Grasim Industries fell 2.06% to Rs 1639.95 after the income tax department raised a demand of Rs 8,334 crore on the company as capital gains tax with regard to sale of shares in a group firm.
The Deputy Commissioner of Income Tax (DCIT) has imposed a capital gain tax on the company of Rs 8,334 crore related to a sale of shares in group firm Aditya Birla Capital (ABCL) during tax assessment year 2018-19.In March 2019, Grasim had received an order issued by the DCIT raising a demand of Rs 5,872.13 crore on account of dividend distribution tax (including interest). It was related to the composite scheme of arrangement undertaken by the group involving the merger of Aditya Birla Nuvo with Grasim Industries and subsequent demerger of the group's financial services business Aditya Birla Financial Services (now known as ABCL) into a separate entity.
The demand was 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," Grasim informed the stock exchanges on Friday, 1 October 2021.
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 30 September 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," it said.
Grasim said it will take appropriate action against the said order.
Grasim Industries is a leading global producer of Viscose Staple Fibre, the largest Chlor-Alkali, Linen and Insulators player in India. Through its subsidiaries, UltraTech Cement and Aditya Birla Capital, it is also India's largest cement producer and a leading diversified financial services player.
On a consolidated basis, Grasim Industries' net profit jumped 612% to Rs 1,667 crore on 53% rise in revenue to Rs 19,919 crore in Q1 FY22 over Q1 FY21.
Powered by Capital Market - Live News
Disclaimer: No Business Standard Journalist was involved in creation of this content
