Devyani International subsidiary tax demand of INR 59.52 million quashed
Devyani International Limited announced that its wholly-owned subsidiary, Sky Gate Hospitality Private Limited, has successfully quashed an Income Tax demand of INR 59.52 million. The demand, originally raised under section 143(3) of the Income-tax Act, 1961 for the Assessment Year 2024-25, was withdrawn following a rectification order dated June 9, 2026.
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Devyani International Limited announced that its wholly-owned subsidiary, Sky Gate Hospitality Private Limited, has successfully quashed an Income Tax demand of INR 59.52 million. The demand, which was issued under section 143(3) of the Income-tax Act, 1961 for the Assessment Year 2024-25, was withdrawn by the Deputy Commissioner of Income Tax through a rectification order dated June 9, 2026. The development removes a financial liability related to the alleged excess premium on share issuance during the financial year 2023-24.
The company had previously informed the exchanges on March 25, 2026 that Sky Gate Hospitality had received the demand order. The tax authority had contested the premium on shares issued by the subsidiary during FY24. Following the receipt of the demand, Sky Gate filed a rectification application under section 154 of the Income-tax Act, 1961 to challenge the assessment.
The Deputy Commissioner of Income Tax accepted the submissions made by Sky Gate Hospitality, leading to the quashing of the earlier demand order. The intimation regarding the rectification was received by the subsidiary on June 10, 2026. The disclosure was made to the exchanges in compliance with Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Key Details of the Tax Demand
| Detail | Information |
|---|---|
| Subsidiary Name | Sky Gate Hospitality Private Limited |
| Original Demand Amount | INR 59.52 million |
| Assessment Year | 2024-25 |
| Relevant Financial Year | 2023-24 |
| Section under which demand was raised | Section 143(3) |
| Section under which rectification was filed | Section 154 |
| Date of Rectification Order | June 9, 2026 |
| Date of Receipt of Intimation | June 10, 2026 |
The resolution of this tax dispute eliminates the contingent liability for Sky Gate Hospitality and Devyani International . The company confirmed that the necessary disclosures regarding the rectification have been submitted to the National Stock Exchange of India Ltd. and BSE Limited.
Historical Stock Returns for Devyani International
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| +1.09% | -5.18% | -7.23% | -19.95% | -37.74% | -12.83% |
How will the elimination of this tax liability impact Devyani International's free cash flow and capital allocation plans for the upcoming fiscal year?
Does this resolution set a precedent that will encourage the company to re-evaluate other pending tax litigations or contingent liabilities?
Will the company pursue any claims for interest or costs incurred during the period the tax demand was outstanding?
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