Welspun Enterprises Limited has announced that its subsidiary, Welspun Aunta-Simaria Project Private Limited, has received a Notice of Demand from the Income Tax Department. The demand, issued under Section 156 of the Income Tax Act, 1961, follows an Assessment Order by the Assessment Unit of the National Faceless Assessment Centre.
The tax demand pertains to the fiscal year 2023-24, with the assessment year 2024-25, where the taxable income for the subsidiary was assessed at ₹33.34 crore. This assessment was made after an addition concerning ICDS III and Section 43CB of the Income Tax Act, 1961, was applied. The issue revolves around the computation of income using the percentage completion method, which the Income Tax authority disputes.
Welspun Enterprises has stated that it intends to challenge the demand by filing an appeal with the Commissioner of Income-tax (Appeals) Tribunal. The company maintains that the demand is not maintainable and asserts that its accounting practices align with industry standards for Hybrid Annuity Model (HAM) projects. As such, Welspun believes that its approach is compliant with the applicable framework for such projects.
Despite the tax demand, Welspun Enterprises has assured stakeholders that it does not anticipate any material impact on its financial, operational, or other activities. The company is confident in its assessment and is taking appropriate steps to address the issue.
Disclaimer: This article is based on a regulatory filing submitted to the National Stock Exchange of India (NSE).