The income tax (I-T) department has conducted searches across premises linked to real estate developer Embassy Group in Bangalore, Gurgaon and Mumbai for alleged tax evasion.
According to people aware of the matter, the searches have been conducted across as many as 50 offices of Embassy Group and its affiliates.
“There were few officials across Embassy offices and promoter’s homes, but they haven’t found anything, and it looked more of a routine exercise,” mentioned one of the persons quoted above.
The income tax department is also searching premises of Indiabulls Real Estate in Mumbai’s Worli and Gurgaon area in the backdrop of its impending merger with the company.
The proposed merger has received the nod from the Competition Commission of India (CCI), the stock exchanges, and the Securities & Exchange Board of India (SEBI), and is awaiting approval from NCLT. The combined entity will be renamed Embassy Developments and will be co-headquartered in Mumbai and Bengaluru.
Following the completion of the merger, the combined listed entity will be 44.9% owned by Embassy Group, 26.2% by the existing public and institutional shareholders, 9.8% by the current IBREL promoter group and around 19.1% by the Blackstone Group and other Embassy institutional investors.
Embassy Group has an alliance with New York-headquartered WeWork to operate its co-working brand WeWork in India.
“This is a routine income tax inquiry. Embassy Group has always acted and will continue to act in accordance with the provisions of all applicable laws and regulations, while maintaining the highest standards of corporate governance. We have extended our complete compliance to the relevant authorities. We would like to assure our stakeholders that business continues as usual,” the company said in a statement.
According to tax department sources, the raids are connected with suspected irregularities in REIT floated by the company and particular issues concerning capital gain tax.
“There are tax-related queries on REIT for which the searches were conducted in Bangalore, Mumbai and Gurgaon. Transactions pertaining to capital gain tax are also being studied,” said a senior official privy to the details.
Certain documents and electronic evidence have been seized during the searches and are being evaluated. A final report will be prepared, and the same would be referred by the assessing officer while finalising the tax demand, added the official.
“There was news that around 600 income tax officials visited various offices, but that number is not true. Two officials visited the Gurgaon and Mumbai offices of Indiabulls, but they could not conduct the search, and the merger is not yet completed,” said another person mentioned above. “Embassy Group entities, including Embassy REIT, have paid direct and indirect taxes of over Rs 1,000 crore over the last two years.”
Embassy REIT owns and operates a 42.8 million square feet portfolio of eight infrastructure-like office parks and four city-center office buildings in Bangalore, Mumbai, Pune, and the National Capital Region (NCR).