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Business News/ Politics / News/  Quattrocchi, Chadha liable to pay tax on commission: tribunal
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Quattrocchi, Chadha liable to pay tax on commission: tribunal

Quattrocchi, Chadha liable to pay tax on commission: tribunal

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The ruling Congress received yet another blow with the Income Tax Appellate Tribunal concluding that commissions were paid to arms agent Win Chadha and Italian businessman Ottavio Quattrocchi in the Bofors howitzer gun deal that kicked up a national furore in the 1980s.

The tribunal, which decided on an appeal by Chadha’s son, also expressed surprise that the tax department had not proceeded against Quattrocchi and others who had received commissions on the gun deal.

The tribunal’s order, which came on 31 December, and was made public on Monday, could be politically damaging for the Congress, which is already reeling under a series of corruption charges and controversies, including the second generation (2G) telecom spectrum allocation scam that by an estimate by the Comptroller and Auditor General (CAG) has cost the national exchequer up to Rs1.76 trillion.

The tribunal, in its 98-page order, while dismissing an appeal by Chadha’s son against the income-tax department’s decision to levy tax on an undisclosed commission of Rs52.60 crore to his father for the assessment years 1987-88 and 1988-89, said: “Keeping in consideration the rival contentions, all the facts, the material available on record, the probable normal human conduct, the surrounding circumstances, the preponderance of probabilities and the legal propositions, we have no hesitation to hold that assessee received the impunged commission..."

Chadha, who died in October 2001, had been accused of receiving the commission through “M/s Svenska Incorporated, Panama," alleged to be a front company of the appellant.

The order also points out that the Indian government had to pay an excess amount of around Swedish kronor, or SEK, 242.62 million (Rs162 crore, according to the current exchange rate; Rs41 crore in 1986), which was later passed on Bofors to its agents Chadha and Quattrocchi. “Investigations revealed that W.N. Chaddha and Quattrocchi had been transferring the funds received from Bofors frequently from one account to another and from one jurisdiction to another to avoid detection and to obliterate the trail of the money," the tribunal said in the order.

The two-member bench, comprising R.C. Sharma and R.P. Tolani, held that both Win Chadha and the entities through which money was transferred as commission to Quattrocchi were liable to pay tax in India.

The order mentions that a commission of SEK 19.21 crore (Rs32.66 crore at 1986 rate) was transferred to M/s Svenska Inc., Panama, which was traced to Chadha, and was credited in an account of Swiss Bank Corp., Geneva. Similarly, Rs8.57 crore was transferred to AE Services Ltd, c/o Mayo Associates SA, Geneva, which was opened only a fortnight earlier on 20 August 1986.

“It will be politically damaging for the party in the entire atmosphere," said a Congress leader, who requested anonymity. However, the party officially said it would study the order before commenting.

However, the main opposition, which has been vehemently attacking the Congress and the United Progressive Alliance (UPA) government over the corruption allegations, demanded the Bofors pay-off case be reopened and a special investigation team (SIT) take charge of the probe.

The Central Bureau of Investigation had closed the 18-year-old case in September last year saying there was no evidence against Quattrocchi. The Bofors scandal had cost prime minister Rajiv Gandhi-led Congress heavily in the 1989 Lok Sabha elections, when it was ousted.

“The fraud perpetuated by the CBI, which said no kickbacks and bribes had been paid, was at the behest of the Congress, and it now stands unravelled," said Arun Jaitley, leader of opposition in the Rajya Sabha.

The Congress leader quoted earlier maintained that the party was never against charging Quattrocchi, alleged to be close to Congress president Sonia Gandhi and her family, but wanted to ensure that the party and former prime minister Rajiv Gandhi’s name remain in the clear.

CBI had failed on two occasions in its attempt to extradite Quattrocchi—first from Malaysia in 2003, and then from Argentina in 2007.

In November 2009, the agency had asked the Interpol to take Quattrocchi’s name off the Red Corner notice.

The Interpol Red Corner notice is an international arrest warrant.

liz.m@livemint.com

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Published: 03 Jan 2011, 10:38 PM IST
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