Tulip twist: Tax raid or routine check?

NEW DELHI: Tulip Telecom, a provider of data telecom service and IT solutions recently came under the scanner of the Income Tax Department for allegedly evading taxes to the tune of a couple of crores. As per a reliable source, the raids began on September 24 and are still underway. The IT department conducted searches at various premises of the company and laptops of senior officials have also been confiscated.

When contacted, Lt Col HS Bedi (VSM) Chairman and MD, Tulip Telecom confirmed the visit from tax officials. “People from the authority did visit our office. We enjoy certain benefits under Section 80-I of the IT Act. We have multiple businesses so they were just checking out how much of it is direct of if we are getting additional revenues. It is a normal process they carry out,” commented Bedi.

Explaining the reason behind the raids Bedi stated, “Actually the government is under pressure for collections, hence they are carrying out routine checks of companies that are availing tax benefits.” According to sources in the market there are complaints of anomalies in the company's regional offices as well. Survey operations were also conducted in the Jammu office last week.

Section 80-I refers to the profits and gains derived from an eligible industrial undertaking and permits a deduction to the extent of 25 percent of such profits and gains, i.e. the profits and gains derived from the industrial undertaking.

Tulip is a public limited company and is listed on the Bombay Stock Exchange and National Stock Exchange in India. According to its official website, the company has displayed robust growth since its inception and its IPO has been ranked as one of the top four IPOs in India, since 2005, by CNBC. It has revenues in excess of Rs 1,614.40 crore in FY 2008-09 and a market capitalization in excess of Rs 2,131.50 crore as on March 31, 2009.