Hindustan Unilever has received a tax notice amounting Rs 962.75 crore, including an interest of Rs 329.33 crore from the Office of the Deputy Commissioner of Income Tax, Mumbai. The company in a filing on Monday said that they had received the order on August 23.
The tax demand, HUL stated, has been raised on account of non-deduction of TDS as per provisions of Income Tax Act, 1961 while making remittance of Rs 3,045 crore for payment towards acquisition of India Health Food Drink (HFD) intellectual property rights (IPR) from GlaxoSmithKline ‘GSK’ Group entities.
HUL, in the filing, added that there would be no significant financial implications at this stage as the company has a strong case on merits to appeal against the demand. It said that it would undertake necessary steps.
“There should not be any significant financial implications at this stage pursuant to the Demand Order for the reasons below: The Company has strong case on merits on tax not withheld, basis available judicial precedents, which have held that the situs of an intangible asset is linked to the situs of the owner of the intangible asset and hence, income arising on sale of such intangible assets are not subject to tax in India,” it stated.
Meanwhile, HUL shares were trading flat at Rs 2,819 in early deals on BSE today. Market cap of the FMCG firm stood at Rs 6.61 lakh crore.
“As the Demand Order is appealable, the Company will be taking necessary actions in accordance with the law prevailing in India. Further, the Company has an indemnification right to recover the demand raised by the Income Tax department and will undertake necessary steps in furtherance of the same,” said HUL in the filing.
The order was received on Friday, and was filed with the exchanges on the next working day, which was Monday.