Searches are being carried out in 40 locations in Tamil Nadu (in Chennai and Tirunelveli) and Karnataka.

Income Tax department building in Koramangala, BengaluruIncome Tax department in Bengaluru
news I-T Wednesday, June 15, 2022 - 13:04

The Income Tax Department searched the offices and other locations pertaining to Tamil-Nadu based MGM Group on Wednesday, June 15. Searches are being carried out in 40 locations in Tamil Nadu (in Chennai and Tirunelveli) and Karnataka. The searches are being carried out as tax evasion has been suspected. The MGM Groups runs the popular theme park MGM Dizzee World in Chennai. Further details pertaining to the search and seizure are awaited. 

Apart from the famous theme park, the MGM Group has investments in logistics (MGM Anand Transport Pvt Ltd), distilleries  — Southern Agrifurane Industries and Kamal Wineries — in Tamil Nadu and Andhra Pradesh, housing, infrastructure, port handling, movie production, hotels and resorts, and more. Properties run by MGM Hotels include a beach resort on ECR, MGM Eastwoods Resort also on ECR in Chennai, and one hotel in Bengaluru’s Whitefield and in Vailankanni.

The Group was started by MG Muthu. His son MGM Maran is now the promoter and director. In April this year, the Enforcement Directorate had attached properties worth Rs 216.40 crore of Southern Agrifurane Industries Pvt Ltd (SAIPL) and its promoter, director MGM Maran and associate MGM Anand for violating the Foreign Exchange Management Act (FEMA). MGM Maran is the former chairman of the Tamilnad Mercantile Bank. MGM Anand Muthu is the Group’s Managing Director. 

In April, the ED said that seized assets are in the form of land and buildings owned by SAIPL in Tamil Nadu and Telangana, shares owned by Maran in Tamilnad Mercantile Bank Limited, shares of Indian companies SAIPL, MGM Entertainment Pvt Ltd and Anand Transport Pvt Ltd owned by Anand.

SAIPL was found to have allegedly siphoned off Indian funds of Rs 216.40 crore aboard under the garb of Overseas Direct Investments (ODI) by way of False Declarations to its AD Bank as well as by way of structuring transactions in a manner so as to send outward remittances without any bonafides and with sole objective to remove funds from India in the name of ODI without there being any genuine business reasons for SAIPL, the ED said.

Officials said that such funds had been diverted outside India under the garb of ODI with an intention to escape the clutches of Indian laws. By this way, the company siphoned off around 85% of its entire net worth abroad.

"Also, Maran had surrendered the Indian Passport in 2016 and taken 'Cyprus Passport' to become a citizen of Cyprus. In another FEMA investigation, Maran remained totally non-compliant to the proceedings and did not attend ED office even once, in-spite of multiple summons and did not submit any of his foreign assets details, resulting into another seizure order of his Indian Assets worth Rs 293 crore in the month of December 2021," said the ED official.

In December 2021 too, the ED had seized assets worth Rs 293.91 crore belonging to MGM Maran under FEMA. Then too, the ED had said the seized assets were in the form of shareholdings in four companies — the Southern Agrifurane Industries Private Ltd, Anand Transport Private Ltd, MGM Entertainment Private Ltd, and MGM Diamond Beach Resorts Private Ltd. Three of the companies are unlisted entities.

The ED said Maran had incorporated two companies in Singapore during 2005-06 and 2006-07 and invested Singapore $5,29,86,250 equivalent to Indian Rs 293.91 crore, but the investment was made without Reserve Bank of India's (RBI) permission and non-disclosure to Indian regulators.

With IANS inputs

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