The enforcement department has rejected claims by Xiaomi Technology India Private Limited, the Indian arm of Chinese mobile phone maker Xiaomi, that royalty payments of up to Rs 5,500 crore, made by Xiaomi India to three foreign companies since 2016, have been proven to be legal. by Income Tax Department of India.
The ED has also disputed allegations that the Rs 5,500 crore transferred from India since 2016 were royalty payments since the technology royalty contracts were signed by Xiaomi Hong Kong and not by Xiaomi India – the seller of Xiaomi phones.
The ED’s position emerged in the context of a hearing of a petition filed in the Karnataka High Court by Xiaomi Technology India Private Limited against the ED’s move on April 29, 2002, to confiscate the bank accounts of Xiaomi Technology India Pvt Ltd on the grounds that the royalties were paid in excess of 5,500 Crore for foreign accounts conducted by the company since 2016 in violation of the Foreign Exchange Management Act 1999. Xiaomi India contacted Karnataka HC last month, stating that the technology ownership rights paid to three foreign companies were not inconsistent with FEMA law.