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Informist, Friday, Jul. 11, 2025

 

NEW DELHI – The Delhi High Court has stayed the recovery of INR 11.40 billion income tax demand against Oyo Hotels and Homes Pvt. Ltd. for the assessment year 2021-22 (Apr-Mar). The income tax demand had raised the tax demand against Oyo Hotels on account of the addition to its income after the company issued compulsorily convertible preference shares to Oravel Stays Ltd. 

 

Oyo Hotels was incorporated as a wholly owned subsidiary of Oravel Stays Ltd. in 2015. Thereafter, the National Company Law Tribunal had approved a scheme of demerger between Oravel Stays and Oyo Hotels in 2019. 

 

Oravel Stays raised funds amounting to $1.5 billion from non-resident investors between December 2019 and March 2020. Out of the amount received, Oravel Stays subscribed compulsorily convertible preference shares of Oyo Hotels in a rights issue at an aggregate share premium of INR 2.29 billion. In November 2020, Oravel Stays subscribed to the compulsorily convertible preference shares at an aggregate share premium of INR 35.09 billion under a preferential allotment.

 

In 2022, Oyo Hotels filed its return of income for the assessment year 2021-22 with a total loss of INR 8.59 billion and a tax refund claim of INR 30.07 million. The tax department in an assessment order passed against Oyo Hotels, additions of INR 38.86 billion were made to the petitioner's income under Section 56(2)(viib) of the Income Tax Act, 1961. These additions were on account of the share premium received on the issuance of compulsorily convertible preference shares to Oravel Stays.

 

Further, additions of INR 1.05 billion were also made on expenditure of revenue nature by Oyo Hotels, treated as capital expenditure. There were further additions too on the petitioner's income on account of the management fee and deduction claimed twice by the company. Due to these additions, a tax demand of INR 11.40 billion was raised against Oyo Hotels.  End 

 

Reported by Surya Tripathi

Edited by Saji George Titus

 

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