The Income Tax Department has fined Tata Chemicals ₹103.63 crore for violating interest disallowance rules. In a regulatory disclosure, Tata Chemicals stated it received a penalty order from the National Faceless Assessment Centre, Income Tax Department, under Section 270A of the Income Tax Act.
The penalty relates to the disallowance of interest under section 36(1)(iii) of the Act. Tata Chemicals intends to appeal this order before the National Faceless Appeal Centre based on legal merits and advice from its counsel.
Tata Chemicals’ stock price falls by 8%
Tata Chemicals’ stock price dropped over 8% in intraday trading, possibly due to short selling after its removal from the F&O Ban list. This decline followed a significant rise earlier, driven by expectations of value unlocking after Tata Sons’ IPO.
The notable decline in Tata Chemicals’ shares on Wednesday is linked to the removal of the ban in the F&O segment, prompting the creation of short positions. Analysts noted that the previous surge in Tata Chemicals’ stock was driven by hopes of the company capitalizing on value unlocking after Tata Sons’ listing. However, Tata Sons’ consideration of alternatives to an IPO likely dashed those hopes.
Tata Chemicals’ stock witnessed significant gains, surging nearly 40% in the first week of March, reaching its peak on March 7th. This surge followed a report by Spark Capital indicating that the intrinsic value of Tata Chemicals could be 5-7 times its FY25 estimated price-to-earnings ratio.
The report also suggested that this value could rise further if Tata Chemicals’ investment is sold off during or after the initial public offering (IPO) of Tata Sons. The report estimated Tata Sons’ value at approximately ₹10-11 lakh crore.
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