Return
to Story Page
To print: Select File and then Print from your
browser's menu
Arpan Mukherjee
CALCUTTA, Sept 8: Tata Chemicals has appealed to the appellate authority against an income-tax assessment of Rs 251 crore levied on the interest on borrowings used for capital expenditure and which have been capitalised by the company.
The company has pointed out that, for tax purposes, it treated all interest on borrowings as deductible expenditure and provision for taxation is being made on such basis.
The income-tax department has disallowed the depreciation on interest for the period between 1991-92 and 1994-95. The assets have been put to use during the year to March 31, 1995.
The company's statutory auditors, SB Billimoria and NM Raiji & Co, have noted in their report that the company has not made adjustments of around Rs 225 crore in respect of calculation of its revenue for its fertiliser prices. The estimated retention price calculated by the company is more than the provisional retention price. However, the final notification on the retention price is still pending.
Tata Chemicals reported anet profit of Rs 288.55 crore for the year to March 31, 1998, on a total income of Rs 1661.50 crore. The total turnover includes an investment income of Rs 13.15 crore, chiefly comprising dividend income of Rs 11.20 crore and dividend from subsidiary company of Rs 1.32 crore.
The board has recommended a 65 per cent dividend (Rs 6.50 per Rs 10 share) and the total dividend payout will be 117.42 crore and a tax component on the proposed of Rs 11.74 crore.
The company has proposed amendments in its articles of association for share buyback, issuing of shares without voting rights, dematerialisation of securities and introduction of employee's stock option scheme. These will require the shareholders' approval at the forthcoming 59th annual genarl meeting on September 17.
According to the company's annual report, it follows the practice of capitalising in its account all interest on borrowings used for capital expenditure for the period up to the date on which the asset is put to use. The tax claims as onMarch 31, 1997, was Rs 204.73 crore for the period between 1991-92 and 1994-95 against Rs 155.28 crore in 1995-96. The claim has now been increased to Rs 250.93 crore as on March 31, 1998.
The schedules to the balance sheet note that the company has filed appeals against the assessment orders.
The notification on the final retention price of uera is still awaited. The company has calculated the revenue for two years -- 1994-95 and 1995-96 -- based on the actual cost data submitted to the Fertiliser Industry Coordination Committee. However, the provisional retention price is lower than the estimated price by Rs 197 crore.
The company has noted that, in the event of the income-tax claims being upheld, the contingency reserve/ general reserve "are adequate to take care of any such contingencies".
In addition to this, Rs 29.84 crore has been claimed on account of escalation of input costs and interest subsidy in terms of pricing policy. The issue is in abeyance since the government is yet to issue thefinal notification.
The auditors have pointed out that: "...pending finalisation of the final retention price by the government no adjustment is made for Rs 197 crores recognised as revenue in the past years as indicated..." and also "...claims for escalation in input costs and interest subisdy amounting to Rs 29.84 crores accounted pending final issuance of government notifications..."
They noted that the consequential impact on the profit and the reserves cannot be ascertained on account of uncertainties associated with the fixation of the final Retention Price.
According to fertiliser industry experts, the final retention price is usually close to the figures calculated the companies in line with the FICC norms.
The company has capitalised Rs 8.18 crore for conversion of foreign-currency loans and liabilities contracted for acquiring fixed assets. It also availed itself of sales tax benefit of Rs 48.94 crore under the metropolitan scheme of the Gujarat government. The final notification is stillawaited.
According to the notes to the balance sheet, the management has paid an interim relief effective January 1, 1996, to its recognised union amounting to Rs 4.17 crore. It said that provision has not been made in the accounts since final demand is still to be ascertained.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
------------------------------------------------------------
This story was printed from Net Express located at http://www.expressindia.com. Net Express provides a portal to India, with news from The Indian Express and The Financial Express along with sites on travel and tourism, the entertainment industry, the power sector, the environment and much more.
------------------------------------------------------------