Karnataka Bank, Tata Fin among 25 cos in IT net

MUMBAI, DEC 23: Most of the 25 finance companies which had entered into lease agreements with REPL Engineering Ltd, have offered to make de...

MUMBAI, DEC 23: Most of the 25 finance companies which had entered into lease agreements with REPL Engineering Ltd, have offered to make declarations under VDIS ’97, sources in the Income Tax department said today.

The entities which have allegedly claimed depreciation on non-existent windmills and machinery, leased out to REPL, include big names like:

Karnataka Bank Limited, HDFC Bank, Shapoorji Pallonji Finance, Tata Finance, Bank of Madura, LKP Finance, IIT Corporate Services, TVS Laxmi Credit Capital, Binani Metals Ltd, Maharashtra Apex Corporation Ltd, ICDS, Harita Finance, Manipal Finance, Federal Bank Ltd, Gem Stone Investment, TDICI, Chennai Inorganic, Indian Syntants, Shalibhadra Finance Limited, J R Enterprises J T Lalvani, Hindustan Dorr Oliver and Mardia Finance.

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Manipal Finance has already surrendered an amount of Rs 1.5 crore to the department, sources said. The department had served summons to these companies under section 131 of the Income Tax Act, 1961, on December 19 to explain certain transactions shown in their books of account following raids on REPL Engineering Ltd, a manufacturer of energy saving devices, optical fibre and TV cables, as alleged bogus depreciation claims to the tune of over Rs 114 crore, were unearthed.

Two major entities — IDBI and 20th Century Finance — which had allegedly financed plant and machinery worth Rs 3.5 crore and Rs 50 lakhs respectively, have also been added to the list. These companies had allegedly bought the machinery from a certain Universal Moulders and Fabricators owned by S N Pethe. The department suspects that Pethe was a frontman for REPL, and the amount (a total of Rs 4 crore) had been thus siphoned out. The machinery was then leased out to REPL and depreciation claimed on it.

REPL was raided on Friday last and is one of the biggest successes of the IT department in Mumbai, fetching the it an unexpected group of VDIS declarants, who will now pay 35 per cent tax on the amount allegedly concealed. Many of the 25 companies have sought time on receiving the IT summons.

Meanwhile, the list of firms involved in the hawala transactions, which are also under scrutiny of the investigation wing of the IT after raids on brokers last month, has risen to 113. Several of these are also making a beeline for declarations under VDIS, sources said.In their summons, the companies had been given time till January 31 to explain their transactions or face action. REPL had confirmed assets worth Rs 198 crore, on which depreciation has been claimed, which did not exist. I-t officials alleged that REPL had shown in its books of account for the last three financial years (from April 1995 onwards) that it had acquired 28 windmills worth Rs 69 crore through lease deals from 23 banks and finance companies.

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REPL was “planning to go through VDIS and the list was drawn’ but for the raids on their premises last week.