One day, two deals & Rs 68.70cr loss to exchequer!

NEW DELHI: SIS Live, the British firm which was awarded telecast rights for the Commonwealth Games by national broadcaster Prasar Bharati, signed an almost ‘photostat’ agreement, outsourcing the telecast to Zoom Ltd, an Indian company, on the very day it inked the deal with Prasar Bharati.

The national broadcaster had awarded telecast rights to SIS Live for Rs 246 crore, sighting its expertise in specialised, high-definition service. SIS Live, however, violated the contract by outsourcing the rights to Zoom Ltd.
Copies of both contracts signed on the same day, March 5, 2010, is in possession of ET. The value of SIS Live’s contract with Zoom Ltd is worth Rs 177.30 crore. In other words, if Prasar Bharati had directly signed a deal with Zoom Ltd, it would have saved Rs 68.70 crore.

Efforts to contact Prasar Bharati CEO B S Lalli on the matter proved futile. An SMS sent to him also failed to elicit any response.

Both contracts are identical, with a few changes thrown in the SIS Live-Zoom document. What makes the pacts odd is a common person, Mr Vaseem A Dehlvi, who takes two different roles in the contracts. He is shown as a witness in the Prasar Bharati-SIS Live contract, but signs the SIS Live-Zoom deal, as Zoom’s authorised representative, lending credence to the charge that SIS Live was just a front company for Zoom to secure telecast rights, while someone pocketed Rs 68.70 crore.

Mr Dehlvi had also appended his signatures on invoices raised on Doordarshan, the arm of Prasar Bharati, as resident director of SIS Live.

Clause 14 of the Prasar Bharati-SIS Live deal made it amply clear that the “entity (the British firm) shall not assign or transfer the contract or any part thereof, but the HB (host broadcaster) acknowledges that the entity will utilise sub-contractors/production associates for the performance of the services”. As it turned out, the entire telecast rights were subsequently transferred by SIS Live to Zoom. Appendix A of the second deal outlines the overall functions of Zoom — generation of basic feed, broadcast venue operations and services, and training.

“If all these operations were to be outsourced by SIS Live, what was the point in awarding the contract to it in the first place,” asked a senior Prasar Bharati official. Soon after Doordarshan-SIS Live deal was clinched, Prasar Bharati acted with alacrity in releasing the entire contractual amount of Rs 246 crore to SIS Live, which transferred a major portion of it immediately out of India, raising question marks about its real intentions.

The I-T department started inquiring into the deal after it got to know of the matter. It issued an order of attachment under Section 281 B of the IT Act (done on the basis of apprehension that the assessee would not remain within India and thus it was necessary to complete the assessment with the aim of collecting tax) directing Prasar Bharati to attach the contract amount not yet released to SIS Live.

The order was withdrawn a day later, citing revised/modified certificate issued under Section 197 of the I-T Act. The order, issued by the international taxation wing of the income-tax department, is quite revealing. A survey conducted by the assessing officer, DDIT, Circle 2(2), international taxation, New Delhi, on October 5, found that “no bills and vouchers of expenses incurred and books of accounts were found in the premises and the assessee could not explain where the same were being maintained. Hence, in the absence of books of accounts and bills and vouchers, it could not be established that the expenses claimed by SIS Live are true and accurate and whether the premises which was being used by the assessee constituted a permanent establishment of the assessee”.

“In such a scenario, the assessee firm is likely to receive 90% of the amount by October 31, 2010, whereas its books of accounts along with relevant bills and vouchers for expenses are neither available nor traceable till the date of survey or even a day after that,” the order added.

That being the case, the department, after factoring in the I-T Act and the Double Taxation Avoidance Act with the UK, fixed a rate of 11.78% to be levied on the gross receipts of Rs 246 crore. Prasar Bharati was accordingly directed to deduct Rs 29 crore from the amount paid to SIS Live.