DLF to pay Income Tax on additional 1,200 Crore Taxable Income

Income Tax department of India has found additional Rs. 1,200 Crore taxable income in accounts of Real Estate Gaint of India, DLF Limited. IT department after a special investigation, issued DLF limited a directive in this regard. This investigation was done for FY 2006 account books.

Even after DLF challenges the order by approaching appellate authorities, it still round off to 300-400 crores as added income tax for the year 2005-2006.

This audition of DLF's income for financial year 2005-2006 is a fallout of special audit report of Income Tax Department. Actually in 2006, there was a change in accounting rules for construction and real estate development companies. In this change, the “complete contract method” was changed to “percentage of completion method (PoCM)” recommended by Institution of Chartered Accounts. This implied recognition of revenue vis-à-vis the progress in construction.

DLF mentioned in its statement to Stock Exchange, that they plans to challenge the order of Income Tax Department about additional tax. Their statement was:

"The company has got an expert opinion on the enhanced taxable income and is confident that this addition will not be sustained by the appellate authorities. In an unlikely event, if the said order is not reversed by the appellate authorities, then it can result in a contingent liability of about Rs 300 to Rs 400 crore."