Tata Steel argues that the previous income tax return for FY 2018-19 was accepted without any concerns regarding the debt waiver, and believes it has strong grounds to contest the reassessment on both technical and merit-based issues.
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Tata Steel on Friday said it has received an order to reassess taxable income for the financial year 2018-19 and increase the taxable amount by over ₹25,000 crore. The company has moved the Bombay High Court against the reassessment.
Tata Steel said in a stock exchange filing that the assessment order came on March 31 this year, following a show cause notice issued on March 13 by the Assessing Officer, Office of the Deputy Commissioner of Income Tax, Circle 2(3)(1), Mumbai.
The March 13 notice sought further documents related to the waiver of ₹25,185.51 crore in FY19 for the purpose of reassessing taxable income for AY 2019-20.
Meanwhile, on March 24, the company filed a writ petition in the Bombay High Court “challenging technical infirmities in conducting the reassessment proceedings.”
Explaining the issue, the company said it had acquired erstwhile Bhushan Steel Limited (renamed Tata Steel BSL Limited) in May 2018 through insolvency proceedings.
Consequent to this acquisition, a debt of ₹25,185.51 crore was waived off in favour of Tata Steel BSL Limited (TSBSL).
Later, TSBSL and Bamnipal Steel Limited amalgamated into Tata Steel Limited effective November 2021. The appointed date for the amalgamation was April 1, 2019.
“It is pertinent to note that the income tax return of Bhushan Steel for FY 2018-19 was accepted by the income tax department in June 2020 without any demand pertaining to the waiver of loan,” Tata Steel said in the latest statement.
It said the company has examined the matter and “believes that it has a strong case on merits apart from the technical infirmities in the order for which the company is already before the High Court of Bombay”.
In addition to the writ petition, the company said it would “seek appropriate legal remedies before relevant judicial/quasi-judicial forums contesting the matter on merits and challenging the contents of the order passed by the Assessing Officer”.
According to the company, the relevant provisions of the Income Tax Act, 1961, state that “waiver of debt cannot be treated as taxable income in the hands of TSBSL at the relevant point in time, more so when such waiver was a sequel to an acquisition under the IBC proceedings.”
Published on April 5, 2025
