The Union Ministry of Finance has agreed to refund to the Chandigarh Housing Board (CHB) the penalty imposed on it by the Income Tax Department for the “income” generated on the money received from Parsvnath for a residential project at the IT Park here.
In a series of meetings with the Ministry of Home Affairs and the Ministry of Finance, UT officials pleaded that since the Parsvnath project had been cancelled as part of a settlement deal, with the CHB refunding Rs 572 to the builder, the issue of paying income tax on the income seized to exist.
After the deal was signed between the CHB and Parsvnath for a residential project in 2005, the Income Tax Department had asked the CHB to pay tax on the income generated from the money received for the project. On several occasions, income tax sleuths had raided CHB offices and sealed their bank accounts.
The Income Tax Department has slapped a penalty of nearly Rs 300 crore on the CHB for not disclosing as “income” the money received from Parsvnath. A part of the money was deposited by the CHB with the department. The CHB maintained that it acted only as a nodal agency and a major portion of the money received by it from the deal was deposited with the Consolidated Fund of India as the money belonged to the Chandigarh Administration.
Following the cancellation of the deal with Parsavnath under which the CHB refunded Rs 572 crore to the builder, the board took up the case of unsealing its accounts and refund of Rs 107 crore that was levied on it by the Income Tax Department as tax on the financial transaction between the builder and the board.