I-T, ED probe firms that got 2G licences

The income tax department and the enforcement directorate have begun separate probes into possible violation of tax and foreign exchange laws by telecom firms that were awarded licences and granted 2G spectrum in 2008 amid allegations that scarce radio frequencies were offered at extremely cheap rates.

The income tax department and the enforcement directorate have begun separate probes into possible violation of tax and foreign exchange laws by telecom firms that were awarded licences and granted 2G spectrum in 2008 amid allegations that scarce radio frequencies were offered at extremely cheap rates.

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I-T department sources are scrutinising tax returns of the operators that were granted telecom licences in 2008.

The comptroller and auditor general (CAG) is of the view that the spectrum allocation process was undertaken in an arbitrary manner and has pegged the probable revenue loss between Rs90,000 crore to Rs1.77 lakh crore.

Sources said the I-T department was examining the "articles of association" of each of the new licences to check whether these firms had submitted incorrect paid-up capital, revenue and profit figures at the time of applying for licences.

"It has been observed that at least 12 entities, which had applied for licences, neither had the sufficient paid-up capital nor did they incorporate telecom related business in their memorandum of association," an I-T department source said.

Scrutiny of the documents appended by these companies with applications also suggests they had not complied with the conditions of the Companies Act 1956, the source said. "Some companies had suppressed facts or gave misleading information along with their applications. None of these 12 had the minimum paid up capital required to apply for a telecom service licence," he said.

The ED is scrutinising details of investments in telecom firms that attracted significant foreign capital after they received the licences. "The fact that three operators could draw huge foreign investments, even before establishing a foothold in the Indian telecom market would suggest that acquiring licence allotment of spectrum for roll out was the main factor which attracted the foreign investment," the source said.