Massive Tax Relief of Rs.21,000 Crore to DND flyover operator Noida Toll Bridge Company

In a major win for Noida Toll Bridge Company Limited (NTBCL), the Income Tax Appellate Tribunal (ITAT) overturned a large tax demand of almost Rs.21,000 crore. The listed firm, which is part of the IL&FS Group, manages the Delhi-Noida-Delhi (DND) flyover, which is an essential infrastructure link between the two cities.

The tax demand covered nine financial years, from 2006 to 2015, and contained Rs.10,893 crore in alleged unpaid taxes and the equivalent amount in penalties. The Income Tax Department accused NTBCL of hiding income and failing to report appropriate income information.

The Income Tax Department issued an assessment order on December 31, 2008, which was followed by reassessment proceedings. These procedures sought to prohibit the amortization of interest on NTBCL’s zero-coupon bonds and to tax aimed returns as income. Furthermore, the department distinguished land granted on lease by NOIDA/DDA as a subsidy and prohibited depreciation on the DND Toll Bridge.

NTBCL opposed the tax claims, questioning the authority of the reassessment and enhancement notices, as well as challenging different disallowances and additions on merit.

In its order on August 8, 2023, the Tribunal reversed the reopening and enhancement of NTBCL’s tax assessments, giving relief for six of the nine assessment years (FY 2006 to FY 2012). This resulted in the reduction of around Rs.16,000 crore of tax demands. On May 17, 2024, the Tribunal overturned the penalty orders in favour of NTBCL.

On August 20, 2024, the Tribunal gave relief for the remaining three years, ending the entire nine-year tax dispute in favour of NTBCL. The penalties for these years were likewise waived on September 4, 2024.

“Considering that the Co-ordinate Bench of the Tribunal erased the additions made against the assesses in the quantum appeal, the order of the penalty proceedings, which is associated to the said additions, would not be sustained. Accordingly, the impugned penalty judgments are hereby overturned,” ruled ITAT in its most recent order, which also dismissed the penalty proceedings.

“With this order the complete demand and penalty of approx. Rs.21000 crores have been fully addressed in favour of the company” , according to a spokesperson of NTBCL.