Accounting of interest received on income-tax refund
This query is : Resolved
13 December 2017
Sir,
The Hutti Gold Mines Co. Ltd, Hutti (HGML) (a Karnataka Govt PSU), while closing books of accounts for F.Y.2016-17 has accounted Rs.83 lakhs interest on IT refund for the A.Y.2015-16, received on 30.08.2017 (before closing of accounts for FY 2016-17). This was done in the absence of order u/s 143 (1). However the amount accounted tallies with the interest received from the department (compared after receipt of 143 (1) order).
Now the CAG has made audit observation on the accounting of interest, stating that substantial amount of interest pertains to FY 2017-18 (April 2017 to August 2017).
Hence, expert opinion is requested on the accounting of interest income on refund of Income-tax.
The Hutti Gold Mines Co. Ltd, Hutti (HGML) (a Karnataka Govt PSU), while closing books of accounts for F.Y.2016-17 has accounted Rs.83 lakhs interest on IT refund for the A.Y.2015-16, received on 30.08.2017 (before closing of accounts for FY 2016-17). This was done in the absence of order u/s 143 (1). However the amount accounted tallies with the interest received from the department (compared after receipt of 143 (1) order).
Now the CAG has made audit observation on the accounting of interest, stating that substantial amount of interest pertains to FY 2017-18 (April 2017 to August 2017).
Hence, expert opinion is requested on the accounting of interest income on refund of Income-tax.
13 December 2017
CAG's observation is correct if 83 lakhs includes interest for the period from the next day of closing of account of 2016-17 to the date of 143(1) intimation.
13 December 2017
In the order u/s 143 (1) the period for which the interest pertains is not mentioned. In the absence of the period it is not possible to apportion the interest amount to F.Y.2016-17 & 2017-18. Further, if the books are still open the interest has to be accounted in the year for which books are open, as the Accounting Standard says it in "Events occurred after Balance Sheet date". Had we not accounted the interest in FY 2016-17, the same CAG would have issued audit enquiry.
Plz Clarify.
Plz Clarify.
13 December 2017
Interest can be worked out period wise though not mentioned in 143(1) generally
with the help of 244A(1)(a)/(aa)/(b) and can be accounted for financial year wise.
with the help of 244A(1)(a)/(aa)/(b) and can be accounted for financial year wise.
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