Tata Steel Wins ₹427 Crore Tax Relief, Exposure Drops To ₹1,259 Crore

Mumbai: Tata Steel has received a favourable order in a long-running income-tax dispute linked to interest expenditure on loans used for the acquisition of Corus Group Plc, providing relief of approximately Rs 427 crore for FY2009.

The Income Tax Appellate Tribunal allowed the company’s claim for deduction of interest expenditure for FY2009, following an earlier favourable ruling for FY2008, Tata Steel said in an exchange filing.

The development could reduce the company’s aggregate tax exposure from approximately Rs 1,686 crore to Rs 1,259 crore once the Assessing Officer gives effect to the latest order through a separate consequential order.

Rs 1,901 Crore Dispute

The broader dispute relates to loans borrowed and utilised by Tata Steel for its acquisition of Corus Group Plc. Income-tax authorities had disallowed interest deductions under Section 36(1)(iii) of the Income Tax Act for FY2008 through FY2015.

The aggregate tax exposure from the issue was approximately Rs 1,901 crore, against which Tata Steel had filed appeals before the Income Tax Appellate Tribunal.

For FY2009, the Deputy Commissioner of Income Tax had disallowed a deduction claim of Rs 813.65 crore towards interest expenditure in January 2014. Tata Steel challenged that order the following month.

Earlier Rs 215 Crore Relief

Tata Steel had already secured a favourable ruling for FY2008 in February 2026, when its interest deduction claim was allowed. The tax exposure for that year was approximately Rs 215 crore.

That decision was expected to lower the overall exposure from Rs 1,901 crore to Rs 1,686 crore after implementation by the Assessing Officer.

FY2010-FY2015 Cases In Focus

The latest ruling could have implications beyond FY2009. Tata Steel said the favourable FY2008 and FY2009 orders could have a “persuasive impact” on related pending litigation concerning the same issue for FY2010 through FY2015.

Following implementation of the FY2009 order, the company will also make necessary adjustments to the contingent liability disclosed in the notes to its financial statements.