I-T dept raids 12 HDIL premises

MUMBAI: The Income-tax department on Thursday raided 12 premises of HDIL, a Mumbai-based real estate developer, and questioned HDIL on three issues. According to an I-T source, one of the questions raised was in connection with claims made under Sections 80 IB (10)(c) of the I-T Act, a provision that allows tax benefits to a developer of residential apartments with an area of 1,000 sq ft or less. This is the second instance that HDIL���s premises have been raided by the I-T officials; the earlier raid was in 2007.

The second allegation pertains to the diversion of funds from the company, while the third relates to HDIL���s transaction with IL&FS. HDIL recently acquired 53 acres from IL&FS for Rs 1,900 crore. Hari Prakash Pandey, CFO, HDIL, who was in New York, said: ���I am not aware of any such (the three points raised by the I-T officials) thing.

I did talk to HDIL officials in Mumbai and they did not mention anything of that sort to us, I do not think that the ground for investigation relates to these areas.��� HDIL officials were questioned under Section 80 IB (10)(c), which refers to the ���deduction in respect of profits and gains from certain industrial undertakings other than infrastructure development undertakings.���

Under this section, a developer gets some I-T deductions on residential apartments that have a maximum area of 1,000 sq ft in Mumbai and New Delhi and less than 1,500 sq ft for other cities. The I-T department believes that HDIL sold bigger apartments and still managed to get deduction under this section.

Elaborating on the issue, an I-T official said: ���HDIL allegedly sold 2,000 sq ft apartments, but showed them as two 1,000 sq ft apartments and took the deduction on profit. As a result, they are not paying income tax that they were supposed to pay.��� HDIL has denied this allegation.

I-T officials, under the provisions of the I-T Act, are not obliged to convey to the investigated party any specific reason for conducting a raid. Any I-T raid requires prior approval of the director (investigation) and the director general (investigation). The HDIL stock fell 3.85% or Rs 12.35 on Thursday to close at Rs 308.

I-T officials, on Thursday, also surveyed Dewan Housing Finance Corporation (DHFL), a company owned by Kapil Wadhawan, though no raids were conducted. Mr Wadhawan, till recently, was on the board of HDIL. Both HDIL and DHFL are a part of the Wadhawan group.