In a big setback to New Delhi Television (NDTV), Delhi High Court (HC) on Tuesday quashed the stay order given by Income Tax Appellate Tribunal (ITAT) stopping the Income Tax Department from levying a fine of Rs.525 crores ($80 million). The Division Bench comprising of Justice Ravindra Bhat and Justice Najmi Waziri upheld the Income Tax decision to fine Rs.525 crores on NDTV for tax evasion in 2008. The HC also said that the stay order given by ITAT was totally wrong and the Tribunal had exceeded its powers.
It is still intriguing as to why GE put money in NDTV through subsidiaries and that too through tax havens.
NDTV obtained a stay from ITAT on September 2016, when Income Tax found that the TV channel had illegally routed money through Bermuda. Around Rs.642 crores ($98 million – $150 million in 2008) was routed in 2008 through US giant General Electrical (GE) subsidiary in USA via Bermuda and NDTV received this money through its shell company registered in Netherlands. This dubious deal took place when P Chidambaram was the Finance Minister and many Income Tax officers who challenged this deal were punished by the Congress regime.
At last Income Tax in June 2016 slapped fine of Rs.525 crores ($80 million) for this illegal routing of money and hushing up of money flow. NDTV even claimed to Income Tax that they tried to sell a dream and it did not materialize. Later NDTV’s senior staffers Vikram Chandra and K V L Narayan Rao confessed to Income Tax about the illegal money routing from GE’s subsidiary in USA via Bermuda and Netherlands.
It must be noted that in those days (2008), GE was trying to make a deal worth Rs.16000 crores ($2.432 billion) with Indian Railways for building electric locomotive engine and it collapsed after officers found forgery of documents. Those days Chidambaram and Planning Commission Deputy Chairperson Montek Singh Ahluwalia were supporting this deal. GE was a diesel locomotive manufacturer and was not eligible to bid for electric locomotives. It is still intriguing as to why GE put money in NDTV through subsidiaries and that too through tax havens.
Delhi High Court’s Order is going to create huge problem for NDTV as it has to pay Rs.525 crores. NDTV is now facing a serious cash crunch and several staffers have been retrenched in the past few months. Moreover NDTV’s move to compound the Enforcement Directorate’s fine of Rs.2030 crores ($309 million) was also rejected by RBI. These developments are expected to challenge even the day-to-day running of the TV channel. Is the denouement near?
1. The conversion rate used in this article is 1 USD = 65.78 Rupees.
2. Text in Blue points to additional data on the topic.
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