Tata Steel moves HC against I-T notice for Rs 25,000 crore loan waiver linked to Bhushan Steel acquisition

Tata Steel Limited has approached the Bombay High Court challenging a reassessment order issued by the Income Tax Department regarding a ₹25,185.51 crore loan waiver linked to its acquisition of Bhushan Steel Limited (now Tata Steel BSL Limited) under the Insolvency and Bankruptcy Code (IBC), 2016.

The matter dates back to May 2018, when Tata Steel, through its wholly owned subsidiary Bamnipal Steel Limited, acquired the debt-laden Bhushan Steel as part of the IBC resolution process. Following the acquisition, the waived debt was not treated as taxable income, and the income tax return for FY 2018–19 (AY 2019–20) was accepted by the department in June 2020 without any objections related to the waiver.

However, on March 13, 2025, Tata Steel received a show cause notice from the Office of the Deputy Commissioner of Income Tax, Circle 2(3)(1), Mumbai, seeking further documentation concerning the waiver. Subsequently, on March 31, 2025, the Assessing Officer issued an order reassessing the taxable income for FY 2018–19 by including the waived loan amount.

In response, Tata Steel filed a writ petition with the Bombay High Court on March 24, 2025, questioning the authority of the Assessing Officer and highlighting technical infirmities in the reassessment process. The company also intends to pursue additional legal remedies before appropriate forums, challenging the reassessment on both procedural and substantive grounds.

Tata Steel has argued that under the provisions of the Income Tax Act, 1961, a waiver of debt under IBC proceedings should not be treated as taxable income. The company believes it has a strong case, backed by legal precedents, and is currently evaluating the impact of the order and its future course of action.

This disclosure has been made in compliance with Regulations 30 and 51 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Further details, including the legal annexure, have been provided to stock exchanges as per regulatory requirements.

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