Tata Steel has moved the Bombay High Court [1] after receiving a reassessment order that increases its taxable income for the financial year 2018-19 by over Rs 25,000 crore. The company argues that the reassessment is flawed and has challenged the order on both technical and legal grounds.
The reassessment stems from a show-cause notice issued on March 13 by the Office of the Deputy Commissioner of Income Tax, Circle 2 (3) (1), Mumbai. The notice sought additional documentation regarding the waiver of Rs 25,185.51 crore in FY19, which was linked to Tata Steel’s acquisition of Bhushan Steel Limited—later renamed Tata Steel BSL Limited—through insolvency proceedings in May 2018.
Following the acquisition, the debt waiver was granted in favor of Tata Steel BSL Limited. In November 2021, Tata Steel BSL Limited and Bamnipal Steel Limited were amalgamated into Tata Steel Limited. Tata Steel maintains that the waiver of debt should not be considered taxable income under the provisions of the Income Tax Act, 1961, particularly since it was a direct consequence of an acquisition under the Insolvency and Bankruptcy Code (IBC).
The company asserts that the tax department accepted the income tax return of Bhushan Steel for FY 2018-19 in June 2020 without any demand related to the loan waiver. Tata Steel believes it has a strong case and has filed a writ petition in the Bombay High Court, citing procedural deficiencies in the reassessment process. Furthermore, Tata Steel plans to pursue further legal remedies through relevant judicial and quasi-judicial forums to contest the reassessment order.
Sources:
[1] Tata Steel gets notice over Rs 25,000 crore tax waiver, moves Bombay High Court https://economictimes.indiatimes.com/industry/indl-goods/svs/steel/tata-steel-gets-notice-over-rs-25000-crore-tax-waiver-moves-bombay-high-court/articleshow/119988178.cms