Tata Steel wins Rs 100 crore transfer pricing challenge

Tata Steel Ltd has successfully challenged the revenue department's Rs 100 crore transfer pricing claim with the Income Tax Appellate Tribunal ruling in favour of the steelmaker. A bench of Amit Shukla and Padmavathy S also ruled in favour of Tata Steel on disallowance of interest paid on perpetual non-convertible debentures of about Rs 266 crore, disallowance of provision for leave encashment of around Rs 324 crores, and other disallowance claims.

The Transfer Pricing Officer (TPO) had sought to make a transfer pricing adjustment on account of market rate paid for electricity supplied by the company's captive power plant.

The assessing officer (AO) also disallowed the deduction of interest paid on debentures by Tata Steel as it treated debentures issued as equity and not borrowings. The tribunal disagreed with AO's findings as the deduction amount of around ₹ 324 crore was certified by the auditor.