The income tax (I-T) department is hot on the trail of investments worth Rs7,316 crore made by 26 foreign entities in Gurgaon-based real estate company Ireo Group amid rising suspicion of "round tripping" by some of these investors.
Round tripping refers to routing of investments by a resident of one country through another country back to his own country to evade taxes.
Documents reviewed by Hindustan Times showed 20 Mauritius-based firms — all based out of a single address in the island nation — have made investments as equity shareholders Ireo. Another six Cyprus-based firms have invested through fully convertible debentures (FCDs) in the firm alleged to have links with BJP leader Sudhanshu Mittal.
FCDs are instruments where the investor is given the option of converting the capital into equities or shares of the firm at a later date.
I-T sleuths, which carried out search operations at Ireo’s office in Gurgaon last month and early this month, is scrutinising evidence to find out whether Indian resident entities have routed investments through shell companies in tax havens Mauritius and Cyprus in a specially created entity called Indian Real Estate Opportunity (IREO) Fund.
It has also written to authorities in Mauritius and Cyprus seeking details of these firms.
The company denied any links with Mittal, whose brother-in-law Lalit Goyal is a promoter of Ireo. It also maintained all its investments were legitimately routed adhering to established norms.
"Sudhanshu Mittal has no connection with Ireo or its investors. The investment decisions and affairs of the fund are run by the fund managers based out of New York and Mauritius. We have supplied details of major investors in the IREO Fund to I-T authorities in 2008 and extended list is being submitted to them again," IREO group’s spokesperson said in an emailed response.