Tata Steel triumphs over the Rs 100 crore transfer pricing test.
ET
India
30-11-2023
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By successfully contesting the revenue department's Rs 100 crore transfer pricing claim, Tata Steel Ltd. was granted a favourable ruling by the Income Tax Appellate Tribunal. The disallowance of interest paid on perpetual non-convertible debentures totaling approximately Rs 266 crore, the disallowance of the provision for leave encashment totaling approximately Rs 324 crores, and other disallowance claims were all decided in favour of Tata Steel by a bench consisting of Amit Shukla and Padmavathy S.
Due to the market rate paid for the electricity supplied by the company's captive power plant, the Transfer Pricing Officer (TPO) had requested to make a transfer pricing adjustment.
Tata Steel's attempt to deduct interest paid on its debentures was also denied by the assessing officer (AO), who viewed the debentures as equity rather than debt. The auditor certified a deduction of approximately ? 324 crore, so the tribunal disagreed with the AO's conclusions.