Huawei manipulated account books to reduce taxable income: CBDT

New Delhi: The income tax department has found alleged manipulation of account books for reducing taxable income in India by Chinese telecom company Huawei whom it raided recently, sources said on Thursday.

The searches were conducted on February 15 at the main business and residential premises of "key office bearers" of a multi-national group, engaged in distribution of telecom products and providing captive software development services, the CBDT said in a statement. Sources identified the company as Huawei.

"The ultimate shareholding of the group lies with a foreign entity of a neighbouring country," the statement issued by the policy-making body for the tax department said.

The CBDT alleged that the group "manipulated its books of account to reduce its taxable income in India through creation of various provisions for expenses, such as provisions for obsolescence, provisions for warranty, doubtful debts/loans and advances etc., which have little or no scientific/financial rationale". "During the investigation, the group has failed to provide any substantial and appropriate justification for such claims," it alleged.

The company, during the searches, had said it was "firmly compliant" with Indian laws.

"Huawei is confident our operations in India are firmly compliant to all laws and regulations. We will approach related Government departments for more information and fully cooperate as per the rules and regulations and follow the right procedure," the company had said in a statement.

The CBDT statement made multiple charges against the company including that it "made inflated payments against receipt of technical services from its related parties outside India."