 286.90 crore for the year 2002-`03, got a reprieve.
The first income tax appellate authority upheld the deductions claimed by the company under Section 10A of the Act, which vacates a substantial portion of the demand for the year ended March 31, 2003.
In December 2006, Wipro received additional tax demand of Rs 302.70 crore (including interest of Rs 75.30 crore) for the financial year ended March 31, 2004 on similar grounds as earlier years. The company has filed an appeal against this demand.
Considering the facts and nature of disallowance and the order of the appellate authority upholding the claims of the company for earlier years, Wipro believes that the final outcome of the above disputes should be in favour of the company and there should not be any material impact on the financial statements.
The demand, under the I-T Act 1961, was primarily on account of denial of deduction under Section 10A for profits the company earned out of its software technology park units in Bangalore for 2002-03. Software exporters are exempt from paying tax on their income under sections 10A and 10B of the I-T Act.
Wipro had received demands in March 2004 and March 2005 for 2000-`01 and 2001-`02, respectively, for a total of Rs 523.3 crore. The IT major had appealed against the demands then.
In March 2006, the first I-T appellate authority substantially upheld the deductions claimed by the company under Section 10A of the Act. However the income tax authorities have filed an appeal against the above order.