The income tax department is currently examining the tax liabilities of five companies – Unitech, Swan Telecom, Videocon Telecommunications, Loop Telecom and Kalaignar TV as part of its ongoing investigations into the transactions undertaken by companies that were awarded licences in 2008.

This was conveyed to the Joint Parliamentary Committee (JPC) that is looking into the entire gamut of policy prescriptions in the telecom sector between 1998 and 2009 here today. Top brass of the Finance Ministry including the Finance and Revenue Secretary, Mr R.S.Gujral and the CBDT Chairman, Mr M.C.Joshi presented a status report to the JPC on the investigations being conducted by the tax authorities.

"Investigations are on at various stages and they said the committee will be briefed subsequently", Mr P.C.Chacko, JPC Chairman said here on Wednesday.

The tax department has told the JPC that they are investigating into the source of funds of the licencee companies (those awarded in 2008) for payments to the Department of Telecommunications (DoT) for acquiring licences. The tax implication on dilution of equity to other foreign or domestic companies post allotment of the licences is also being looked into by the tax department, Mr Chacko said.

He highlighted that licensee companies had transferred their shares to their own group company at par and then to other entities at a huge premium. The taxability of such transactions are being investigated by the CBDT, Mr Chacko said.

The findings, so far, of the tax department reveal that telecom companies had raised resources from domestic as well as foreign countries such as Mauritius, Hong Kong, Dubai etc. By and large, domestic sources are explained as loans, internal accruals and investment by group companies. "Verifications are still on", Mr Chacko said, adding that the tax department will brief the JPC in the coming days on the progress made in the investigations.

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