Comptroller and Auditor General of India has pulled up Indian Railway subsidiaries, IRFC, for paying additional tax due to erroneous computation of taxable income and RITES for irregular expenditure on foreign travel.
"Audit scrutiny in the case of Indian Railway Finance Corporation for the assessment year 1997-98 revealed that while calculating the book profits, amounts of Rs 60.83 crore and Rs 3.63 crore on account of provisions made for bad and doubtful debts and diminution in the value of investments respectively during the financial year 1996-97 were not added to the net profits as required under the Income Tax Act," the CAG said adding consequently the taxable income as shown in the return of income was understated by Rs 19.34 crore. The company also failed to pay correct amount of advance tax on the due dates, it said.

Thus, while processing and assessing the return, prima facie adjustments were made and on account of incorrect disclosure of income and short and deferred payment of advance tax, IRFC had to pay additional tax and interest aggregating Rs 7.60 crore, the CAG said.

About RITES, it said the company failed in regulating foreign travel claims in accordance with the instructions of the Department of Public Enterprises which resulted in irregular payment of Rs 95.02 lakhs to the officials during the period from March 1996 to July 1998.
Bureau Report