After the special investigation, pertaining to the FY 2006 account books of India's real estate giant, DLF Limited, the Income-Tax (I-T) Department found an additional Rs 1,200 crore taxable income, and issued the company a directive in this regard on Wednesday.

Though the realty major intends challenging the I-T department's order, by approaching appellate authorities within 90 days, it still may have to shell out Rs 300-400 crore as added income tax for the 2005-06 financial year.

The contended addition to DLF's income for the mentioned year is fallout of the I-T department's special audit report. It relates to a period when, in 2006, the accounting rules for construction and real estate development companies underwent a change from the 'completed contract' method to the Institute of Chartered Accountants of India-recommended 'percentage of completion method' (PoCM) - which implied recognition of revenue vis-à-vis the progress in construction.

In its statement to the Stock Exchange, DLF mentioned its plans against the I-T department order of additional tax, saying: "The company has got an expert opinion on the enhanced taxable income and is confident that this addition will not be sustained by the appellate authorities. In an unlikely event, if the said order is not reversed by the appellate authorities, then it can result in a contingent liability of about Rs 300 to Rs 400 crore,"