: The Indian Institute of Management (IIM), Rohtak, received ineligible tax exemption of ₹ 48.90cr on it surplus income from fiscal year 2015-16 to 2020-2021, an audit report of the Comptroller and Auditor General (CAG) has revealed, highlighting other financial irregularities by the institute, including undue financial benefits to its director and ‘exorbitant fee structure’.
However, the institute has denied any violation, saying that it is fully compliant to all statutory provisions of law.
According to Section 10 (23C) (iiiab) of the Income Tax Act, 1961, a university or an institution is exempted from tax if it gets more than 50 percent of grants from the government. However, maximum grant received by IIM, Rohtak, was 31.20 per cent of the total in receipt in the financial year 2017-18, the CAG audit and inspection report, a copy of which is with HT, said.
“So the institute is not substantially financed by the government as its grant received from the government in any financial years from 2015 -16 to 2018 was below the threshold amount of 50 per cent as stipulated in rule 2BB of income tax rules, 1966.
“The institute is not entitled to claim exemption from payment of income tax amounting to ₹ 48.90 crore on its surplus income of ₹ 157.18 crore during financial year 2015-16 to 2020-21,” the CAG report added.
{{/usCountry}}“The institute is not entitled to claim exemption from payment of income tax amounting to ₹ 48.90 crore on its surplus income of ₹ 157.18 crore during financial year 2015-16 to 2020-21,” the CAG report added.
{{/usCountry}}The report further stated that the scrutiny of the Institute’s director Dheeraj Sharma’s salary details for the assessment year 2017-18 to 2020-21 revealed that corresponding perquisites to the tune of ₹ 36,84,285 in the form of free accommodation, security and watch and ward, 10% per annum of the cost of furniture and furnishing were not considered as part of his respective salary income.
“Hence, income tax and cess amounting to ₹ 11,49,525 was leviable but not levied,” the report said.
The CAG said that the institute has ‘charged exorbitant fee’ from students and the reply of the institute is not acceptable as the fee charged violates not-for profit motive of the institute.
Section 9 (1) of the Indian Institute of Management Act 2017 provides that the institute shall be not for profit legal entity and no part of surplus, if any, in revenue of such institute.
“The fee structure is so designed that the receipts are 2-3 times the expenditure of the institute and too is on an increasing trend year to year. Instead of being invested in growth of institute and utilised on conducting research work, the funds amounting to ₹ 251,96,45,000 were deposited in fixed accounts (term deposits) in banks, on which interest amounting to ₹ 17,68,22,281 was earned,” the report read.
The CAG also asked the institute to provide justification on hiring three chartered accountants instead of one and the expenditure of ₹ 29,17,590 incurred on their services.
“It was observed that the purchase amounting to ₹ 28.88 lakhs was made from the local market without getting non-availability certificate from GeM portal. It was also found that one shop was rented out on a monthly license of ₹ 3,000 and out of 14 shops, only three were rented out, which caused a loss of ₹ 11.88 lakhs for the year 2019-21,” it said.
The report also highlighted that LTC bills of ₹ 87,000 were passed without production of original tickets. “Sanction strength of superintendent at the institute was one as on March 31, 2020 but the institute promoted another superintendent in July the same year and paid allowances amounting to ₹ 4.74 lakh. This payment of salary was irregular,” it said.
While replying to CAG’s report, IIM, Rohtak’s internal auditor Manuj Bansal said these are draft comments of CAG on which institution replies have already been submitted and are under consideration.
“This is not the final report. Institute is fully compliant to all statutory provisions of law. There are no violations of any kind. IIM Rohtak is exempted under Income Tax Act 1961 as per provisions of Section 10(23C)(iiiab) for the financial year 2019-2020 and Section 10(23C)(vi) for the financial year 2020-2021,” he added in his reply to queries by HT. ENDS