Shree Cement: I-T dept claims ₹4,000 crore demand for wrongful claims & deductions

The I-T department conducted a survey action at five locations of the company in June 2023 in connection with the deductions claimed under section 80IA of the Income Tax Act for the April 2014 to March 2023 period.

The survey took place at the company premises in Beawar, Jaipur, Chittorgarh, and Ajmer.

“IT dept survey claims Shree Cements raised wrongful claims of ₹8,500 crore between April 2014-March 2023 and major violations for claiming deductions for waste management, water treatment and power infrastructure,” official said.

As per the report filed by tax officials post the survey action, “Shree cement claimed ₹7,000 crore wrongful deduction for solid waste management but during the survey, IT department could not find any such utility at any of the company premises.

Similarly, the company has raised ₹250 crore wrongful deduction for water treatment plant, but during investigations it was found that the company only has a RO water unit, which is used for employees and no treatment plant has been installed at any of the company facilities,” official said.

Not just this, the official highlighted that the “survey investigations also say that the company wrongfully claimed deduction under New India Power Undertaking Scheme, whereas the company has only repurposed old machinery to start a power plant for which it had claimed deductions earlier.”

It is important to note that in a separate government action, the Ministry of Corporate Affairs (MCA) had issued an inspection order against the Kolkata-based cement manufacturer on reports of improper income tax filings. The order was issued taking note of issues such as party transactions, corporate governance matters and issues pertaining to improper income tax filings.

A survey action of the I-T department is an investigative procedure carried out to ascertain the actual income earned by a tax payer for a financial year.

However, Shree Cement has dismissed any tax evasion reports. The alleged tax evasion, according to the reports, is said to be the biggest ever to date.

The company had said: “Income Tax Department is conducting a survey at our premises, and the company's management team is available and extending full cooperation to the officials. The information as required by the officials is being made available."

Shares of Shree Cement are currently trading 4.21% lower at ₹27,165 on the NSE. The stock has also turned negative so far this year.