CDA unable to recover Rs4.51b lease extension fee, other taxes

Islamabad

The Capital Development Authority (CDA) has not been able to recover Rs4.51 billion on account of lease extension fee, annual ground rent and other taxes of commercial plots whose lease period had expired.

The auditor general’s report released recently has pointed out that the CDA Estate Management Directorate leased out commercial plots in various sectors for a period of 33 years. The audit found that the lease period of commercial plots allotted before 1979 had already expired. Upon expiry, these lease agreements have not been extended after recovering due lease extension charges from allottees and beneficiaries. “This resulted in non-recovery of Rs4.51 billion on account of lease extension fee, annual ground rent and other taxes,” the report said.

The audit maintains that non-recovery on account of lease extension fee was due to different revenue-recognition policies, disregard to the rules and regulations and internal controls.

For the first time, the auditor pointed out the non-recovery in September 2012. The concerned CDA official replied that as soon as applications for extension of lease are received the recovery would be initiated. “The reply was not tenable because lease periods of allotments made during 1963 to 1979 have already expired during the period from 1996 to 2012 and no action was initiated despite lapse of considerable period in most of the cases.

Moreover, the auditor observed that the CDA has no record or detailed inventory of plots indicating date for the period starting from 1996 to 2012 to monitor the lease.

The Departmental Accounts Committee in a meeting held in first quarter of this year directed the authority to revalidate all expired leases and get these verified from audit but no compliance was made.

The auditors have also identified loss of Rs6.22 billion to the CDA due to encroachments of CDA land for car parking by hotels, private offices and hospitals.

The audit noted that two hotels have been encroaching upon over 24,000 square yards of CDA land in Sectors F-5 and G-5 for the last many years. The report said that a private hospital located in Sector H-8 was also encroaching upon the CDA land without any lease agreement.

Source: http://www.thenews.com.pk/Todays-News-6-197576-CDA-unable-to-recover-Rs451b-lease-extension-fee-other-taxes