Hero Moto's appeal upheld, tax tribunal sets aside Rs 2,337 crore tax demand

Two-wheeler major Hero MotoCorp has got a favourable ruling from the Income Tax Appellate Tribunal (ITAT), setting aside an income tax demand of Rs 2,336.71 crore for AY12, the company informed stock exchange on July 25.

The ITAT verdict upholds Hero Moto's appeal against the reassessment order and rules it invalid, rejecting the tax addition.

The case pertains to Hero's JV with Honda, which was terminated in 2010, and Honda exited JV by selling its entire stake to the Hero Group, to enable both Hero Group and Honda to independently focus on two-wheeler business in India.

The 26% stake held by Honda in HHML (JV) was to be taken over by Hero Group through Hero Investment Pvt. Ltd. In the appeal, the Hero Group said in an off-market deal in March 2011 acquired 5.19 crore equity shares, representing 26% stake in HHML, from Honda at Rs 739 per share, for a total Rs 3,841.83 crore being paid to Honda, on which due tax was paid.