Kalpataru Projects International Limited (KPIL) has notified the reassessment orders received from the Deputy Commissioner of Income Tax (DCIT), Central Circle-3(3), Mumbai, pursuant to a search conducted in August 2023. These orders relate to eight years of income tax returns, from Assessment Year (AY) 2013-14 to AY 2020-21. The DCIT has raised a demand for tax and interest under Section 156 of the Income Tax Act, 1961.

Tax Demand and Financial Implications

The company disclosed that the aggregate impact of the tax demand (including reduced refund for the relevant years) is INR 141.31 Crores. However, the company has indicated that it holds a strong case to challenge the reassessment, particularly regarding certain additions and disallowances made by the tax authorities. Notably, KPIL plans to file appeals against the orders in accordance with the prescribed timelines.

Additionally, the company emphasized that the reassessment orders do not have any significant financial implications on the business due to its belief in a strong defense. The company will take appropriate legal remedies to contest the decisions and rectify any mistakes in the demand computation.

Specifics Regarding AY 2016-17

For Assessment Year 2016-17, while there were no additions made to the total income, the company reported that the tax authorities erroneously raised a demand of INR 95.83 Crores, apparently due to system issues. In response, Kalpataru Projects has already filed an application for rectification, which, if granted, is expected to nullify the demand raised for that year.

Company’s Legal Standing

The company has conveyed that, based on external legal advice and its own assessment, it is confident about successfully contesting the reassessment orders before the appellate authorities. Furthermore, Kalpataru Projects is also in the process of filing rectification applications to address the mistakes in the demand computations for the affected years.

Conclusion

In light of the reassessment orders from the DCIT, Kalpataru Projects remains committed to protecting its interests. The company is prepared to take all appropriate legal actions to resolve the matter favorably. The impact of the reassessment on the financial position of the company is expected to be minimal, given the ongoing rectification and appeal processes. The company will continue to update the stakeholders on the developments regarding these matters.

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