Mumbai:

In his affidavit filed before the court, I-T assistant commissioner J M Kadrekar said Twinstar Holding held 100-per cent shares in three investment companies — Dwarkaprasad Anilkumar Investment Pvt Ltd, Pravin Naveen Investment and Trading Company Ltd, and Sterlite Copper Rolling Mills Pvt Ltd.

The I-T affidavit said Dwarkaprasad Anilkumar Investment owes Rs 35. 70 crore, Pravin Navin Investment owes Rs 163.60 crore while Sterlite Copper Rolling Mills Rs 24.20 crore to the department.

"A search action under section 132 was conducted on the Sterlite group on 8 December 1999 and all these investment companies which are assessed in the charge of commissioner of I-T, 3, Mumbai, were also covered by the action. The order of block assessment was passed in the case of these three investment companies and Rs 223.50 crore was determined to be payable by them," said the department. The interest under section 220(2) and penalty will further increase the amount by around Rs 267.50 crore.

The department states that if the demerger scheme is approved by the court, the shares attached by the I-T department as the revenue of SIL may undergo substantial devaluation and ultimately will have an effect on the revenue of the states. Due to the devaluation, the market price of the shares would be reduced and the very purpose of attaching the shares towards the dues of the IT would be defeated.

"These three investment companies went into voluntary liquidation and the shares of SIL and Madras Aluminium Company held by the investment companies were transmitted to Twinstar Holdings. On completion of block assessment proceedings, three voluntarily-liquidated investment companies, their directors and liquidator have refused to pay the demand raised pursuant to the order of block assessment on the pretext that all the assets of the investment companies have been transferred to the holding company, Twinstar Holdings," the department said.

It added that the department got the knowledge of the demat account in Deutsche Bank of Twinstar Holdings wherein the share of the investment companies were parked.

Therefore, in the interest of the revenue the I-T department has attached the shares by exercising the power under section 28 and section 226(5) of the IT Act, 1961. The said attachment was challenged by Twinstar Holding in the Bombay High Court and the writ petition came to be dismissed by an order dated 30 October 2002.

Twin Star Holding had moved the Supreme Court, and the apex court in a special leave petition (SLP) No 2351 of 2002 refused interim relief, but directed the department not to take further steps till the disposal of the SLP. The SLP is pending before the Supreme Court.