Contrary to the claims by the IPL franchisees that the funding pattern has been within the stipulated rules and everything is above board, the Income Tax department has raised questions about the flow of the funds in at least three teams—Kings XI Punjab, Kolkata Knight Riders and Rajasthan Royals, reports Times of India.
This forms part of a report submitted by the CBDT, parent body of the I-T, to the standing committee on finance on Wednesday
I-T officials said the explanation provided and the details submitted was not convincing and needs to be further investigated.
Sources said that in these three teams there is a huge fund flow from Mauritius, a tax haven.
“Besides the transactations are layered that a detailed investigation is required,'' an official added. The report otherwise contains a roundup of the I-T action since April 15 when the probe began in full swing.
In the case of KKR, the officials said, “They had promised us to provide the investment details and flow of funds but they are yet to give it to us and seem to be very reluctant,'' an I-T official told Times of India, particularly referring to KKR co-owner Jay Mehta who had convinced the authorities that all documents related to the franchise would be submitted.
Mehta, a friend of Lalit Modi, had entered into the Kolkata franchise as an investor only in the second season. In the first year, the franchise was bought by actor Shah Rukh Meer Taj Mohammad Khan, along with wife Gauri.
“The shareholding pattern is not clear but what is more perplexing is the funding. In RR, we need to find out more details because there is a chain of multi-layered transactions originating from Mauritius and other tax havens,'' the official said.
Royals co-owner and Modi's co-brother in-law Suresh Chellaram—a Nigeria-based businessman who owns the company Tresco International Ltd— owns 44.2per cent stake in the franchise.
In the case of Kings XI Punjab, whose officials were quizzed by sleuths on Wednesday, the bid document was bought in 2008 by Preity Zinta and it was she who signed the agreement before bringing in the other investors. “It requires a lot more clarity in funding and the shareholding pattern,'' the official said.
The government on Wednesday said the Registrar of Companies has not found anything wrong with the balance-sheets of IPL franchisees and no company has given sweat equity to anyone
“Prima facie, as far as balance sheets, are concerned we can say there is nothing of unnatural... No sweat equity issues have been found either,” corporate affairs minister Salman Khurshid said.
He added that some franchisees have not been up-to-date in filing balance sheets and notices have been issued to them for doing so by May 3.
