ITAT Allows Tata Steel’s Rs 813.65 Crore Interest Expenditure Deduction Claim, Tax Exposure Drops to Rs 1,259 Crore:

Tata Steel Limited has received a favourable order from the Income Tax Appellate Tribunal (ITAT) for the Financial Year 2008-09, providing relief in a tax dispute involving the disallowance of interest expenditure claimed under Section 36(1)(iii) of the Income Tax Act, 1961.

The company had earlier disclosed that income tax authorities had disallowed its claims for deduction of interest expenditure on loans borrowed and used for acquiring Corus Group Plc, a foreign subsidiary. The dispute covers the Financial Years 2007-08 to 2014-15, with an aggregate tax exposure of around Rs 1,901 crore.

For Financial Year 2007-08, the ITAT had already passed a favourable order dated February 20, 2026, allowing Tata Steel’s claim for deduction of interest expenditure. The tax exposure for that year was around Rs 215 crore, reducing the overall exposure from approximately Rs 1,901 crore to Rs 1,686 crore, subject to the Assessing Officer passing a consequential order.

For the Financial Year 2008-09, the Deputy Commissioner of Income Tax had disallowed Tata Steel’s claim of Rs 813.65 crore towards interest expenditure under Section 36(1)(iii). Tata Steel appealed against the order dated January 10, 2014, before the ITAT.

The final hearing for the Financial Year 2008-09 was held in June 2026. Tata Steel received the ITAT’s favourable order dated September 18, 2026, on September 28, 2026. Following its earlier order pertaining to the Financial Year 2007-08, the Tribunal allowed the company’s claim for deduction of interest expenditure. The tax exposure for Financial Year 2008-09 is around Rs 427 crore.

Consequently, Tata Steel’s total tax exposure is expected to reduce from around Rs 1,686 crore to Rs 1,259 crore after the Assessing Officer gives effect to the order. The company will subsequently make necessary adjustments to the contingent liability disclosed in its financial statements.

Tata Steel stated that these favourable orders may have a persuasive impact on its pending tax litigation for the Financial Years 2009-10 to 2014-15 involving the same issue.