Taxman says GTL admits evasion on Rs500 crore

GTL, the telecom infrastructure firm, has admitted to evading tax on Rs500 crore income and has agreed to pay the additional tax liability on it by the end of this fiscal, according to two senior officials in the Mumbai office of India’s income tax department. GTL denied any such development.

“They (GTL) have agreed to settle the tax on total evasion of Rs500 crore,” said one of the two senior tax officials, both of whom did not want to be identified.

The additional tax liability is expected to be around Rs150 crore.
The I-T authorities had conducted a raid of the office premises of GTL in September last year.

“GTL, through a clutch of 20-odd companies, was showing (that) it was buying software,” said the official. “We found that actually they were just taking out money in order to evade tax.”

GTL and GTL Infra, both of which are listed on Indian stock exchanges, are the flagship companies of the Global Group of companies promoted by first-generation entrepreneur Manoj Tirodkar.

In the fiscal year ended March 31, 2010, GTL had consolidated revenues Rs2,236.94 crore. GTL Infra recorded revenues of Rs347 crore during the same period and targets to close the current fiscal with Rs432 crore in revenues.

In January last year, GTL Infra had bought 17,500-odd telecom towers of Aircel Ltd for Rs8,400 crore.

“We recovered many false invoices when we carried out search operations,” said the second official, adding that “the money payable would be slightly less than one-third of the income, as depreciation of assets would be taken into account.”

This officer was a member of the team that searched GTL’s offices last September. “They have agreed to pay the amount by the end of fiscal year,” he added.

GTL denied any wrongdoing. In an emailed statement, GTL denied that it agreed to pay tax on Rs500 crore. It said that any such information is “false, baseless and incorrect, deliberately being created for the purpose of spreading rumours by some vested interests.”

“GTL/GTL Infra are not required to pay any such additional taxes or taxes other than due in the normal course of business,” the spokesperson added.

The I-T department has not decided whether to impose a penalty on the company but experts believe that concealment of income can attract a penalty. “Concealment of income can attract maximum fine. (But) it is up to the I-T department to decide how much penalty to impose,” said Jayant Thakur, a chartered accountant at Mumbai-based Jayant M Thakur and Co.

The Global Group has 7 operating firms  generating about $1.5 billion in revenue and employs nearly 35,000 people across operations in 46 countries.