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IT dept says DLF diverted funds, questions role of auditors

IT dept says DLF diverted funds, questions role of auditors
PTI
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First Published: Sun, May 24 2009. 04 14 PM IST
Updated: Sun, May 24 2009. 04 14 PM IST
New Delhi: The I-T authorities have slapped a tax liability of Rs300-400 crore on realty leader DLF over what they called understatement of income and fund diversion by the company.
The liability was raised after a special audit by the Income Tax department in the accounts of DLF for the year 2005-06.
With the kind of discrepancies found in the books of the company, it appears that the auditor of the company has not done its job properly, sources said.
A written query e-mailed to the company remained unanswered.
The company, sources said, took loans from banks for some residential and shopping mall projects but diverted the funds to subsidiaries which essentially were involved in land bank building. This activity led to an addition of Rs120 crore to the taxable income head of the company.
The action is in violation of Section 58-A of the Companies Act and also the agreement between the banks which gave loans. Among bankers which have given loans to the company are ICICI Bank, ABN Amro, GE Finance and Citibank.
Tax authorities have also claimed that Rs230 crore which DLF took from subsidiaries (DLF has about 900 of these) should be deemed as taxable income and not loans as claimed by the company.
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First Published: Sun, May 24 2009. 04 14 PM IST