Grasim Industries Ltd will challenge the ₹8,334 crore demand from tax authorities.
The Deputy Commissioner of Income Tax (DCIT) has sent the demand notice as capital gains tax in a transaction related to the demerger of its financial services business.
"We refer to our earlier communications dated 16th March 2019 and 25th March 2019 informing the Stock Exchange(s) about demand towards dividend distribution tax raised on the company by the Deputy Commissioner of Income Tax (DCIT) and subsequent stay granted by the Hon’ble Court in the matter, pending decision by the Hon’ble Tribunal. As a corollary to the earlier order, the Learned 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 said in a stock exchange filing.
"The Learned DCIT has valued the shares issued by the Resulting Company (Aditya Birla Capital Limited) at ₹24,037 crore as the sale consideration for transfer of undertaking and has made addition of capital gains of ₹22,772 crore to the income of the company as part of scrutiny assessment for the AY 2018-19 and has passed draft assessment order on 30th September 2021, " it added.
Based on the draft order, demand for the AY 2018-19 is estimated at ₹8,334 crore, including interest and excluding any penalty proceedings.
"The company would take appropriate action against the said Order which it believes is against the spirit of tax laws," it added.