India investigating Kraft for possible tax evasion

India's ministry of finance is investigating whether Kraft Foods evaded taxes in its USD 19 billion takeover of Cadbury last year, the New York Times Dealbook reported on Monday.

Indian officials are examining Kraft's tax liabilities related to the deal, following a public interest lawsuit filed last year in the Delhi High Court, the newspaper said in its online edition.

In the suit, a Delhi-based lawyer asserted that Kraft had "completely and illegally avoided" tax liabilities related to the sale of shares and capital assets in India, which had caused "substantial loss to the Indian economy," the paper said.

In a December 22 letter referring to the public interest suit, which was shown to The New York Times by the law firm that filed the suit, a finance ministry official wrote "action has been initiated in the matter under the Income Tax laws."

Salil Mishra, an under secretary of finance who wrote the letter, told the New York Times that he could not comment on the issue.

A Kraft spokesman in India told the paper on Monday that the company was not aware of any litigation or investigation related to tax matters and the Cadbury deal, and had not been contacted by the Indian government on the matter.

Kraft did not return Reuters' call or e-mail seeking comment, after regular business hours.