Photo/IllutrationMasayoshi Son, head of Softbank Group Corp., speaks in London in 2016 about the acquisition of Arm. (Asahi Shimbun file photo)

Softbank Group Corp. failed to declare about 420 billion yen ($4 billion) in taxable income in the year ended in March 2018, apparently a record sum but not one deemed as tax evasion.

The Tokyo-based telecommunications carrier explained it chalked up a loss of about 1.4 trillion yen in relation to the stock of British chip designer Arm, which it purchased in 2016 for about 3.3 trillion yen.

However, the Tokyo Regional Taxation Bureau did not allow Softbank Group to book about 30 percent of the 1.4 trillion yen as a loss, sources said.

The company has already filed a modified tax declaration.

But even after the revision, its total loss exceeded its profits. For this reason, the company was not ordered to pay additional taxes.

It is extremely rare for a company to fail to declare such a vast sum in income.

In May 2017, Softbank Group established an investment fund named Softbank Vision Fund worth 10 trillion yen.

According to the sources, the company transferred part of its Arm shares to the fund in the form of investment in 2018. However, the market price of the shares at the time was lower than the price paid by the company when it purchased Arm in September 2016.

The company booked the difference, 1.4 trillion yen in total, as a loss.

However, the taxation bureau viewed the situation differently and said the company had failed to declare 420 billion yen in income.

“There was a difference of views (between tax authorities and our company) about when the loss should be reported,” Softbank Group said.

“About 400 billion yen will be reported as a loss in the year that ended in March 2019. This is not a matter of tax evasion, like concealing income,” it added.