The income tax case against Congress chief Rahul Gandhi and his mother Sonia Gandhi, in which they moved the Supreme Court on Tuesday, stems from the 2011 takeover of Associated Journals Ltd (AJL), the publisher of National Herald, by a newly incorporated company, Young Indian, for which the government had slapped a hefty tax demand.
The Gandhis moved the SC after the Delhi HC allowed the I-T department to reopen their tax returns filed for the 2011-12 assessment year.
In December 2017, the I-T department had passed an assessment order against Young Indian, incorporated on November 23, 2010, by Sonia, Rahul, Motilal Vora and Oscar Fernandes, cancelling its tax exemption. The I-T department found that the company was “engaged in activities which are non-charitable in nature”.
The department found that three months after the company was incorporated, in February 2011, 99% shares of AJL, which owned property across India worth over Rs 414 crore, were allotted to Young Indian. Interestingly, the officebearers of AJL that transferred all rights to YI, through a loan exchange pact, included Vora and Fernandes. The I-T assessment order claimed the “objective of the scheme to earn the benefit of the business asset of AJL was fulfilled within a short period of three months by takeover of AJL”.
While cancelling its tax exemption, the department has assessed Young Indian’s taxable income at Rs 414.40 crore for 2011-12. That year, YI had filed its returns with nil income, and its directors and shareholders too had shown no gain from the company, an issue now being disputed by the I-T department.
AJL owns commercial property in Delhi, Patna, Panchkula, Mumbai and Lucknow, acquired at a concessional rate from central and state governments for publishing newspapers.
Officials associated with the I-T assessment said they found that AJL had as early as 2008 decided to stop publishing newspapers. Many of its properties were later commercially used.
“If these properties were to be purchased by a commercial entity, it would have had to pay hundreds of crores to AJL along with payment of substantial capital gain tax by AJL,” a source said.
In its assessment order, the I-T department said senior Congress leaders devised a “scheme” to transfer all assets of AJL, which had taken a loan of Rs 90 crore from Congress, to YI by allowing the latter to purchase all liabilities of AJL from the Congress for a paltry sum of Rs 50 lakh.
“The assigning of loan owned by AJL to Young Indian by Congress is an adventure in the nature of trade and defined u/s 2(13) of the I-T Act,” the source said.
Source : PTI