The Income Tax Department of India has issued a tax notice to the US-based firm Ciena, which has contested the claim. Ciena is a global provider of telecom networking equipment, software and services which support the delivery and transport of voice, video and data services.

In a regulatory filing, Ciena has stated that in February 2014, it received a final audit assessment notice from the Income Tax Department of India. The company has filed an appeal citing deficiencies in this assessment. Ciena further states that it estimates that it could be exposed to possible losses of up to $2.9 million, even though the company has not accrued a liability of such amount as of April 30, 2014.

Further, as per the regulatory filing, as of October 31, 2013 and April 30, 2014, Ciena accrued liabilities of $0.4 million related to a preliminary assessment notice from the Income Tax Department of India citing deficiencies in payments for the assessment year 2009.

For Ciena, India is one of the key telecom markets. Globally the company has six research and development (R&D) centres including one in India. The lease for the company’s R&D centre in Gurgaon and Canada is due to expire in 2017.

Ciena has claimed that the transition of these facilities can affect a large number of employees. In fact, the company is currently considering alternative facilities in view of the expiry of lease of the two R&D centres.