“The management is in the process of seeking expert advice and examining how the recalculations can be incorporated in the income returns filed with the IT department for the respective financial years for which New version A similar matter will have to be resolved at two of its key subsidiaries, IL&FS Financial Services and IL&FS Transportation, after the National Company Law Tribunal takes note of the revised accounts.
While there are provisions in the law to allow tax refunds, these are subject to a statute of limitations. “The companies have to file their tax returns late and then the authorities have to approve the application,” a tax official told TOI.
In the case of Satyam, which went through a similar resolution process, the recalculation led to a lengthy legal battle, according to tax consultants, but a recent court order may come to IL&FS’s rescue as the accounts were recalculated on the instructions of the NCLT. Tax consultants said the CBDT had to provide some relief, given the “unusual situation” where the government had to step in and take control of the company and the lenders are bearing the losses.
Sources said that the IL&FS group will argue based on the NCLT order that the case is not barred by limitation as the customized accounts were only now acknowledged. They also said that companies are working on the required reports for the tax authorities before submitting refund requests, but acknowledged that the issue is complicated.
With banks losing money on the exposure and the government seeking a recovery, the company is hoping tax authorities can step in. However, government sources suggested the process will not be easy as it would also set a precedent for the future.
The revised accounts also suggest that the group has overpaid executive salaries as well as performance-related compensation based on previous accounts. As TOI first reported, the new management has now demanded repayment of the “overpaid amounts”, including to the directors of the replaced boards, which some of them, however, are refusing to repay.
