NDTV under I-T scanner for concealing Rs 1600 crore income

The Income Tax Department is looking into undisclosed income to the tune of Rs 1600 crore relating to New Delhi Television. According to a DNA report, inquires in this regard were initiated by Income Tax authorities back in UPA days.

The report, quoting sources, suggest that the assessment of the concealed income of Rs 642.5 crore by NDTV Group and related companies was done in February, 2014. Re-assessment proceedings for concealment of income of Rs 403.85 crore was initiated against M/s RRPR Holdings Pvt Ltd owned by Prannoy and Radhika Roy.

In addition, the Reserve Bank of India has reportedly detected violation and contravention of several provisions of FEMA when the ND TV raised money to the tune of Rs 2030 crore. The Enforcement Directorate has issued a show cause notice to this effect.

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It could be noted that NDTV had raised funds by floating a galaxy of shell companies. S Gurumurthy, in a cogent article in New Indian Express, had written that between 2006 and 2010, NDTV India had floated 20 wholly-owned subsidiaries in different parts of the world. While seven were based out of Mauritius, eight subsidiary companies were based in India, two were located in Netherlands, one each in London, UAE, and Sweden. Sources in the investigating agencies suggest that these companies had no real business, no employees and even no business premises.

These “letter-box companies”, which were wholly resting on the valuation of NDTV Ltd, together had raised $417 million. Of the $417 million, $267 million was invested by GE Corporation directly or indirectly. $310 million was raised through NDTV Network PLC UK and $117 million were raised via the sale of NDTV Imagine to GE Corporation.

The CBI, on June 9, raided the residence of NDTV promoters Mr and Mrs Prannoy Roy.

The CBI case against NDTV is related to a Rs 375 crore loan from ICICI Bank and a corresponding wrongful loss of Rs 46 crore to the bank that is alleged to have been a result of collusion between Roys and the ICICI officials. But behind this, there is also a chain of borrow, repay and borrow when Roys took a series of loans in 2008 as they sought to buy back a large chunk of NDTV shares from the market.

In December 2007, Roys had bought 7.73 per cent of NDTV shares from General Atlantic. Minority shareholders of NDTV were made an open offer to sell shares. To fund the purchase of shares that the minority shareholders wanted to sell, Roys created a company called RRPR Holdings Private Limited. RRPR borrowed Rs 501 crore from India Bulls Ltd.

To repay part of the India Bulls loan, RRPR borrowed Rs 375 crore from ICICI Bank in October 2008. In August 2009, RRPR found another lender called Vishvapradhan Commercial Private Limited (VCPL) to repay the ICICI loan. VCPL agreed to pay Rs 350 crore to RRPR in July, 2009.

RRPR’s balance sheets – filed before the Registrar of Companies in March, 2009 – however, showed that it had a loan of Rs 349,26,14,485 from ICICI Bank and an interest of Rs 17,21,80,697 on that loan. Between 31 March and 7 August, 2009 — when RRPR repaid ICICI after receiving the money from VCPL — an additional interest was accumulated and the bank therefore suffered a loss to the tune of Rs 48 crore.

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