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

Changing weather patterns, climate change responsible for Nepal floods

The interaction between active Western Disturbances, increased atmospheric moisture and the region’s complex topography aswell as global warming are important factors behind intense rainfall in the Himalayas, leading to flash floods in Nepal, according to meteorologists. Nepal

A right she cannot reach

Last summer, the two of us spent several weeks in rural Madhya Pradesh with a non-profit that works on gender justice through women’s self-help groups. We went in with a notebook full of laws. The Protection of Women from Domestic Violence Act. The Dowry Prohibition Act. Free legal aid for every wo

Tier-2 cities lead India’s digital credit push

Digital payments have become a reflex for urban India, but the confidence earned in paying has not yet carried over to borrowing. That is the central finding of `How Urban India Pays Report 2026`, released by Pahlé India Foundation in collaboration with Amazon Pay. Based on a survey of 5,149 consu

India calls for doubling bilateral trade with UK by 2030

Commerce and industry minister Piyush Goyal has called upon businesses in India and the United Kingdom to translate the opportunities created by the India-UK Comprehensive Economic and Trade Agreement (CETA) into expanded trade, investment, partnerships and job creation. Addressing the Bu

Gandhian movement after Gandhi failed: Ram Guha

The Gandhian movement in India, after Gandhi’s death, failed, says Ramachandra Guha, and blames Vinoba Bhave for it. But the movement found new, fertile grounds around the world and succeeded in bringing about a change in South Africa, the US and elsewhere. It is high time it returned home. Of cour

When religion, politics and Bollywood come together

Tavleen Singh, noted journalist and political commentator, has turned to fiction, with her debut novel ‘The Actor’ (HaperCollins India). Set in the near future, it has a superstar, Amit Singh, turning to politics, when the political landscape is dominated by prime minister Guru Gaynendraj