Shriram Pistons Receives Income Tax Penalty Order of Rs. 74.24 Lakh; Evaluating Legal Options:

Shriram Pistons Receives Income Tax Penalty Order of Rs. 74.24 Lakh; Evaluating Legal Options Shriram Pistons & Rings Limited has recently issued a regulatory filing dated July 1, 2025, to the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) under Regulation 30(2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, informing them that it has received an order from the Income Tax Department. The company was issued the income tax order dated June 30, 2025, under Section 270A of the Income Tax Act, 1961, stating that the company has been imposed with a penalty amounting to Rs. 74,24,036 because during the financial year related to Assessment Year 2020-21, the company claimed that the cess paid on income tax should be allowed as a deductible expenditure. The company made this claim based on existing tax laws and previous judicial rulings that supported these kinds of deductions.

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But, the Assessing Officer (AO) disagreed with the company's claim during the assessment process and imposed an addition to the total taxable income under Section 143(3) of the Income Tax Act. Therefore, the department then issued a penalty order saying that the company had misreported income by incorrectly treating cess as a deductible expense. The company has clarified that currently it is evaluating all available legal options, including possibly filing an appeal against the income tax order before the CIT(A). This is a standard step companies are permitted to adopt if they believe a tax order is incorrect or unfair. Moreover, the company clarified that the taken action will not have any material impact on its financial position, business operations, or other activities.