Videocon-Datacom deal under taxman’s lens

After Swan and Unitech, the income-tax department is looking into the tax implications of a deal between Datacom Solutions and the Videocon group after the former was allotted 2G licences in 21 circles for Rs1,507 crore in 2008.

In a complex structure, Videocon Telecommunications was originally incorporated as Datacom Solutions, a group company of Himachal Futuristic Corporation Ltd (HFCL). Later, two other group companies of HFCL, namely Jumbo Techno Service and Oswal Chemicals and Fertiliser, invested Rs150 crore in Datacom Solutions.

Videocon group entered by purchasing shares from Jumbo Techno Services. Subsequently, Videocon group infused fresh funds amounting to Rs1,540.22 crore, according to an income-tax department presentation circulated among members of the Joint Parliamentary Committee (JPC) looking into the 2G scam.

Unlike other telecom companies, post-allotment of a Unified Access Service Licence, shares were issued to the Videocon group companies at a face value of Rs10 per share.

“Its tax implication is under examination,” the income-tax department said.

Videocon Telecommunications is also under the scanner of the Telecom Regulatory Authority of India for not meeting mandatory roll-out obligations after obtaining licence and the company has already paid liquidated damages, although under protest.

The source of funds to obtain the 2G licences was a loan of Rs999 crore to Datacom Solutions from State Bank of India and Rs500 crore to Videocon Industries by Central Bank. Another Rs8 crore was met by way of internal accruals.

The telecom department had slapped a penalty of Rs12.45 crore on Videocon Telecommunication Ltd  for missing its rollout obligations in January.

The income-tax department is likely to make a presentation to the JPC during its meeting. Besides Videocon, the department will inform the committee about investigations into other companies, including the Unitech-Telenor and Swan-Etisalat deals, among others.