Bhushan Steel buy case: Tata Steel gets tax notice, challenges in HC

Tata Steel said that the income tax return of Bhushan Steel for FY 2018-19 was accepted by the income tax department in June 2020 without any demand pertaining to the waiver of loan

Tata Steel has received an income tax order in connection with the debt waiver relating to the acquisition of Bhushan Steel under the insolvency law.

 

In May 2018, Tata Steel, through its wholly-owned subsidiary, Bamnipal Steel, had acquired Bhushan Steel (later renamed Tata Steel BSL Limited), under the resolution process of the Insolvency and Bankruptcy Code (IBC).

 

Consequent to the acquisition, a debt of ₹25,185.51 crore was waived off in favour of Tata Steel BSL (TSBSL). Tata Steel BSL and Bamnipal Steel were amalgamated with Tata Steel, effective November 2021.

 

In a stock exchange filing on Friday, Tata Steel said that on March 13, 2025, it had received a show cause notice seeking further documents on the waiver amount. It was for the purpose of reassessment of taxable income for AY 2019-20 by the assessing officer, Office of the Deputy Commissioner of Income Tax, Circle 2(3)(1), Mumbai.

 

 

Tata Steel said that the income tax return of Bhushan Steel for FY19 was accepted by the income tax department in June 2020 without any demand pertaining to the waiver of loan.

 

The steelmaker filed a writ petition with the Bombay High Court on March 24, 2025, questioning the authority of the assessing officer in conducting the reassessment of taxable income for AY 2019-20.

 

Further, on March 31, 2025, Tata Steel received an assessment order issued by the assessing officer, reassessing the taxable income for FY19 (AY 2019-20) and increasing the tax by the amount of debt waived.

 

The order further provides that the company is allowed to file necessary documents with the tax authorities for computation of final tax liability in this regard, it said in the filing.

 

Tata Steel has already filed a writ petition in the Bombay High Court, challenging technical infirmities in conducting the reassessment proceedings. 

 

The company said it will also seek appropriate legal remedies before relevant judicial/quasi-judicial forums. It will contest the matter on merits, challenging the contents of the order passed by the assessing officer.

 

It believes that it has a strong case on merits apart from the ‘technical infirmities’ in the order for which it is already before the Bombay High Court.

 

“The company believes that in terms of the relevant provisions of the Income Tax Act, 1961, waiver of debt cannot be treated as taxable income in the hands of TSBSL at the relevant point in time. More so, when such waiver was a sequel to an acquisition under the IBC proceedings,” it mentioned in the filing.