Hyd: Income Tax searches on two major real estate groups

Hyd: Income Tax searches on two major real estate groups

Roger Pettingell Sarasota Real Estate

HYDERABAD: The income tax investigation unit has conducted searches on two real estate companies across Hyderabad, Bengaluru and Chennai and found that they failed to disclose Rs400 crore capital gains. The I-T searches have led to seizure of undisclosed cash of 3.5 crore and gold, silver, jewellery worth 18.5 crore.
The search covered more than 40 premises in three metros where I-T officials seized several incriminating documents and digital pieces of evidence.
Rakesh Gupta, commissioner of income tax (media and technical policy) and official spokesperson, CBDT said: “Initial analysis of the seized documents has revealed that these groups suppressed income to the tune of 90 crore in respect of the revenue recognisable from the sale of units in real estate. Both the groups have indulged in tax-evasion by inflation of expenses in the construction and development business to the tune of 28 crore, having claimed bogus purchases and resorted to over-invoicing of the construction materials.”
Turns out that one of the two firms entered into a joint development agreement. While one of them – the land owners – received a super built-up area from the other in lieu of the land given for the development of various projects, the former failed to declare the capital gains to the tune of 400 crore accruing from the transaction. This, despite the project completion certificates being obtained.
I-T officials found that interest-bearing borrowed funds have been diverted to related entities or parties for non-business purposes by the main entities of both the groups.
“Instances of the transactions involving advances, loans between the group companies have also been found, which partake the character of deemed dividend and hence liable to be taxed as income,” said the I-T spokesperson.
In the case of a trust covered in the search action, it has been found that the entity has failed to utilise within the specified permissible time limit the accumulated amount for the specified purpose as per the objects of the registered trust deed.


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