I-T dept orders special audit of DLF accounts
The Economic Times, February 26, 2009, Page 12
Our Bureau NEW DELHI
THE Income-Tax department has ordered a special audit of the accounts of DLF and would take necessary action after scrutiny, minister of state for finance S S Palanimanickam said on Wednesday.
“A special audit under section 142(2A) of the I-T Act has been ordered in the case of Delhi Lease and Financing Ltd, also known as DLF, for the assessment year 2006-07,” the minister said. As per the minister, the audit report ’is being examined’ for necessary action as laid down under the law.
The DLF spokesman said, “we would like to state that the assessment (of the audit report) is still to be done; it will be wrong to say that any action is being taken against DLF”.
As per DLF, FY 2005-06 was the first year in which DLF revised accounting standards as prescribed by ICAI because it had to go public. As per these standards, DLF started using Percentage of Completion Method (PoCM) for recognising revenues, and consequently, profits. Prior to this, all accounts were prepared in accordance with Indian GAAP.
Percentage of completion method mandates a realty company to book sales and profit proportionate to the level of construction achieved in any project in the given quarter. Earlier, developers would book sales and profits once the project was completed.
DLF said this accounting change led to DLF recognising an additional profit of Rs 314 crore, resulting in taxable income of Rs 334 crore (for DLF Limited as a standalone entity). DLF Limited (as a standalone entity) paid tax of Rs 114 crore on the same, which is more than the tax paid by the company in the past years.’’
Under the I-T law, in an assessment year, the tax department assesses income of preceding financial year.
Co raises Rs 2,000cr to repay short loans
DLF, India’s largest listed property developer by market cap, has raised over Rs 2,000 crore in debt from PNB, LIC, SBI and Bank of India in the past one month to repay short-term debt, a company official said. The company had earlier raised Rs 1,000 crore in debt from PNB in the December quarter, reports Sanjeev Choudhary from New Delhi. In all, the company has borrowed Rs 1,700 crore from Punjab National Bank, Rs 350 crore from State Bank of India, Rs 220 crore from Bank of India and Rs 720 crore through sale of nonconvertible debentures to LIC in the past three months. All these loans are long-term loans for a period exceeding three years and at an average rate of interest of 14%.
The Economic Times, February 26, 2009, Page 12
Our Bureau NEW DELHI
THE Income-Tax department has ordered a special audit of the accounts of DLF and would take necessary action after scrutiny, minister of state for finance S S Palanimanickam said on Wednesday.
“A special audit under section 142(2A) of the I-T Act has been ordered in the case of Delhi Lease and Financing Ltd, also known as DLF, for the assessment year 2006-07,” the minister said. As per the minister, the audit report ’is being examined’ for necessary action as laid down under the law.
The DLF spokesman said, “we would like to state that the assessment (of the audit report) is still to be done; it will be wrong to say that any action is being taken against DLF”.
As per DLF, FY 2005-06 was the first year in which DLF revised accounting standards as prescribed by ICAI because it had to go public. As per these standards, DLF started using Percentage of Completion Method (PoCM) for recognising revenues, and consequently, profits. Prior to this, all accounts were prepared in accordance with Indian GAAP.
Percentage of completion method mandates a realty company to book sales and profit proportionate to the level of construction achieved in any project in the given quarter. Earlier, developers would book sales and profits once the project was completed.
DLF said this accounting change led to DLF recognising an additional profit of Rs 314 crore, resulting in taxable income of Rs 334 crore (for DLF Limited as a standalone entity). DLF Limited (as a standalone entity) paid tax of Rs 114 crore on the same, which is more than the tax paid by the company in the past years.’’
Under the I-T law, in an assessment year, the tax department assesses income of preceding financial year.
Co raises Rs 2,000cr to repay short loans
DLF, India’s largest listed property developer by market cap, has raised over Rs 2,000 crore in debt from PNB, LIC, SBI and Bank of India in the past one month to repay short-term debt, a company official said. The company had earlier raised Rs 1,000 crore in debt from PNB in the December quarter, reports Sanjeev Choudhary from New Delhi. In all, the company has borrowed Rs 1,700 crore from Punjab National Bank, Rs 350 crore from State Bank of India, Rs 220 crore from Bank of India and Rs 720 crore through sale of nonconvertible debentures to LIC in the past three months. All these loans are long-term loans for a period exceeding three years and at an average rate of interest of 14%.
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