Key Quantitative Figures
The Income Tax Assessment Order u/s 143(3) read with section 144C(3) read with section 144B of the Income Tax Act, 1961, includes the following financial additions:
- Transfer Pricing Addition: ₹90,95,38,080 (₹90.95 crore)
- Addition under Domestic Tax Laws: ₹32,62,88,114 (₹32.63 crore)
- Total Addition: ₹1,23,58,26,194 (₹123.58 crore)
In addition to the tax demand, the department has also initiated penalty proceedings u/s 270A of the Income Tax Act.
Parties Involved
- Listed Entity: Mastek Limited (Scrip Code: 523704, ISIN: INE759A01021)
- Regulatory Authority: Income Tax Department
Stated Rationale from Tax Authorities
The tax authorities computed the additions based on:
1. Transfer pricing adjustments of ₹90.95 crore under Section 92CA(3) of the Income Tax Act, 1961.
2. An addition of ₹32.63 crore to the company's income under domestic tax laws.
Company's Response and Financial Impact Assessment
The Company has stated it does not envisage any material financial implication at this stage. It cites the following specific computational errors apparent in the order's record:
- Computation of tax liability at a higher rate
- Non-allowance of foreign tax credit
- Non-grant of credit for advance tax paid by a subsidiary which was amalgamated with the Company
The Company intends to file its objections/response with the Income Tax Appellate Authorities within the prescribed timelines. Based on this, Mastek believes there will be no impact on its financials, operations, or other activities from this order.