Grasim Industries asked to pay Rs 5,872 crore tax demand for merging firms
today Mar 18, 2019
The IT department has imposed a hefty tax on Grasim Industries asking it to pay Rs 5,872 crore ($885.6 million) for the merger. The company is planning to challenge the order as it feels that the order issued is not tenable in law.
"The company has, on March 15, 2019, received an order dated March 14, 2019, issued by the Deputy Commissioner of Income Tax raising a demand of Rs 5,872.13 crore on account of dividend distribution tax (including interest)," Grasim Industries said in regulatory filing.
“DCIT held that as the demerger of the demerged undertaking is not in compliance with Section 2(19 AA) of the Act, the value of shares allotted by Aditya Birla Capital Ltd to the shareholders Grasim Industries, in consideration of the transfer and vesting of the Demerged Undertaking into ABCL, amounted to dividend, within the meaning of the Act,” the filing added.
The National Company Law Tribunal, bench at Ahmedabad in September 2017 had given its nod for merging Aditya Birla Nuvo and Aditya Birla Financial Services Ltd.
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