New Delhi: The Comptroller and Auditor General (CAG), in its audit of the Indian Institute of Management (IIM) at Rohtak, has found alleged financial irregularities worth crores in the business school’s accounts, ThePrint has learnt.
The IIM, in a detailed response sent to ThePrint, has justified its finances.
The CAG’s ‘Audit and Inspection Report on the accounts of the Director IIM Rohtak for the year 2019-21’ states that the institute received a tax exemption of Rs 48.90 crore for which it was not “eligible”.
The report, accessed by ThePrint, says that according to Section 10 (23C) (iiiab) of the Income Tax Act, 1961, any income received by a person on behalf of any university or any educational institution existing solely for educational purposes and not for purposes of profit, and which is wholly or substantially financed by the government, is entitled to exemption. Further, going by the rules, only if the institution receives at least 50 per cent of grants from the government will it qualify for tax exemption.
This, however, is not the case with IIM Rohtak, it adds.
According to the audit report, grants from the government to IIM Rohtak have been below the 50 per cent threshold every year from the 2015-16 to the 2018-19 academic session.
“Maximum grant the institute received was 31.20 per cent of the total grant received in the year 2017-18. So, the institute is not substantially financed by the government as it receives grants below the 50 per cent threshold,” reads the report.
Consequently, the institute is not entitled to claim exemption from payment of income tax amounting to Rs 48.90 crore in its surplus income of Rs 157.18 crore during financial years 2015-16 to 2020-21, it adds.
The report also states that the institute has “charged exorbitant fees” from students, which could have been “avoided”.
“The fees structure is so designed that the receipts are two-three times the expenditure of the institute and that too is on an increasing trend year to year,” the CAG report reads.
It adds: “Instead of being invested in growth of institute and utilised on conducting research work, the funds amounting to Rs 251,96,45,000 were deposited in fixed accounts (term deposits) in banks, on which interest amounting to Rs 17,68,22,281 was earned.”
The increasing trend of revenue over expenditure year to year “forfeits the not-for-profit intent” of the institute, the report points out.
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Replies submitted, under consideration, says IIM Rohtak
ThePrint sent a detailed questionnaire to IIM Rohtak asking for a response on the tax and fee issue.
The institute, in a reply for the exorbitant fees mentioned in the CAG audit, said: “The annual fee is dependent on several factors, including annual student intake, yearly institute expenditure, future expansion plans, fee of peer institutes, etc. and many others. For the last five years, the institute has only been increasing fees on the basis of inflation each year and the institute did not increase fees in 2021 due to the COVID situation.”
“Also, it may be safe to conclude that the total fee charged by IIM Rohtak is the lowest fees among the 20 IIMs that exist today,” it added.
On the point of being ineligible for tax exemption, it said: “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.”
It added that “the CAG report is a draft report on which replies have been submitted formally and are under consideration”.
However, in the copy of the report accessed by ThePrint, the auditor has mentioned all the replies given by the institute and expressed its remarks.
(Edited by Nida Fatima Siddiqui)
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