IN A detailed notice sent to Deepak Kochhar, husband of ICICI Bank CEO and MD Chanda Kochhar, the Income Tax Department’s investigation wing has focused on “investments” made by two Mauritius entities in his company NuPower Renewables Private Ltd. Investigations have shown that this includes a last tranche of Rs 166.53 crore just two weeks prior to the Rs 3,250-crore loan granted by the bank to the Videocon Group in 2012.
In a notice sent on April 3, details have also been sought on investments of Rs 64 crore in the form of convertible debentures by Supreme Energy Ltd which — as reported by The Indian Express on March 29 — was a company transferred to Deepak Kochhar by Videocon’s Venugopal Dhoot for just Rs 9 lakh, six months after the ICICI Bank loan came in.
Supporting documents have been demanded by April 10 to show disposal of assets by NuPower between 2014 and 2016 (Rs 838.81 crore) and capital gains loss (Rs 47.39 crore) for 2016-17. Details of “slump sale agreements” between NuPower and two of its subsidiaries during 2014-16 have also been demanded. A slump sale refers to the transfer of a whole or part of business concern as a going concern.
While these details do not form part of tax queries, officials in Mumbai and New Delhi told The Sunday Express that the tranches of four payments made by First Land Holdings of Mauritius between 2010 and 2012 in the form of compulsorily convertible preference shares will be the immediate focus of investigation.
This is due to the fact that the last tranche was paid to NuPower by First Land Holdings on March 21, 2012, while the first tranche of the loan from ICICI Bank of Rs 650 crore came on April 3, 2012. The earlier tranches of payments from the Mauritius company were to the tune of Rs 49 crore, Rs 8.69 crore and Rs 99.25 crore, according to details available with the I-T Department.
Apart from details of shareholding and funding for NuPower from 2010 to 2016, Deepak Kochhar has been asked to furnish the following for First Land Holdings Ltd and DH Renewables Holdings Ltd, which is also based in Mauritius: nature of activity; incorporation details; details of promoters and board resolutions for investments.
Kochhar has been asked to explain how he came into contact with the two Mauritius companies and submit transcripts of all communications, including email and minutes of meetings, between the two sides. Tax officials have sought copies of agreements between the companies for issuance of compulsorily convertible preference shares to NuPower as well as the share valuation report for investments.
Referring to depletion of NuPower’s assets, tax sleuths have pointed out that the balance sheet of the company for 2015-16 shows a disposal worth Rs 681.23 crore, including plant and machinery. Similarly, the balance sheet of the company for 2014-15 reflects disposal of assets worth Rs 157.58 crore. The department has now sought proof of all these transactions and sale.
Details of slump sale agreements between NuPower and its subsidiaries — Echanda Urja Private Ltd and NuPower Wind Farm Ltd — have also been sought along with the determination of net worth of assets and proof that these transactions were at “arms length”. The department has asked for calculation and purchase agreements of assets in 2016-17, based on which NuPower claimed a long-term capital gains loss of Rs 47.39 crore. The department has also sought a copy of the agreement determining the terms and condition of conversion of 39.77 lakh cumulative convertible preference shares (CCPS). Records show that 4.99 lakh shares were converted into 2.94 lakh equity shares at Rs 2,000 per share and the remaining 34.78 lakh shares were converted into 29.95 lakh equity shares at Rs 1161 per share.
While the company converted 71 lakh fully convertible debentures of Rs 100 each into 6,08,659 equity shares at Rs 1160.50, the department also sought details regarding source of funds for issuance of 71 lakh zero coupon debentures at Rs 100 and the valuation report for determining the value of per share at Rs 1160.50. The tax notice and summons to Deepak Kochhar has been sent under Section 131 of the Income Tax Act from Mumbai with a request for “strict compliance”. Officials in Mumbai said that they will shortly approach authorities in Mauritius for details of investments made by the two firms based in that country.