A UK-based company which bagged the Rs 246 crore broadcast contract for Commonwealth Games came under the scanner for alleged tax evasion even as the CVC asked CBI to probe any criminal conspiracy angle in award of certain Games-related projects.
The Income Tax department has invoked provisions of the Double Taxation Avoidance Agreement between India and the UK to go after the British broadcast firm SIS Live whose Indian arm was found to have come into existence "solely" for the purpose of executing a CWG Games contract.
Survey operations on the Indian arm of the British company were conducted by the IT department whose Assessing Officers found alleged discrepancies in the financial documents of the firm. It was allegedly trying to evade taxes to the tune of Rs 29 crore.
The IT department subsequently asked the Prasar Bharti, which had made Doordarshan enter into a contract with company for broadcast rights of the games, to cut taxes from the company's receipts under the Tax Deducted at Source (TDS) category.
The I-T department in its order to Prasar Bharti, said that the broadcast firm had "come into existence solely with the purpose of carrying out and undertaking all activities and actions necessary or desirable to implement the CWG contract"
Sources said that the terms of payment by Prasar Bharti were also being looked into by investigators.
"Whatever has been done, has been done in a totally proper, correct and valid manner," Chief Executive Officer of Prasar Bharti, B S Lalli said.
"There is a payment schedule which is a part of the contract. So at that point of time, a payment had to be released, so what the members have recorded on his note to senior general manager and I recorded there... that basically it is not for us to interfere in the matter of the service tax because that is between the entity and the service tax department," Lalli said.
The I-T department had earlier issued attachment orders of the unreleased amount of contract amount of Rs 246 crores to the firm by Prasar Bharti on October six, but a day later, it issued orders to cut taxes under TDS by invoking provisions of section 197 (certificate for deduction at lower rate) and the DTAA.
As the multi-agency probe into corruption and financial irregularities moved forward, a criminal conspiracy angle will be probed by CBI in the wake of unearthing of discrepancies in awarad of contracts for some games-related projects causing huge financial losses.
Official sources said the discrepancies like payment to non-existent parties, wilful delay in execution of contracts, inflated prices and bungling in purchase and renting of overlays including equipment worth several crores through tendering have been noticed.