The Government auditor CAG today said that the Income Tax Department has granted irregular benefits to the infrastructure companies without verification, which resulted in resulted in a loss of 4500 crores to the Revenue.
“Central Board of Direct Taxes (CBDT) did not have any established mechanism to assess the impact of revenue foregone on account of deductions under Section 80 IA of the Income Tax Act on the economy and industrial growth of the country”
The CAG has revealed the list of companies who availed this benefits. Reportedly, Rs 1,766.74 crore tax benefit availed by Reliance Ports & Terminals Ltd for construction of captive jetties at Port Sikka in Bihar. JSW Energy (Rs 340 crore), Reliance Infrastructure (Rs 51.88 crore), Tata Power (Rs 36.99 crore) and Gujarat Fluro Chemicals (Rs 22.75 crore) are the other companies in the list.
“There is no existing system to ascertain from the sponsoring ministries as to whether the tax holidays have had the desired impact on the growth of the economy,” CAG said. According to it, in the absence of such a mechanism it is difficult to the auditor to ascertain whether the very purpose of tax holidays has been achieved.
CAG, in its performance audit of the Revenue Department, mentioned that CBDT may evolve a mechanism for proper linkage between tax benefit allowed by the I-T department with the actual investment made by the assessee to assess the impact of tax holiday. The government provides tax holiday to companies under Section 80 IA for deduction in respect of profits and gains of companies engaged in infrastructure development at 100 per cent for a certain period.This is with an aim to encourage investment in infrastructure.The report which is based on test audit conducted by CAG between 2012-13 and 2014-15, is currently tabled in the Parliament.
