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Sunday, July 21, 2024

Income Tax Department Issues ₹4,000 Crore Demand Notice to Shree Cement Over Alleged Wrongful Deductions

The Income Tax Department is set to demand ₹4,000 crore from Shree Cement following a survey that revealed alleged improper claims for deductions. Sources familiar with the matter informed that a demand notice is likely to be sent to the company.

The disputed deductions pertain to waste management, water management, and power infrastructure.

In June 2023, the Income Tax Department conducted a survey on Shree Cement regarding deductions claimed under section 80IA of the Income Tax Act for the period spanning April 2014 to March 2023. The survey report, submitted in December of the same year, estimates “wrongful deductions” at ₹8,500 crore over the nine-year period. An official stated, “The survey report is ready, and based on our calculations, the total outstanding tax liability, including interest and penalty, is about ₹4,000 crore.”

Shree Cement has refuted the charges, with a company spokesperson stating, “The allegations leveled on Shree Cement are both fundamentally speculative and devoid of merit. As such, therefore, we refute the statements.”

The survey report alleges that the company used fake bills to claim deductions under section 80IA for a non-existent solid waste management plant, amounting to ₹7,000 crore over the considered period. Similar claims were made for a non-existent water treatment plant, and the company allegedly re-installed equipment for power supply for which deductions had already been claimed.

The company claimed ₹250 crore for the water treatment plant and approximately ₹1,200 crore for power supply since 2014, according to the official.

In June, Shree Cement acknowledged the tax department’s survey and expressed cooperation. The Ministry of Corporate Affairs is also separately investigating the company’s accounts and corporate governance matters.

In FY23, Shree Cement reported a 45.7% year-on-year drop in net profit at ₹12,691 crore, while sales increased by 19.4% to ₹223,965 crore.

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