Coca-Cola India (CCI) is in trouble with the Indian Income Tax department over alleged dues amounting to INR770m (US$17.02m). The said dues date back to the financial year 2002-03.

The income tax department claims that advertising and promotional expenses that CCI claimed as business expenses were actually partly taxable as the firm is not a marketing company - the company is actually designated in India as a concentrate manufacturer - and as such cannot claim a full rebate on expenses incurred in advertising and promotions.

The actual amount in disagreement is INR2.87bn, though the income tax department can legally only recover INR770m. The tax authorities are also claiming interest of INR223m on the amount.

The tax department had sealed CCI's accounts as of 30 September, with the Bombay High Court yesterday (19 October) backing the order, but giving the company time to clear INR100m of its arrears by the end of the year, before filing an appeal.

The legal dispute will be heard in the court during December.