Having failed to deduct income tax on a part of the recent `572-crore refund to realty giant Parsvnath, the Chandigarh Housing Board (CHB) will now pay around `5.6 crore to the I-T department.
After an arbitration decision, the board refunded around `572 crore in all to Parsvnath Developers Limited for the scrapped Prideasia housing project in IT Park. This included more than `55 crore as interest that the CHB had earned on the project money of nearly `517 crore that had come to it between 2006 and 2008. This interest was defined as income by the I-T department in a recent communiqué to the CHB, and it said the board should have imposed TDS (tax deducted at source) on it before making the payment to Parsvnath.
The decision to make the payment was taken at a board of directors’ meeting of the CHB on Wednesday, though the payment is being made “under protest”, informed CHB secretary Mandeep Kaur. Sources said the view earlier in the CHB was that the income tax should be paid by Parsvnath, if at all, and there could be no TDS on what was essentially a payment made after an arbitration order.
Between October 2006 and April 2008, Parsvnath had paid around `517 crore to the CHB as bid price for the township project. The company was actually to pay `821 crore upfront and share 30% sales revenue. But the pact was later scrapped due to a dispute between the two parties. Parsvnath invoked the arbitration clause, and the arbitrator passed the award on January 9 this year.
The I-T hit, however, comes after a major relief to the CHB some weeks ago, when the arbitrator had rejected an additional claim of `146 crore made by Parsvnath. Delhi-based firm Parsvnath had sought the additional money saying there had been computation error in compensation. While the arbitrator had acknowledged that there had indeed been an error, and thus the CHB owed more money, it ruled that the additional money could not be sought now as the arbitration settlement had been signed and sealed.
Prideasia was to come up on 123 acres of land in a joint venture of Parsvnath and CHB; the foundation was laid in 2008. It was aimed at high-income customers; there was even to be a helipad in it. As part of the arbitration, the CHB has got back the land since. It is still to decide what to do with it.