Indus Towers shares rise 2% after ITAT ruling reduces Rs 3,500 crore contingent liability

Indus Towers shares jumped 2% to an intraday high of Rs 359.75 on the BSE after the company secured a favorable ruling from the Income Tax Appellate Tribunal (ITAT) regarding depreciation claims on assets received during its merger with Bharti Infratel.

The ITAT dismissed the tax department's objections, leading to a reduction in the company’s contingent liability by approximately Rs 3,500 crore.

The case stems from the 2020 merger between Indus Towers and Bharti Infratel, which consolidated their telecom tower infrastructure, making Indus Towers one of India’s largest telecom tower companies. During the merger, assets were transferred, and Indus Towers claimed depreciation on these assets. However, the tax authorities had disallowed these claims, triggering the dispute.

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With the ITAT ruling in its favor, Indus Towers can now claim depreciation on the merged assets, providing significant relief to its financial position. The company previously estimated a contingent liability of Rs 3,500 crore, largely tied to this dispute.

In its announcement, Indus Towers highlighted the broader implications of the ITAT ruling, which also addressed other tax-related issues. "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.," the company stated.

“This is a significant positive outcome for the company and will result in a reduction of Rs 35,000 million (approx) in contingent liability,” it added.

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The ruling marks a major win for Indus Towers in its tax disputes and provides clarity on its financial standing. The company had earlier revealed ongoing reviews of other related issues, including provisions for expenses and amortization of asset retirement obligations.

On Monday, Indus Towers shares closed at Rs 352.8, up 0.8% on the BSE, while the benchmark Sensex declined 0.47%. The stock has gained 74% so far in 2024 and 80% over the past two years, with the company’s market capitalization now at Rs 93,087 crore.

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