DLF Ltd, India's largest real estate company by revenue, on Thursday said it may incur a tax liability of about Rs300 crore to Rs400 crore.
This comes after the Income Tax department reassessed the company's books, which may result in Rs1,200 crore of additional income showing up for the 2005-06 financial year, the company said in a statement to the Bombay Stock Exchange.
The 2005-06 financial year was the first in which real estate companies were required to use a different method for calculating revenue and profit.
However, DLF feels that it may not have to pay the extra amount.
''The company has got an expert opinion on the enhanced taxable income and is confident that this addition will not be sustained by the appellate authorities,'' DLF said.
''In an unlikely event, if the said order is not reversed by the appellate authorities then it can result in a contingent liability of approximately Rs300 to Rs400 crore,'' it said
Reports citing DLF chief financial officer Ramesh Sanka said that the company would approach appellate authorities within 90 days.
May dilute promoters' stake
Meanwhile on Friday, shares of DLF Ltd fell two per cent amid increasing market rumours that its promoters are selling part of their stake in the company.
While the company denied any such move on Thursday, it is widely believed that the promoters may dilute up to 12-14 per cent stake in DLF to three to four foreign institutional investors and raise about Rs5,000 crore.
DLF chairman K P Singh, his family and other promoters, together held about 88.55 per cent stake in the company as of 31 March.
Media reports have said that money raised through the stake sale will be infused into DLF Assets Ltd (DAL), a company that DLF promoters own together with private equity investors. DAL buys constructed properties from DLF and owes the realty firm some Rs4,900 crore from past deals.