In what could have serious financial implications for battered national carrier Air India, a supplementary audit conducted by the Comptroller and Auditor General of India (CAG) has revealed that AI may have understated its losses for fiscal 2010 by Rs. 3038.1 crore.
That could mean that the losses were under-reported by over 50%. AI had claimed to have cut down its net loss to Rs. 5,551 crore in 2010 from Rs. 7,189 crore the previous year.
However, going by the findings, the losses for 2010 should stand at Rs. 8589.1 crore. The CAG report, accessed by the HT, was discussed in a meeting of top airline officials last Friday.
AI, the report found, did not take into account the deferred tax assets (DTA) of Rs. 2842.52 crore. DTA is a tax payment that a company has to pay in a future year depending on the anticipated profits and income.
According to accounting norms, DTA should be treated as an expenditure that should be factored in while calculating the final loss or profits of the company.
In the case of AI, the company did not adopt the standard practices in accounting for DTA. AI said it followed all accounting norms while calculating the DTA.
"The DTA pertains to the year 2008-09 and was created last year on the grounds that AI has a turnaround plan in place and it would be possible to adjust the tax benefit on the losses in the future years out of the profits available," AI told HT in an emailed statement.
The CAG also said that AI did not show Rs. 195.58 crore as expenditure, despite showing it in its books as maintenance charges for leased aircrafts.
AI said the company contributes to maintenance reserves for aircraft components and there was no understatement of loss.