Shree Cement is facing a tax demand of Rs 4,000 crore from the income tax department after a survey revealed that the company has incorrectly availed certain deductions. As per a report by the Economic Times, a demand notice is expected to be issued to the company soon.
During June 2023, the income tax department carried out a survey on the company, focusing on deductions claimed under section 80IA of the Income Tax Act for the period between April 2014 and March 2023.
Submitted in December of the preceding year, the survey report indicates 'wrongful deductions' amounting to Rs 8,500 crore over the nine-year period. As per sources cited in the report, the total outstanding tax liability, inclusive of interest and penalty, stands at approximately Rs 4,000 crore.
However, dismissing the charges, the company's spokesperson emphasised that the allegations against Shree Cement are fundamentally speculative and lack merit.
The survey report accuses the company of using fake bills to claim Rs 7,000 crore in deductions under section 80IA of the Income Tax Act. Allegedly, these deductions were for a non-existent solid waste management plant, as well as questionable claims for a water treatment plant and power supply. The report highlights that no actual water treatment plant was installed, instead, the company set up only a few RO machines for employee use.
The company purportedly re-installed equipment from its old plant, on which deductions were already claimed, in the guise of a power generation machine. It asserted deductions of Rs 250 crore for the water treatment plant and around Rs 1,200 crore for power supply since 2014.