I-T dept to compare owners? networth, cost of franchises

The income tax department?s search on IPL funding sources would be based on a comparison of the net worth of individuals who own the IPL franchises and the quantum of funds with which the franchises were actually bought.

According to sources, the department is making a detailed account of their investments, accounts and property to get to the bottom of the funding. If the two?the net worth of team owners and the amount they invested?does not match, there could be reason to slap demand notices on the individuals, the sources said.

Use of foreign funds in IPL is also under the I-T sleuths? lenses, given that these foreign funds could be either tax-evaded Indian money or funds from third countries routed through tax havens. Although only one IPL franchisee company?Jaipur IPL Cricket that owns the Rajasthan Royals?had approached the finance ministry to bring in foreign money, the I-T department has definite clues about many others too routing Indian funds to tax havens abroad and bringing them back as foreign funds.

Jaipur IPL Cricket had applied to the Foreign Investment Promotion Board to bring funds through issue of foreign equity, though the application was rejected in October 2009. However, the company again applied for the same approval that is still pending with the FIPB.

The application that was rejected had proposed, ?to induct 100% foreign equity by way of issue of shares for consideration other than cash inflow.? The proposal was rejected on the insistence of revenue department, sources said. Rajasthan Royals team that represents Jaipur in the IPL had bought by the Emerging Media Group for an amount of $ 67 million in 2008.

?This is worth probing that only one company had approached the government for bringing in foreign money through the approval (FIPB) route, while others who are also suspected to have brought in money from foreign country did not come to the government,? a senior official said. Tax officials point out that the large funds involved in the IPL made it even more important for the tax department to keep a tab on its the sources of funds. Bollywood actor Shah Rukh Khan bought Kollata Knight Riders for an amount of $ 75.09 million at the auction conducted in 2008 while Mukesh Ambani?s RIL bid of $111.9 million got the Mumbai Indians that also made it the costliest team in the Indian Premier League (IPL) auction.