I-T Dept looks into Videocon-Datacom deal and tax implications
After Swan and Unitech, the Income Tax Department is looking into the tax implications of a deal between Datacom solutions and the Videocon Group after the former was allotted 2G licences in 21 circles for Rs 1,507 crore in 2008.business Updated: Jul 10, 2011 17:01 IST
After Swan and Unitech, the Income Tax Department is looking into the tax implications of a deal between Datacom solutions and the Videocon Group after the former was allotted 2G licences in 21 circles for Rs 1,507 crore in 2008.
In a complex structure, Videocon Telecommunications was originally incorporated as Datacom Solutions, a group company of Himachal Futuristic Corporation Limited (HFCL).
Later, two other group companies of HFCL, namely Jumbo Techno Service and Oswal Chemicals and Fertiliser, invested Rs 150 crore in Datacom Solutions. Videocon Group entered by purchasing shares from Jumbo Techno Services.
Subsequently, Videocon Group infused fresh funds amounting to Rs 1,540.22 crore, according to an Income Tax Department presentation circulated among members of the Joint Parliamentary Committee (JPC) looking into the 2G scam.
Unlike other telecom companies, post-allotment of a Unified Access Service Licence, shares were issued to the Videocon Group companies at a face value of Rs 10 per share. "Its tax implication is under examination," the Income Tax Department said.
Videocon Telecommunications is also under the scanner of telecom regulator TRAI for not meeting mandatory roll-out obligations after obtaining licence and the company has already paid liquidated damages, although under protest. The source of funds to obtain the 2G licences was a loan of Rs 999 crore to Datacom Solutions from State Bank of India and Rs 500 crore to Videocon Industries by Central Bank. Another Rs 8 crore was met by way of internal accruals.
The Department of Telecom (DoT) had slapped a penalty of Rs 12.45 crore on Videocon Telecommunication Limited for missing its roll-out obligations in January this year.
The Income Tax Department is likely to make a presentation to the JPC during its meeting. Besides Videocon, the Department will inform the Committee about investigations into other companies, including the Unitech-Telenor deal and Swan-Etisalat deal, among others.
According to the Income Tax Department, the telecom companies have raised funds either from the domestic sources or from foreign countries like Mauritius, Hong Kong, Dubai and Singapore.
"By and large, the domestic sources may be explainable as from loans, internal accruals and investment by group companies. However, verifications are still under progress.
"As regards the offshore funds, references in respect of several foreign entities have been made through the Foreign Tax Division of the CBDT to ascertain the identity and source of investment," it said.
First Published: Jul 10, 2011 17:00 IST