Even as questions have been raised in the past over the purchase and subsequent sale of land by Robert Vadra owned Sky Light Hospitality in Bikaner at significant premium to companies through a maze of suspicious transactions, some fresh details in the case now raise deeper questions of impropriety during the UPA rule in 2013. Here is a look into the issue and why it is turning significant now.
The case details
As first reported by The Indian Express, Robert Vadra’s Sky Light Hospitality Private Limited sold 69.55 hectares in two deals to Delhi-based Allegeny Finlease Pvt Ltd in January 2012 for Rs 5.15 crore — at Rs 7.41 lakh per hectare, seven times the purchase price of the same land two years ago. In January 2010, Sky Light Hospitality had bought the land in two deals for a total of Rs 72 lakh, at a little over Rs 1 lakh per hectare. While Mahesh Nagar, the authorised representative of several companies linked to Vadra, purchased and sold the land on behalf of Sky Light Hospitality, his helper Ashok Kumar and Bikaner-based real estate agent Onkar Mal Yadav sold the two parcels of land as power of attorney for the local landowners to Nagar in 2010.
The funding maze for purchase of land from Skylight
While Allegeny purchased the land from Skylight Hospitality in Jan 2012, the money for the land purchase was sourced from another company. In 2011-12, BPSL gave a loan of Rs 5.64 crore to Allegeny and as per its records filed with the RoC, it used the money to buy land in Bikaner. Allegeny’s filings with the Registrar of Companies show no entry of repayment of the loan to BPSL.
Incidentally, around the same time that BPSL gave loans to Allegeny, the Settlement Commission passed an order, admitting BPSL’s application against the IT Department. The IT department had issued show-cause notice to BPSL and sought the company to make income additions for assessment years 2004-05 to 2011-12 on various accounts aggregating to over Rs 800 crore.
What did BPSL get?
A look into the Settlement Commissions final order on June 30, 2013 shows that the Settlement Commission not only reduced the quantum of income addition for BPSL to Rs 317 crore, thereby providing relief on income of around Rs 500 crore, but also granted it immunity from prosecution and penalty. This was a sharp departure from the order issued by the previous bench barely two weeks earlier.
Barely two weeks before the final order was passed, the previous bench had issued a draft order in mid-June 2013, directing addition of around Rs 800 crore to applicant’s income and also ordered that “no immunity is granted from prosecution and penalty imposable under the IT Act to the issues arising from application and covered by this order”.
ED raises questions
The Enforcement Directorate has asked the Income Tax Settlement Commission for details on its proceedings in the case related to Bhushan Power and Steel Limited (BPSL) which gave a loan to a company that bought land owned by Vadra’s firm at seven times its acquisition cost.
Two months ago, then Director of Enforcement Directorate Karnal Singh wrote to the Commission asking for details of the file that contains deliberations on the BPSL case and the order that was reserved, The Indian Express has learnt. He also asked for details of the reconstituted bench that is alleged to have diluted the order to provide relief to BPSL.
This was a follow-up letter to a previous ED query on the same lines to which the Commission had said that records were destroyed in a fire, sources said.
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