Brainbees ESOP Trust, a controlled trust of firstcry (brainbees solutions) , has received an order under Section 148A and a notice under Section 148 of the Income Tax Act, 1961 from the Income Tax Department for Assessment Year 2022-23. The regulatory action targets the issuance of shares to the Trust for employee grants, potentially leading to a reassessment of tax liabilities. The Trust asserts that no income chargeable to tax has escaped assessment and plans to pursue legal remedies.

The Income Tax Department issued the order and notice on June 30, 2026, alleging that income chargeable to tax escaped assessment within the meaning of Section 147 of the Income Tax Act, 1961. The Department proposes to assess or reassess the issuance of shares to the Trust or re-compute losses, depreciation, or other allowances for A.Y. 2022-23. The specific dispute concerns the valuation of shares issued to the ESOP Trust.

According to the filing, the Department seeks to reassess the issuance of 1,03,62,254 shares to the ESOP Trust. The shares were issued to the Trust at a face value of ₹5 per share, whereas the Department contends this was against their fair market value at the time of issuance. The Trust is evaluating appropriate legal remedies in response to the order and notice.

The financial implications of the dispute cannot be determined at this stage as no demand order has been passed by the Income Tax Department. The Trust believes it has a strong case on merit and that it has complied with all tax regulations. Brainbees Solutions emphasized its commitment to high standards of corporate governance and compliance, including the prompt payment of taxes.

Key Details of the Dispute

Firstcry (Brainbees Solutions) has extended the timeline for a proposed investment of up to AED 34 Million in its subsidiary Firstcry Management DWC LLC to July 31, 2026, due to procedural delays. The funds, sourced from Initial Public Offer (IPO) proceeds, are designated for business expansion, including a further investment of up to SAR 22 Million in Firstcry Trading Company in the Kingdom of Saudi Arabia and the balance in Firstcry Retail DWC LLC in the United Arab Emirates. This extension revises the previous deadline of June 30, 2026, which was communicated to the exchanges earlier.

Investment Details

The disclosure was submitted to the National Stock Exchange of India and BSE Limited pursuant to Regulation 30 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. The communication was signed by Mandar Chintaman Joshi, Company Secretary & Compliance Officer of Firstcry.