Welspun Aunta-Simaria Project Private Limited, a subsidiary of Welspun Enterprises, has received a Rs 33.34 Crore tax demand notice following a scrutiny assessment for the 2024-25 assessment year. The dispute stems from the application of ICDS III regarding percentage completion accounting methods for Hybrid Annuity Model projects. The company maintains that its accounting approach is appropriate and intends to challenge the order before the Income-tax Appellate Tribunal.
Details of the Tax Dispute
Welspun Enterprises has been notified that its subsidiary, Welspun Aunta-Simaria Project Private Limited, has received an assessment order from the Income-tax Department. The order, issued in relation to the 2024-25 assessment year, includes an addition to taxable income amounting to Rs 33.34 Crore. The assessment was concluded under Section 143(3) of the Income-tax Act, focusing on specific accounting treatments adopted by the company.
Basis of the Challenge
The primary point of contention involves the application of ICDS III and Section 43CB of the Income-tax Act, specifically regarding the percentage completion method. The company asserts that the accounting standards it utilized are fully compliant with the Hybrid Annuity Model (HAM), which is standard practice for infrastructure developers engaged in similar projects. Consequently, the company believes the tax authority’s demand is not maintainable.
Future Outlook and Impact
The company has initiated steps to file an appeal with the Commissioner of Income-tax (Appeals) Tribunal to contest the order. Regarding the financial health of the organization, the management does not anticipate any material impact on its operational or financial activities as a result of this notice. The company remains confident in its position and is proceeding with the necessary legal recourse.
Source: BSE
