Interest claimed by Shaw Wallace on inter-corporate deposits and the material evidences collected by the income tax department on the basis of searches on Kishore Chhabria, (former SWC managing director and estranged brother of chairman M R Chhabria) in 1995, together account for a major chunk of the additional Rs 220 crore claim made by the department in its 10-year (1986-96) block assessment report of the company.
IT sources said the assessment wing of the department has disallowed interest claimed by the company on inter-corporate deposits totalling approximately Rs 90 crore. This had not been included in the appraisal report prepared by the departments investigation wing earlier this year, following country-wide raids carried out by the authorities in August last year.
The appraisal report had pegged the level of concealed income at Rs 80 crore. The 10-year block assessment report has made a tax demand of Rs 179 crore against the alleged concealment of income totalling Rs 298.4 crore. The report was sent to SWC Calcutta headquarters on November 29.
Besides the above, an estimated Rs 70 crore has been disallowed on the basis of papers seized during an earlier raid on K R Chhabrias premises.
Sources said this relates to funds taken out of the company ostensibly for business purposes. K R Chhabria had been raided by the department in 1995 and vital documents had been seized, which have become valuable evidences for this assessment. K R Chhabria served as managing director of Shaw Wallace & Co between 1988 and 1992.
This brings the companys total liabilities to over Rs 600 crore, including Rs 387 crore as intercorporate deposits, a pending Rs 25 crore income tax claim and a pending Rs 80 crore Fera contravention case.
The preliminary appraisal report prepared after country-wide raids pertain to investigations relating to commission payments not made to distributors, inflated advertising expenses, false depreciation claims, non-existent investments in six Guwahati companies, receipt of money under the garb of intercorporate deposits related to the sale of properties and investments and interest receivables on account of loans given to subsidiary companies.
