Income tax department irregularly allowed deductions: CAG -Governance Now

Income tax department irregularly allowed deductions: CAG

The income tax department irregularly allowed deduction to assessees in 19 cases in eight states in respect of income earned through sale of carbon credit

GN Bureau | November 23, 2016

#carbon credit #Income Tax department #CAG #infrastructure

The income tax department irregularly allowed deduction to assessees in 33 cases across 13 states in respect of infrastructure developed by joint venture formed by collaboration with foreign companies, undertakings owned by association of persons (AOPs), assessees who did not enter into agreement with the government, non-compliant industrial park and excluded works contractors. This resulted in underassessment of income involving tax effect of Rs 205.84 crore, observed the CAG.

The Comptroller and Auditor General (CAG) report on allowance of deduction to the assessees engaged in infrastructure development said that the ITD irregularly allowed deduction to assesses in 16 cases in eight states where the business of the assessees such as sale of plots, projects not covered under infrastructural facilities, conversion charges, development/maintenance of park etc, were not eligible for the deduction. This resulted in underassessment of income involving tax effect of Rs 174.35 crore.

The report also noted that the income tax department irregularly allowed deduction to assessees in 19 cases in eight states in respect of income earned through sale of carbon credit which involved tax effect of Rs 34.77 crore.

“The ITD irregularly considered additions made on account of treatment of expenditure as revenue, sale of fixed assets, disallowance made u/s 40A(3) 14A, 40(a) etc., for deduction in nine cases in five states. Consequently, the allowances were more than the amount claimed by the assessee involving consequential tax effect of Rs 74.66 crore.

“The ITD irregularly allowed deduction to assessees in eight cases in two states in respect of profits derived from ‘Railway Sidings/Jetties’ constructed and operated by the assessees for their private purposes, which did not qualify to be treated as infrastructure facilities in terms of Explanation to section 80 IA(4). Irregular allowance of deduction attracted tax effect of Rs 2066.70 crore.”

The report went on to say that the ITD irregularly allowed deduction to assessees in six cases in four states for the period beyond the permissible limit of 10 consecutive assessment years, starting from the declared initial assessment year. Incorrect allowance of deductions resulted in underassessment of income involving tax effect of Rs 859.47 crore.

“The ITD irregularly allowed deduction to assessees in 15 cases in eight states where the assessee did not apportion the common expenses between eligible and non eligible units properly which resulted in excess allowance of deduction involving tax effect of Rs 224.47 crore.”

Read the full CAG report here

Comments

Other News

Maha Mumbai Metro launches WhatsApp-based ticketing

Maha Mumbai Metro Operations Corporation Ltd (MMMOCL) has launched a WhatsApp-based ticketing service. The service, available on Metro Lines 2A and 7, allows commuters to purchase tickets directly through WhatsApp, eliminating the need for paper tickets and providing a seamless, user-friendly experience.

Navi Mumbai airport: Runway trial successful

An Indian Air Force (IAF) transport carrier C295 landed at the southern runway 26, marking the formal launch of the new airport of Mumbai Metropolitan Region (MMR) on Friday. The aircraft touched down on the newly completed 3,700-metre runway at 12.14 pm, the airport operator said. The landi

‘Those who know dharma say truth is the highest dharma’

As Ramlila performances in north India are winding up and we celebrate Dussehra, the victory of good over evil, here is a unique retelling of Valmiki`s Ramayana.

Nation bids farewell to Ratan Tata

It is the end of an era with Ratan Tata’s passing away. The former chairman of Tata Sons died of age-related illnesses at the Breach Candy Hospital in Mumbai late Wednesday. He was 86. A titan among the captains of industry, Tata steered the mighty Tata Group from the days of old econo

A trip to the future, with AI visionary Kurzweil

The Singularity is Nearer: When We Merge with AI By Ray Kurzweil Bodley Head/ Penguin, 425 pages Ray

Election Results: NC-Cong leads in J&K, BJP in Haryana

The vote counting on Tuesday after the assembly elections of Jammu & Kashmir and Haryana has been mostly on predictable lines, except for a twist: in J&K, as expected, the National Conference in alliance with the Congress is on the way to securing a creditable mandate, but in Haryana the BJP is pro