If this is happening to DLF, it must be happening to other projects in Bangalore as well. I heard that another project, Mantri Magnolia has been cancelled as well and Mantri is asking buyers to apply for refunds. So much for projects pending approval. The good old days for the builders are over. Deccan Chronicle reports
The country’s biggest realty company, DLF, has been thrust into two unexpected battles. The income-tax authorities have slapped a demand of Rs 400 crore on it. And the Bangalore civic body has issued a public warning that a large DLF project in the city does not have its sanction.
The tax demand, which will be appealed against by the company, arose out of a special audit of DLF’s accounts for 2005-06. A special auditor, appointed by the income-tax department for the purpose, came to the conclusion that the company had earned about Rs 1,200 crore over and above what it had declared in its returns.
The company itself notified the Bombay Stock Exchange about the new tax demand. Ramesh Sanka, group CFO, in a signed statement to the exchange, said, “On May 6, 2009, the assessing officer, pursuant to the audit and assessment proceeding, has issued an assessment order adding…. most of the amount suggested by the special audit report.”
Sanka, speaking to Financial Chronicle, said the company would contest the claim within 90 days, as provided for in the law.
In the statement to BSE, later reiterated by Sanka to FC, DLF said that the root of the extra tax demand lay in the change in accounting method that the company made in 2005-06.
The new method, prescribed by the Institute of Chartered Accountants of India, requires real estate developers and construction companies to switch over from the “conveyancing method” to the “percentage of completion method” (PoCM) for computing revenues and profits.
Sanka said that the company had used the PoCM method in the following years also.
More bad news awaited the company in Bangalore. The Bruhat Bengaluru Mahanagara Palike (BBMP) took out advertisements in newspapers on Thursday, saying the DLF had not obtained its approval or sanction for the Westend Heights project in the city.
Asserting that it was the only competent authority to sanction building plans in the city, BBMP said, “Prospective buyers are advised against purchase of such illegal apartments which are liable for all lawful action that will be initiated, including demolition.”
The BBMP action was an obvious response to advertisements that DLF took out three weeks ago, announcing the sale of apartments in the project, on Bannerghatta Road, at Rs 1,850 per sq ft.
DLF’s homes head for Karnataka, Anantha Naarayanan, told FC that his company had already pre-sold 600 of the 1,000 apartments planned in the 27-acre project for which the outlay would be Rs 400 crore. Construction is yet to begin.
In the advertisement, DLF claimed to have obtained the approval of the Bangalore Development Authority (BDA) for four floors. BBMP officials said the DLF advertisement showed an elevation of 18 floors.
S Subramanya, BBMP commissioner, told FC “it’s clear that people are being taken for a ride”.
BBMP warned that the owners of Westend Heights apartments would not be given occupancy certificates.
Subramanya said he expected DLF to cover BBMP’s advertisement costs and apply for sanction in the proper route.
In a statement DLF claimed that it obtained approvals for the developmental plan of the project through its subsidiary, Annabel Builders & Developers, for S+4 level from BDA. “Construction on the project has not yet commenced and will begin only after obtaining detailed plan approvals from BBMP and other relevant clearances…. The allegations of illegality made in BBMP… are incorrect.”
One of DLF’s customers, Pradeep Jain, said, “I had booked a flat on the sixth floor in. DLF then clearly said that it would get the approval for four floors by May and that for the sixth floor by November. Today when I called the company, it said it had obtained clearance for four floors and would mail me the clearance certificate.”
The country’s biggest realty company, DLF, has been thrust into two unexpected battles. The income-tax authorities have slapped a demand of Rs 400 crore on it. And the Bangalore civic body has issued a public warning that a large DLF project in the city does not have its sanction.
The tax demand, which will be appealed against by the company, arose out of a special audit of DLF’s accounts for 2005-06. A special auditor, appointed by the income-tax department for the purpose, came to the conclusion that the company had earned about Rs 1,200 crore over and above what it had declared in its returns.
The company itself notified the Bombay Stock Exchange about the new tax demand. Ramesh Sanka, group CFO, in a signed statement to the exchange, said, “On May 6, 2009, the assessing officer, pursuant to the audit and assessment proceeding, has issued an assessment order adding…. most of the amount suggested by the special audit report.”
Sanka, speaking to Financial Chronicle, said the company would contest the claim within 90 days, as provided for in the law.
In the statement to BSE, later reiterated by Sanka to FC, DLF said that the root of the extra tax demand lay in the change in accounting method that the company made in 2005-06.
The new method, prescribed by the Institute of Chartered Accountants of India, requires real estate developers and construction companies to switch over from the “conveyancing method” to the “percentage of completion method” (PoCM) for computing revenues and profits.
Sanka said that the company had used the PoCM method in the following years also.
More bad news awaited the company in Bangalore. The Bruhat Bengaluru Mahanagara Palike (BBMP) took out advertisements in newspapers on Thursday, saying the DLF had not obtained its approval or sanction for the Westend Heights project in the city.
Asserting that it was the only competent authority to sanction building plans in the city, BBMP said, “Prospective buyers are advised against purchase of such illegal apartments which are liable for all lawful action that will be initiated, including demolition.”
The BBMP action was an obvious response to advertisements that DLF took out three weeks ago, announcing the sale of apartments in the project, on Bannerghatta Road, at Rs 1,850 per sq ft.
DLF’s homes head for Karnataka, Anantha Naarayanan, told FC that his company had already pre-sold 600 of the 1,000 apartments planned in the 27-acre project for which the outlay would be Rs 400 crore. Construction is yet to begin.
In the advertisement, DLF claimed to have obtained the approval of the Bangalore Development Authority (BDA) for four floors. BBMP officials said the DLF advertisement showed an elevation of 18 floors.
S Subramanya, BBMP commissioner, told FC “it’s clear that people are being taken for a ride”.
BBMP warned that the owners of Westend Heights apartments would not be given occupancy certificates.
Subramanya said he expected DLF to cover BBMP’s advertisement costs and apply for sanction in the proper route.
In a statement DLF claimed that it obtained approvals for the developmental plan of the project through its subsidiary, Annabel Builders & Developers, for S+4 level from BDA. “Construction on the project has not yet commenced and will begin only after obtaining detailed plan approvals from BBMP and other relevant clearances…. The allegations of illegality made in BBMP… are incorrect.”
One of DLF’s customers, Pradeep Jain, said, “I had booked a flat on the sixth floor in. DLF then clearly said that it would get the approval for four floors by May and that for the sixth floor by November. Today when I called the company, it said it had obtained clearance for four floors and would mail me the clearance certificate.”
