CWG: UK broadcaster under scanner; CBI to probe conspiracy

A co. which bagged the broadcast rights for CWG came under scanner even as CVC asked CBI to probe any criminal conspiracy angle.

Updated: Oct 22, 2010, 20:59 PM IST

New Delhi: A UK-based company which bagged the Rs 246 crore broadcast contract for Commonwealth Games came under the scanner for alleged tax evasion even as the CVC asked CBI to probe any criminal conspiracy angle in award of certain Games-related projects.

The Income Tax department has invoked provisions of the
Double Taxation Avoidance Agreement between India and the UK
to go after the British broadcast firm SIS Live whose Indian
arm was found to have come into existence "solely" for the
purpose of executing a CWG Games contract.

Survey operations on the Indian arm of the British
company were conducted by the IT department whose Assessing
Officers found alleged discrepancies in the financial
documents of the firm. It was allegedly trying to evade taxes
to the tune of Rs 29 crore.

The IT department subsequently asked the Prasar Bharti,
which had made Doordarshan enter into a contract with
company for broadcast rights of the games, to cut taxes from
the company`s receipts under the Tax Deducted at Source (TDS)

The I-T department in its order to Prasar Bharti, said
that the broadcast firm had "come into existence solely with
the purpose of carrying out and undertaking all activities and
actions necessary or desirable to implement the CWG contract."

Sources said that the terms of payment by Prasar
Bharti were also being looked into by investigators.

"Whatever has been done, has been done in a totally
proper, correct and valid manner," Chief Executive Officer of
Prasar Bharti, B S Lalli said.

"There is a payment schedule which is a part of the
contract. So at that point of time, a payment had to be
released, so what the members have recorded on his note to
senior general manager and I recorded there... that basically
it is not for us to interfere in the matter of the service tax
because that is between the entity and the service tax
department," Lalli said.

The I-T department had earlier issued attachment
orders of the unreleased amount of contract amount of Rs 246
crores to the firm by Prasar Bharti on October six, but a day
later, it issued orders to cut taxes under TDS by invoking
provisions of section 197 (certificate for deduction at lower
rate) and the DTAA.

As the multi-agency probe into corruption and financial
irregularities moved forward, a criminal conspiracy angle will
be probed by CBI in the wake of unearthing of discrepancies
in awarad of contracts for some games-related projects causing
huge financial losses.

Official sources said the discrepancies like payment to
non-existent parties, wilful delay in execution of contracts,
inflated prices and bungling in purchase and renting of
overlays including equipment worth several crores through
tendering have been noticed.