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ENS ECONOMIC BUREAU
MUMBAI, SEPT 10: The auditors of IPCL Ltd have qualified the accounts of public sector Indian Petrochemicals Corporation (IPCL) for crediting Rs 34.26 crore in the profit and loss account for the year 1997-98.
B K Khare & Company, auditors of the company, said sales tax incentive of Rs 34.26 crore has been recognised in the account of the year. ``In our opinion, in terms of Accounting Standard 12, the company ought to have taken credit to the profit & loss account of the year only for Rs 629.44 lakh being the purchase tax saved in terms of the relevant scheme... with consequential effect on the company's profit for the year and the net assets as at March 31, 1998.''
The company's annual report clarified that ``sales tax incentive of Rs 34.26 crore for which the company is in possession of requisite eligibility certificates issued by the government of Gujarat is fully recognised in the profit & loss account.'' ``Out of this, the company has already realised Rs 793.22 lakh during the year and is reasonablycertain for the ultimate collection of the balance amount,'' the company said.
The auditor further said ``the accounting policy followed by the company in respect of lease transactions is not in conformity with the accounting practice recommended by the Institute of Chartered Accountants of India in that: in respect of fixed assets given on finance lease, lease rentals are accounted in accounted in accordance with the terms of the lease agreement without making appropriate adjustments for lease equalisation credit or charge as the case may be.''
The company clarified in the annual report that lease rentals of Rs 93.63 lakh under other income are in respect of fixed assets given on lease of GE Plastics India Ltd under a joint venture agreement with General Electric BV. ``Such lease rentals are accounted in accordance with the terms of the said agreement,'' it said.
It may be recalled that the company's profit after tax had declined from Rs 510 crore to Rs 243 crore during the year 1997-98.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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