The Income Tax (IT) department on Thursday added Red Chillies Entertainments owned by actor Shah Rukh Khan and his wife Gauri to the list of companies under its scanner.
A team of IT officials visited the office of Red Chillies Entertainments at Khar here. This is a sequel to I-T officials' visit on Wednesday to the offices of the Kolkata Knight Riders (KKR) owned by Mr. Khan in Kolkata to seek information on the investments made by its management in the Indian Premier League. Funds were allegedly routed to Red Chillies Entertainments from tax havens, sources said.
Meanwhile, IPL Commissioner Lalit Modi was questioned for several hours by I-T and Enforcement Directorate (ED) authorities at the swanky Four Seasons and later at the Nirlon House hotel at Worli on Thursday. He was questioned on Wednesday as well.
The IT and ED teams are investigating the source of funds from tax havens abroad used to fund the IPL as also tax evasion in the $ 80-million “facilitation fee” that was paid for broadcast rights. The IPL bidding processes and details of franchise owners also came under scrutiny.
Later, the ED took Mr. Modi from Nirlon House to the Mumbai Indians office in Mittal Chambers at Nariman Point. Mumbai Indians owned by Mukesh Ambani is an IPL franchisee. The ED first filed a case against the IPL under the Foreign Exchange Management Act to inquire into unauthorised transfer of funds. It is planning to file a case under the Prevention of Money Laundering Act to investigate the flow of funds from tax havens.
On Wednesday, IT officials searched the offices of Multi-Screen Media, formerly Sony Entertainment Television, International Management Group and World Sports Group (WSG), all of which are linked to the IPL in various ways. The officials visited the office of the Singapore-based WSG in Mumbai seeking information about the contractual arrangements in relation to the Board of Control for Cricket in India and the IPL.
In a statement, the WSG said it cooperated fully with the investigating officers and would continue to do so.
The WSG has stated it acquired the international media rights for the IPL in January 2008 for 10 years following a public tender process. The arrangements between the WSG and each of its sub-licensees have been agreed upon in the normal course of business and each approved by all relevant parties. The WSG strongly refuted the allegation of any impropriety in relation to these matters and rejected unsubstantiated comments reported in the media about its business transactions.
However, the I-T department is investigating tax evasion on the “facilitation fee” of $ 80 million which was paid by Multi-Screen Media to the WSG to acquire telecast rights of the league.
The I-T department questioned Mr. Modi on the payment of some portion of the facilitation fee by the MSM to another company in Mauritius, which is a tax haven. As a result, no income tax was paid on the fee in India.