HC Lifts Tax Dept Freeze on 3,700-cr Xiaomi FDs

The Karnataka High Court has granted partial relief to Xiaomi India, setting aside a 3,700 crore seizure order of the company’s fixed deposit (FD) accounts passed by the Deputy Commissioner of Income Tax, Bengaluru, on August 11, 2022.

“The impugned provisional attachment order at Annexure-Adated 11.08.2022 passed by the 1st respondent in respect of the subject fixed depositsaccounts of the petitioner is hereby set aside,” Justice S.R. Krishna Kumar ruled, in an order dated December 16 but uploaded on its website on Tuesday.

But it set certain conditions. The court ruled that Xiaomi India will not be entitled to make payments from the FD accounts “in the form of royalty or in any other form to any companies/entities located outside India.”

The tax authorities had passed the provisional seizure order, alleging that Xiaomi India was reducing its by remit- ting money abroad under the guise of paying royalties. India’s smartphone market leader, however, is entitled to take overdrafts from the FD accounts, and make payments to companies outside India. ET has reviewed a copy of the judgement.

A similar allegation has been made by the Enforcement Directorate, which passed a seizure order on April 29, seizing ₹5,551 crore.

The latest court judgement said the I-T authorities’ seizure order was arbitrary, and does not satisfy the jurisdictional precondition. Xiaomi India did not respond to ET’s queries till press time. S-ET

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