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Indus Towers Shares Surge as ITAT Ruling Reduces Contingent Liabilities by ₹3,500 Crore

Updated on: Dec 18, 2024, 1:46 PM IST
Indus Towers shares rose on December 17 after the ITAT ruled in favour of the company on a key tax dispute, reducing ₹3,500 crore in contingent liabilities.
Indus Towers Shares Surge as ITAT Ruling Reduces Contingent Liabilities by ₹3,500 Crore
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Indus Towers witnessed a significant rise in its share price on December 17, 2024, as the stock surged to an intraday high of ₹359.30 on the NSE. The spike followed a positive ruling from the Income Tax Appellate Tribunal (ITAT), which provided the company relief in its long-standing tax dispute related to depreciation claims. The ruling has effectively reduced the company’s contingent liability by approximately ₹3,500 crore.

The Origin of the Tax Dispute: A Result of the 2020 Merger

The dispute dates back to the 2020 merger between Indus Towers and Bharti Infratel, a move that consolidated the telecom tower infrastructure of both companies. The merger positioned Indus Towers as one of India’s largest telecom tower companies.

During the merger, assets were transferred to Indus Towers, which subsequently claimed depreciation on these assets. However, the tax authorities disallowed these claims, leading to a dispute that significantly impacted the company’s contingent liabilities.

ITAT’s Verdict: A Major Relief for Indus Towers

The ITAT dismissed the tax department’s objections and ruled in favour of Indus Towers. With this decision, the company can now claim depreciation on the merged assets. This ruling marks a major development, as it has directly reduced contingent liabilities by ₹3,500 crore, thereby improving the company’s overall financial standing.

In its official statement, Indus Towers emphasised the broader significance of the ITAT’s ruling. The order also addressed various tax-related issues, including:

  • Disallowance of provisions for expenses
  • Amortisation of Asset Retirement Obligations (ARO)
  • Provision for Service Level Agreement (SLA) Credit

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.

Published on: Dec 17, 2024, 1:17 PM IST

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