Income tax dept imposes hefty penalty of Rs 103.63 crore on Tata Chemicals

The Income Tax Department has levied a hefty fine of Rs 103.63 crore on Tata Group's Tata Chemicals Limited due to a specific violation concerning the disallowance of interest expenses by the company.

The basis of the penalty

Tata Chemicals disclosed in a regulatory filing that the penalty was imposed for a breach under Section 270A of the Income Tax Act. This was specifically due to the disallowance of interest under section 36(1)(iii) of the Act. The order came from the National Faceless Assessment Centre, a part of the Income Tax Department.

"We would like to inform you that the Company has received an Order from National Faceless Assessment Centre, Income Tax Department levying a penalty of ₹ 103,63,48,806/-, under Section 270A of the Income Tax Act, 1961 (Act) for, inter alia, disallowance of interest u/s 36(1)(iii) of the Act," the company said. 

Company's response

In response to the penalty, Tata Chemicals has announced its intention to challenge the order. The company plans to appeal against the decision before the National Faceless Appeal Centre, which is the appellate authority. Tata Chemicals is confident in the merits of its case, relying on prevailing law and the advice of its counsel.

Tata Chemicals has expressed optimism regarding the appeal. The company stated it "reasonably expects favourable orders from the appellant authorities."