In a recent development, Tata Chemicals Limited has encountered a significant challenge in the form of a penalty worth Rs 103.63 crore imposed by the Income Tax Department.
This penalty stems from a dispute related to interest disallowance under Section 36(1)(iii) of the Income Tax Act, adding to the company’s ongoing legal battles and tax controversies.
For allowance of a claim for deduction of interest under this provision following three conditions are there:
(i) The money, that is capital, must have been borrowed by the assessee.
(ii) It must have been borrowed for the purpose of business.
(iii) The assessee must have paid interest on the borrowed amount i.e. he has shown the same as an item of expenditure.
The imposition of this substantial penalty was confirmed through a regulatory filing made by Tata Chemicals on Thursday. The order was issued by the National Faceless Assessment Centre of the Income Tax Department, invoking Section 270A of the Income Tax Act.
Tata Chemicals promptly announced its intent to contest this penalty by appealing to the National Faceless Appeal Centre NFAC, the appellate authority in such matters.
The company conveyed its optimism regarding receiving favorable rulings from the appellate authorities upon presenting its arguments.
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