Shree Cement Faces Tax Demand of Rs 4,000 Crore Over Alleged Incorrect Deductions

5 Jan 2024 , 09:51 AM

According to news reports, After discovering through a survey that Shree Cement had incorrectly claimed several deductions, the income tax authorities has strengthened its demand for Rs 4,000 crore in taxes. Sources with knowledge of the situation informed ET that the corporation is expected to get a demand notice.

ET has reported that the deductions in question are related to power infrastructure, water management, and trash management.

In June 2023, the Income Tax Department polled the corporation regarding the deductions it had claimed under section 80IA of the Income Tax Act for the April 2014–March 2023 period.

As of December of last year, the survey report, which values ‘wrongful deductions’ at Rs 8,500 crore for the nine years in question, was filed. ‘The survey report is ready and as per our calculation the total outstanding tax liability, including interest and penalty is about Rs 4,000 crore,’ a government source told ET.

The charges have been refuted by the company. ‘The accusations made against Shree Cement are without merit and essentially hypothetical. Therefore, we dispute the claims,’ the corporate representative added.

According to the survey report, the corporation is claiming deductions under section 80IA of the Income Tax Act by fabricating bills to establish a solid waste management facility. This plant was never installed, yet the company nonetheless claimed Rs 7,000 crore in deductions over the study period. The electricity supply and water treatment plant were also mentioned in the same sentences. The survey report said that the corporation only had a few RO devices installed for staff use and lacked a water treatment system.

The company had reinstalled equipment from its previous facility, on which the deductions had previously been claimed, under the name of the power generating machine.

According to the official, the corporation has deducted Rs 250 crore for the water treatment plant and around Rs 1,200 crore for power provision since 2014.

Shree Cement acknowledged participating in a survey conducted by the tax department in June and stated that it is offering its complete assistance. The company’s accounting records and corporate governance issues are being investigated independently by the Ministry of Corporate Affairs (MCA).

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