Volcker gets Reliance into tax net

New Delhi: The Finance Ministry will independently scrutinise whether there are any tax violations by the 125 Indian companies named by the Volcker committee report including India?s biggest private sector Reliance Industries.

According the Finance Ministry, there is no formal probe but it will look into the tax returns of the 125 companies in the normal course to see whether there is any violation.

The Indian companies are named by the Volcker committee for allegedly paying kickbacks to the Saddam Hussein under oil-for-food skim.

The companies, which have been named in the report are Reliance Industries, STC, Kirloskar Engines, Ajanta Pharma, Mohan Exports, L T Overseas Ltd, Jord Engineers, National Electrical Industry, Jain Irrigantion Systems, Lucky Exports and Airpac Exports.

These are among the 2,400 firms from all over the world, who have allegedly made illegal payments totaling to $1.8 billion to the then Saddam Government.

The officials at the Finance Ministry say that the ministry is trying to ascertain whether there were any tax violations by the corporates named in the Volcker report.

The ministry will also try to determine whether payments made to the Saddam Hussein regime violated Foriegn Exchange rules. This will be independent of the judicial probe by Former Chief Justice R S Pathak into Volcker's findings.

However corporates are denying that there has been a breach of law.

According to Anil Aggarwal, chairman, Sterlite Industries, "no Indian company received undue benefit and that there has been no violations."

Tax experts say that the Income Tax Act allows deduction of business expenditure that is not of a capital or personal nature.

It is not clear whether payments made to the Saddam regime can be termed kickbacks and whether they are deductible as business expenses.

Meanwhile, the UN will examine future relationships with Indian companies that have been named in the Volcker Commission report.

This was stated to IBN by UN Undersecretary General Shashi Tharoor on Monday.

Tharoor is currently in the city to give a series of lectures.

While applauding the steps taken by the Indian government in response to the allegations made at Former Foreign Minister Natwar Singh, Tharoor said that the UN will also help Indian officials liase with members of the Volcker commission.