Edelweiss Rural And Corporate Services Received ₹2.61 Crore Tax Notice From Income Tax Department

Edelweiss Rural And Corporate Services Received ₹2.61 Crore Tax Notice From Income Tax Department

The company stated that the notice, received on May 31, 2024, pertains to the assessment year 2016-17 and includes certain disallowances.

ANIUpdated: Saturday, June 01, 2024, 05:15 PM IST
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Income tax department | File Photo

Edelweiss Financial Services Limited's subsidiary, Edelweiss Rural & Corporate Services Ltd., received a tax demand notice of Rs. 2.61 crores from the Income Tax Department, the company informed the exchange in its filing.

The company stated that the notice, received on May 31, 2024, pertains to the assessment year 2016-17 and includes certain disallowances.

"We wish to inform that Edelweiss Rural & Corporate Services Limited, a subsidiary of the Company, has, pursuant to search, received the assessment order and demand notice on May 31, 2024, under Section 143(3) of the Income Tax Act, 1961, for the assessment year 2016-17 and a tax demand of Rs. 2.61 crores (including interest) on account of certain disallowances," said the company.

The company added that the demand is not sustainable by the department and will not have a significant impact on its financials, operations, or other activities. It mentioned that they are examining the order and appropriate steps, including the filing of appeals, would be taken in this regard.

RBI's Business Restriction

Earlier, the Reserve Bank of India (RBI) imposed stringent business restrictions on two entities of the Edelweiss Group--ECL Finance Limited (ECL) and Edelweiss Asset Reconstruction Company Limited (EARCL).

The decisive action came in response to supervisory concerns identified during recent examinations, as per RBI release.

According to RBI, invoking its authority under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) and the Reserve Bank of India Act, 1934, ECL Finance Ltd (ECL) to cease and desist immediately from engaging in any structured transactions involving wholesale exposures, except for the repayment or closure of accounts in the normal course of business.

Edelweiss Asset Reconstruction Company Limited (EARCL) to stop the acquisition of financial assets, including security receipts (SRs), and refrain from reorganizing existing SRs into senior and subordinate tranches, it said.

The supervisory examinations revealed that the Edelweiss Group entities had engaged in a series of structured transactions aimed at ever-greening stressed exposures of ECL.

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