Grasim Industries slapped with Rs 8,334-crore income tax demand

The Income-Tax (I-T) department has raised a demand of Rs 8,334 crore against as capital gains tax in a transaction related to the demerger of its financial services business. The company, however, said it would take “appropriate action” against the order, which was “against the spirit of tax laws”.

Grasim referred to its earlier communications in March 2019 about the demand towards dividend distribution tax raised on the company by the deputy commissioner of income tax (DCIT) and subsequent stay granted by the Bombay High Court in the matter, pending decision by the tribunal.

“As a corollary to the earlier order, the DCIT has likewise imposed capital gain tax on the value of shares, without considering that the shares were issued to the shareholders pursuant to the scheme of arrangement and no consideration was received by the company, which could be subjected to tax,” the company informed the stock exchanges on Friday.

The DCIT has valued the shares issued by Aditya Birla Capital at Rs 24,037 crore as the sale consideration for transfer of undertaking. It has made addition of capital gains of Rs 22,772 crore to the income of the company as part of scrutiny assessment for the assessment year 2018-19 and has passed a draft assessment order on September 30, 2021.

“Based on the draft order, the demand for AY 2018-19 is estimated at Rs 8,334 crore, including interest and excluding any penalty proceedings. The company would take appropriate action against the said order,” Grasim said.

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