Apeejay Surrendra Park Hotels Receives Income Tax Assessment Order of ₹41.07 Crore; Plans to File Appeal

What Happened ?

Key Details

Assessment Order:

• Authority: Income Tax Department, Assessment Unit (Faceless Assessment)
• Assessment Year: AY 2024-25
• Date of Receipt: 1 July 2026
• Order issued under:
  • Section 143(3)
  • Read with Sections 260 and 144B
  • Tax demand raised under Section 156 of the Income-tax Act, 1961

Note:

• The assessment order arose from scrutiny proceedings conducted for AY 2024-25.

Nature of Demand:

• Tax demand raised: ₹41,06,72,530, including applicable interest.
• The order relates to additions/disallowances made during scrutiny assessment.
• The alleged issues involve provisions including:
  • Section 37(1)
  • Section 40(a)(ia)
  • Section 68
  • Section 69C
  • Section 35D

Note:

• The company has not accepted the assessment findings and intends to pursue legal remedies.

Company Response:

• Appeal will be filed before the appropriate Appellate Forum/National Faceless Appeal Centre (NFAC).
• Management believes it has adequate factual and legal grounds to defend its position.
• The company expects a substantial portion of the demand may not survive during appellate proceedings.

Note:

• The company has stated that further developments will be disclosed in accordance with SEBI Listing Regulations.

Business Impact:

• Management does not expect the assessment order to materially affect:
  • Financial performance
  • Business operations
  • Other operating activities

Note:

• The disclosure indicates that the matter is currently under legal challenge and no operational disruption is anticipated.

Risk Analysis

Summary:

• Although the tax demand is sizeable, the final financial impact remains subject to appellate proceedings. The outcome will depend on judicial review of the disputed tax adjustments.

Key Risks:

• Appeal outcome remains uncertain.
• Potential cash outflow depends on final adjudication.
• Litigation timelines could extend over multiple years.
• Regulatory compliance and disclosure obligations continue until final resolution.

Worst Case:

• If appellate authorities uphold the assessment in full, the company may be required to settle the tax demand together with any additional statutory interest, impacting cash flows.

Risk Level: Medium

Company Commentary

• The company has received a tax assessment order for AY 2024-25.
• Total demand amounts to ₹41.07 crore, including applicable interest.
• Appeal will be filed before the appropriate appellate authority/NFAC.
• Management believes the company has strong legal and factual grounds.
• No material financial, operational or business impact is currently expected.