Asia Press Agency

Tag: LIC

  • IT Dept Challenges Ruling in ₹4,993 Crore Tax Dispute with LIC

    IT Dept Challenges Ruling in ₹4,993 Crore Tax Dispute with LIC

    The Income Tax Department in India has taken a significant step by approaching the Bombay High Court to challenge a ruling made by the Mumbai-bench of the Income Tax Appellate Tribunal in favor of the Life Insurance Corporation (LIC). These tax dispute cases involve a substantial cumulative amount of ₹4,993 crore and pertain to the assessment year 2013-14.

     

    The tax disputes at the heart of this legal battle are divided into two cases, one concerning ₹1,838.8 crore and the other involving a more substantial ₹3,153.9 crore. In both instances, the Income Tax Appellate Tribunal had ruled in favor of LIC, which is a state-run insurance company and one of the largest in the country.

     

    This development represents a significant escalation in the ongoing dispute between the Income Tax Department and LIC. The tax department’s decision to appeal the tribunal’s ruling underscores the high stakes involved in these cases and the importance of resolving these disputes in accordance with the tax laws of the country.

     

    In a regulatory filing, LIC confirmed that it had received communication from the Income Tax Department regarding its decision to file an appeal with the Bombay High Court. This move is an attempt to overturn the tribunal’s decision and secure the tax liabilities that the department believes LIC owes. The case has gained attention in financial circles due to the substantial amount of money involved and the potential impact on LIC’s financial position.

     

    Despite the legal battle, LIC has expressed confidence that these litigations will not have a material adverse effect on its financial position and operating results. This suggests that LIC is prepared to defend its position in court and remains confident in the merits of its case. However, the final outcome of this legal dispute will depend on the legal arguments presented and the interpretation of tax laws and regulations by the courts.

     

    It’s worth noting that this legal action comes on the heels of LIC receiving notices from the Income Tax Department for a penalty totaling ₹84 crore. These notices were issued in relation to the financial years 2013, 2019, and 2020. LIC became aware of these notices on October 3, 2023, and it’s an additional facet of the ongoing dispute between the insurance giant and the tax department.

     

    Furthermore, in September, LIC found itself dealing with another tax-related issue. This time, it was a Goods and Services Tax (GST) notice from the Bihar taxation body demanding ₹290 crore. This amount included a tax demand of ₹166.75 crore, interest of ₹107.5 crore, and a penalty of ₹16.67 crore. LIC responded by stating its intention to file an appeal before the GST Appellate Tribunal, indicating that it would challenge the order through established legal channels.

     

    These ongoing legal disputes emphasize the complexity and importance of tax compliance and regulation in the financial and insurance sector in India. The outcomes of these cases will have far-reaching implications, not only for LIC but also for the broader landscape of how tax disputes are resolved in the country. The decisions made by the courts in these cases will serve as precedents and impact how future tax disputes are adjudicated, underscoring the need for a fair and efficient tax system that adheres to the rule of law.

  • Government: Asset Valuer for IDBI Bank’s Strategic Disinvestment

    Government: Asset Valuer for IDBI Bank’s Strategic Disinvestment

    The Indian government has initiated the process of strategic disinvestment in IDBI Bank by inviting bids to engage an asset valuer for the transaction. The government and the Life Insurance Corporation of India (LIC) are collectively selling approximately 61% of their stake in IDBI Bank, and multiple expressions of interest (EoI) have been received for the disinvestment.

     

    The Department of Investment & Public Asset Management (DIPAM), on behalf of the government and LIC, recently released a request for proposal (RFP) to engage a reputable asset valuer entity registered with the Insolvency & Bankruptcy Board of India (IBBI). The selected entity will be responsible for valuing various aspects of IDBI Bank’s assets and providing necessary assistance throughout the strategic disinvestment process.

     

    The RFP outlines that the contract with the asset valuer will be initially valid for three years from the date of the appointment letter, with the possibility of extending it for an additional year on existing terms and conditions. Interested parties have until October 9 to submit their bids for consideration.

     

    In May 2021, the Cabinet Committee on Economic Affairs (CCEA) approved the strategic disinvestment of the government and LIC’s equity stakes in IDBI Bank, along with the transfer of management control.

     

    The asset valuer will be tasked with valuing several aspects of IDBI Bank, including:

     

    • Investments (including investments in subsidiaries, associates, joint ventures, and affiliates, as applicable).
    • Loans and advances.
    • Fixed assets.
    • Other assets.

     

    Additionally, the asset valuer will work closely with the transaction advisor and legal advisor appointed by DIPAM to ensure a smooth disinvestment process. IDBI Bank’s liabilities, which include deposits, borrowings, and other liabilities and provisions, will also be considered in the valuation.

     

    As of March 2023, LIC holds a 49.24% stake in IDBI Bank, while the government holds 45.48%. Post the strategic disinvestment, the government and LIC will own 15% and 19%, respectively, in the bank, resulting in a combined holding of 34%.

     

    The strategic disinvestment of IDBI Bank represents a significant step in the government’s ongoing efforts to divest its interests in various state-owned enterprises and promote privatization in key sectors of the economy.