The income tax (I-T) department is suspecting foul play in the array of investments worth Rs7,316 crore made by 26 foreign entities in Gurgaon-based real estate company IREO Group amid rising suspicion of “round tripping” by some of these investors. Round tripping refers to routing of investments by a resident of one country through another country back to his own country to evade taxes.
Documents reviewed by the Media revealed 20 Mauritius-based firms — all based out of a single address in the island nation — have made investments as equity shareholders of IREO. Another six Cyprus-based firms have invested through fully convertible debentures (FCDs) in the firm alleged to have links with BJP leader Sudhanshu Mittal. FCDs are instruments where the investor is given the option of converting the capital into equities or shares of the firm at a later date.
I-T sleuths, which carried out investigative operations at Ireo’s office in Gurgaon last month and early this month, is scrutinising evidence to verify whether Indian resident entities have routed investments through shell companies in tax havens Mauritius and Cyprus in a specially created entity called Indian Real Estate Opportunity (IREO) Fund.It has also written to authorities in Mauritius and Cyprus seeking details of these firms.
The company has also denied any links with Mittal, whose brother-in-law Lalit Goyal is a promoter of IREO. It also maintained that all its investments were legitimately routed adhering to established norms.