Chandigarh, August 9: Punjab’s biggest cable television company Fastway Transmissions Private Limited (FTPL), which has been constantly under fire from local bodies minister Navjot Singh Sidhu, is also under the scanner of the income tax (I-T) department for alleged tax evasion.
The department, which looked into its supply of set top boxes, has found that Fastway showed “purchase” of approximately eight lakh boxes worth Rs 144 crore from a US-based company as lease for three financial years from 2012-13 to 2014-15. The transaction was shown as finance lease.
“During the three-year period, FTPL has paid Rs 144 crore, apart from Rs 21-crore interest, to a non-banking finance company linked to the US firm. The payments were claimed as revenue expenditure by stating that these were for lease rentals instead of purchase. The transaction is that of loan repayment but has been given the colour of lease,” IT sources told Hindustan Times.
FTPL, which is in the business of multi-system operators and digital cable services, provides cable services to its customers in Punjab, Haryana, Himachal Pradesh and Chandigarh through set top boxes.
ASSESSMENT ORDER
“The economic life span of set top boxes is 3 to 4 years. The agreement stipulates that at the end of the lease period, the ownership of set top boxes on option will be transferred to FTPL after making a nominal payment of Re 1 per set top box as against the actual cost of Rs 2,000 to Rs 2,500. The transaction is arranged in such a manner that the cable company is the owner of set top boxes at the end of lease term,” reads the assessment order for fiscal year 2013-14.
The department raised a tax demand of Rs 15 crore and the matter is in the Income Tax Appellate Tribunal (ITAT) at Chandigarh. The appeal being heard by a two-member bench saw heated arguments during a hearing last month. The assessment of related transactions during the remaining two years is at different stages.
When contacted, FTPL managing director Gurdeep Singh said the company has filed an appeal in ITAT against the department’s order. “It is pending before it,” he said.
NO TAX EVASION, SAYS FIRM
FTPL chartered accountant (CA) Rajesh Mehru said there has been no tax evasion or concealment of facts.
“It is a legal and technical issue regarding allowability of lease rental claimed by the company. We have procured the boxes on the basis of operating lease. The (IT) department is considering it as if we have purchased the boxes and is ready to allow depreciation on them, declining the lease rental. Our claim of lease rent expense is supported by a circular of the Central Board of Direct Taxes and judgments by apex court,” he said.
Mehru said the department raised the tax demand and the company is paying it. “We have paid Rs 5 crore and our accounts have been defreezed. The rest is being paid in instalments,” he said. Fastway, which has a virtual “monopoly” over cable business in Punjab, has been at the receiving end of an onslaught launched by Sidhu against its alleged evasion of state taxes and charges.
The minister has accused the company of non-payment of charges and taxes running into hundreds of crores. He has repeatedly goaded the state government to conduct audit into the cable network’s accounts and take action against it. However, chief minister Capt Amarinder Singh has ruled out any vendetta in this regard.
The cable network firm owned by a Ludhiana-based transporter had a smooth run during the 10-year-rule of Akalis, expanding its business at a scorching pace.
News Source: http://www.hindustantimes.com
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