The income tax (I-T) department has prima facie found tax violations in investments made in Rajasthan Royals, after going through the papers submitted by the BCCI on Friday.
The department has also prima facie found violation of Foreign Exchange Management Act (FEMA) rules, as reported by HT earlier in these pages, while going through details of investments made from tax haven countries by four stake holders. After a thorough investigation, I-T authorities will hand over the details related to FEMA violations to the Enforcement Directorate (ED).
The BCCI had submitted documents related to 10 points questionnaire the department had asked them through a notice. Among the answers sought were pertaining to information on all transactions with first 8 franchisees from 2008 onwards. It had also asked details of ownership/shareholding of each franchisee. It had further asked name, address of individuals, entities owning the franchisees and their contract with the IPL.
An I-T official, requesting anonymity, said that prima facie investigation showed some broken links in sources of funds invested by non-resident Indian Suresh Chellaram, who is brother-in-law of IPL Commissioner Lalit Modi, UK based Manoj Badale, actor Shilpa Shetty's husband Raj Kundra and Lachlan Murdoch in the team.
“We are still going through the documents in detail and will ask for all minute details on sources of funds from the stake holders soon,” the official said.
He has also not ruled out sending notices to these people for the purpose of questioning them. “Once we get strong supporting evidence on violations of FEMA rules in these investments, we would hand over the details to the ED,” he said.
The I-T authorities are also scrutinising the deal between IPL and its organising agency International Management Group (IMG) where the former had, as per original agreement, agreed to pay 10 per cent commission from its earnings to the latter for its services.
BCCI later disputed the commission percentage and the deal was renegotiated. While in 2008, IMG was paid close to Rs 43 crore, in 2009 it was paid Rs 33 crore. “We are trying to ascertain if anyone from IPL benefited from this deal,” the official said adding that prima facie investigation has given them some clues about this. The official said it is being investigated if any part of that benefit was routed through some tax haven country.
The department is similarly investigating if some IPL officials benefited from the deal between World Sport Group (WSG) and Multi-Screen Media (MSM). The deal is in controversy over payment of Rs 400cr-plus facilitation fee by MSM to WSG. I-T officials are probing if the benefit to some IPL person was routed through Mauritius.