Govt orders special audit of DLF accounts

DLF Ltd. | Construction - Real Estate | Construction & Infrastructure | BSE: 532868 | NSE: DLF

26 Feb 2009 Evaluate

The government has ordered a special audit of the accounts of the real estate giant DLF and would take necessary action after scrutiny. A special audit under section 142(2A) of the I-T Act has been ordered in the case of DLF for the assessment year 2006-07. The Income-Tax department can order a special audit of the accounts of a company or individual under Section 142 (2A) of the Income-Tax Act in the interest of revenue.

According to the company official, who did not wish to be identified, the FY2005-06 (assessment year 2006-07) was the first year in which DLF revised accounting standards as prescribed by ICAI as it had to go public. As per these standards, DLF started using Percentage of Completion Method for recognising revenues, and consequently, the profits. Prior to this, all accounts were prepared in accordance with Indian GAAP.

This accounting change led to DLF recognising an additional profit of Rs 314 crore, resulting in taxable income of Rs 334 crore (for DLF as a standalone entity). DLF (as a standalone entity) paid tax of Rs 114 crore on the same, and this was more than the tax paid by the company in the past years.crack crack