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The background of the case involves the 2020 merger between Indus Towers and Bharti Infratel, which combined their telecom tower infrastructure to create one of the largest telecom tower companies in India. As part of the merger, assets were transferred, and the company sought depreciation on these transferred assets. However, the tax authorities disallowed depreciation on some of these assets, which led to the dispute.
The favourable ruling from the ITAT will allow Indus Towers to claim depreciation on these assets, reducing the company’s contingent liabilities. The company had previously estimated a contingent liability of ₹3,500 crore, a significant portion of which was due to the depreciation issue. This decision is a key victory for Indus Towers in its ongoing tax disputes and brings clarity to its financial standing regarding this matter.
The company is currently in the process of addressing other related tax issues, including provisions for expenses, amortization of asset retirement obligations (ARO), and other claims that remain under review by the tax authorities, it had revealed in August last year. The ruling is seen as a major positive development for the company’s financial health and operational stability.
“The Hon’ble ITAT has pronounced an order in favour of the Company on denial of depreciation on assets received under merger, disallowance of provision for expenses, amortization of ARO, provision for SLA Credit etc,” Indus Towers wrote in its announcement to all stock exchanges.
This is a significant positive outcome for the Company and will result in a reduction of ₹35,000 Mn (approx) in contingent liability,” the company said.
Indus Towers ended 0.6% higher on Monday at ₹352.05 on the BSE, ahead of the ruling announcement.
