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Informist, Friday, May 30, 2025

 

NEW DELHI – The Supreme Court on Friday stayed the income tax department's reassessment proceedings against Dalmia Bharat Ltd. and its two subsidiaries, Dalmia Cement (Bharat) Ltd. and Dalmia Power Ltd., for the assessment year 2011-12 (Apr-Mar). Further, the top court issued a notice to the income tax department on the petitions by Dalmia Bharat and its arms. 

 

The case has its genesis in KKR Mauritius Cement Investment Ltd. investing INR 5 billion in Dalmia Cement (Bharat). KKR Mauritius was allotted 37.92 million equity shares, accounting for 14.99% of the stake in the company. The shares were bought back by Dalmia Bharat in 2016 for INR 12.18 billion.

 

The income tax assessing officer thought this amounted to round-tripping and proposed to reopen the tax assessments of the three companies. Challenging the tax reassessment proposal, the companies moved a single-judge bench of the Madras high court, which ruled in Dalmia's favour. Since Dalmia Cement (Bharat) had disclosed the investment made by KKR in their returns, the assessments cannot be reopened, the bench said. The income tax department then moved the division bench of the high court, which said it was satisfied that the materials relied on by the assessing officer prima facie indicated that KKR Mauritius Cement Investment was a shell company. "The scale of returns and the manner in which the transactions had been conducted also prima facie suggest round tripping," the division bench had said. 

 

Following this, the three Dalmia companies moved the Supreme Court against the division bench order. "We are of the view that the findings of the Honorable Division Bench of the High Court are unsustainable," Dalmia Bharat had said in the exchange filing.  End

 

At 1333, shares of Dalmia Bharat were down 1.6% at INR 2,020.40 on the National Stock Exchange.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Surya Tripathi

Edited by Tanima Banerjee

 

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