Chettinad Group evaded tax to the tune of Rs 700 crore: I-T

Business conglomerate Chettinad Group, which has interests in cement, healthcare, and logistics, has evaded income to the tune of over Rs 700 crore, the Income Tax department said on Tuesday, following raids at premises owned by the company.

The group may also face action under the Black Money Act as Income Tax sleuths have found foreign assets to the extent of Rs 110 crore in the form of fixed deposits, which were not disclosed in the returns filed by the company.

During the raids conducted last week in over 60 locations, including in Chennai, Coimbatore, Tiruchirapalli, and Bengaluru, the Income Tax officials also recovered unaccounted cash of Rs 23 crore, besides various other documents that throw light on the group’s investments.

Though the Income Tax department has not named the company publicly, sources identified it as Chettinad Group. The group, which is over 100 years old, is currently helmed by M A M R Muthiah, the adopted son of late M A M Ramaswamy, a well-known philanthropist, and sports enthusiast.

Raids at the premises owned by Chettinad Group were conducted on December 9, including at the conglomerate’s head office at the arterial Anna Salai overlooking the iconic Gemini flyover in Chennai. Income Tax department officials said the search has been temporarily concluded and investigations are still in progress.

“Inflation of expenditure to take out cash and also to reduce profits, receipts not accounted fully, the bogus claim of depreciation, etc. amounting to Rs. 435 crore were also identified. There are indications of capitation fee receipts for medical admissions to postgraduate programmes,” the I-T department said in a statement on Tuesday, almost a week after conducting the raids. The group owns a medical college in Chennai.

During the search, details of the actual financial transaction between the searched group and another group for the sale of three infrastructure facilities at various ports were found.

Complex financial arrangements creating bogus liabilities from their own concerns were also seen to be made, ostensibly, to reduce the capital gains arising out of the transfer, I-T officials said, adding the capital gains have been calculated as Rs 280 crore.

“Similarly, huge capital introduction through a web of bogus inter corporate transactions within the group is also under the scanner. A large number of lockers belonging to the group have been identified, which will be operated in due course. As of now, the Department has succeeded in detecting evasion of income of over Rs. 700 crore,” the statement added.

The Chettinad Group began its journey in 1912 after it was launched by its founder Dr. Raja Sir Annamalai Chettiar. It was then led by Dr Raja Sir Muthiah Chettiar, who handed over the reins to Dr M A M Ramaswamy, who in turn passed on the baton to M A M R Muthiah.

From cement to healthcare to transportation to coal terminal, the Chettinad Group is one of the oldest home-grown business conglomerates in Tamil Nadu.