The income tax department has firmed up a ₹4,000 crore tax demand on Shree Cement following a survey that showed the company has wrongfully claimed certain deductions. A demand notice is likely to be sent to the company, sources aware of the details told ET.
The deductions under question relate to waste management, water management, and power infrastructure, ET has learnt.
The Income tax department conducted a survey on the company in June 2023 in connection with the deductions claimed under section 80IA of the Income Tax Act for the April 2014 to March 2023 period.
The survey report was submitted in December last year and pegs “wrongful deductions” at ₹8,500 crore for these nine years. “The survey report is ready and as per our calculation the total outstanding tax liability, including interest and penalty is about ₹4,000 crore,” an official told ET.
Company has denied the charges. “The allegations levelled on Shree Cement are both fundamentally speculative and devoid of merit. As such, therefore, we refute the statements,” the company spokesperson said.
The survey report says that the company is using bogus bills to claim deductions under section 80IA of the Income Tax Act in the name of installing a solid waste management plant, which was non-existent and for which the company claimed ₹7,000 crore over the period under consideration. Similar claims were made for the water treatment plant and power supply. There was no water treatment plant installed in the company and the company had just installed a few RO machines for the use of employees, the survey report said.
In the name of the power generation machine, the company had re-installed equipment from its old plant on which the deductions had already been claimed.
The company claimed ₹250 crore deduction for the water treatment plant and about 1,200 crore for power supply since 2014, the official said.
In June Shree Cement had admitted a survey initiated by the tax department and had said that the company is extending its full cooperation. The Ministry of Corporate Affairs (MCA) is separately looking into the company’s account books and corporate governance matters.
“Company has received a letter dated 19.7.2023 from the office of Regional Director, Ministry of Corporate affairs informing order of inspection under Section 206(5) of the Companies Act, 2013,” Shree Cement had said in an exchange filing in July 2023. In FY23, Shree Cement reported a 45.7% drop in net profit (year-on-year) at ₹12,691 crore compared with ₹23,366 crore last year. Sales for the year was up 19.4% to ₹223,965 crore compared with ₹187,639 crore last year.
