GAMMON INDIA LIMITED

amounting to Rs. 26.80 Millions has been reversed. The effect of the change in method of depreciation
for this year is Rs. 28.50 Millions. On account of this change in the method of depreciation the profit
for that year was higher by Rs. 55.30 Millions.
13. TAXATION:
The break up of Deferred Tax liability and Assets are as follows :-
(Rs. in Millions)
Particulars Year ended
31 st Year ended
March, 31
2009
st Year ended
March, 31
2008
st March,
Deferred Tax liability
2007
-On Account of Depreciation 714.50 545.00 468.30
-On Account of Lease 92.80 - -
-Others 1,675.10 - -
Deferred Tax Assets
-On Account of Gratuity/Leave 47.10
12.90
Encashment Provision
18.30
-On Account of Interest on NCD 2.80 5.00 2.10
-On Account of Unabsorbed Depreciation - - 5.60
-On Account Delay in payment of TDS 82.70 63.40 -
-Risk and Contingencies 79.00 - -
-On Account of Tax Losses 778.50 - -
-Other Disallowances 101.50 - 22.10
Net Deferred Tax Liability 1,390.80 458.30 425.60
a) AEL and REL, are eligible for a 10-year tax holiday under Section 80 IA of the Income Tax Act,
1961. The deferred tax liability would get reversed during the tax holiday period and have not been
recognized in accounts in accordance with AS – 22 (Accounting for Taxes on Income), issued by the
Institute of Chartered Accountants of India.
b) During the year 2008-09, VSPL has written back Deferred Tax Liability amounting to Rs 133.80
Millions ( 2007-08 Nil ; 2006-07 Nil) which has been accounted by the Company in proportion to its
shareholding in VSPL. The proportionate amount of Deferred Tax Liability written back by the
Company is Rs 63.60 Millions (2007-08 Nil; 2006-07 Nil).
c) Gammon Al Matar JV (GALM): The tax rate applicable to the joint venture is 12%. For the purpose
of determining the tax payable for the period, the accounting profit has been adjusted for tax purposes.
Adjustments for tax purposes include items relating to both income and expenses. The adjustments are
based on the current understanding of the existing tax laws, regulation and practices.
d) During the year 2006-07, pursuant to the retrospective amendment of proviso to section 80IA the
Company has reviewed its‟ claim in respect of section 80IA and has decided to provide for income tax
of earlier years without considering the benefits available u/s. 80IA. The amount of short provision
including interest amounting to Rs. 525.60 Millions is being debited to the Profit & Loss Account as
short provision of earlier years.
14. Capital Grant
As per terms of the concession agreement dated October 14, 2005 between MNEL and NHAI, the
Company is entitled for a Grant from NHAI of Rs. 510 Millions during the Construction Period and
Rs.1080 Millions during the Operations period. The company has received a grant of Rs.332.40
Millions. The same is considered as equity support and is credited to capital reserve under Reserves &
Surplus in terms of the concession agreement.
15. Consequent upon the adoption of the Companies (Accounting Standard) Rules 2006, with effect from
April 01, 2007, in the year 2007-08 exchange difference due to restatement of foreign currency
liabilities relating to fixed assets, which were previously adjusted in the carrying amount of fixed assets
are now recognised in the Profit & Loss Account. As a result of this change in the year 2007-08, the net
F
45