Indian Hume Pipe Co. Ltd. has informed stock exchanges about two penalty orders totaling ₹5.73 crores imposed by the Income Tax Department for Assessment Year 2023-2024. The disclosure was made on April 1, 2026, under Regulation 30 of SEBI listing regulations.

Major Tax Penalty Orders

The company received two separate penalty orders dated March 31, 2026, from the Assessment Unit, Income Tax Department, NAFAC, Delhi. These penalties arise from disputes over tax deductions and purchase transactions that were disallowed in the original assessment.

Background of Tax Disputes

The penalties stem from two main disallowances made in the assessment order dated March 25, 2025, under Section 143(3) of the Income Tax Act. The first penalty relates to the disallowance of a deduction claimed under Section 54D amounting to ₹7,30,03,569. The second penalty concerns an addition of ₹10,51,80,264 for alleged unexplained purchases.

Both disallowances were subsequently confirmed by the Commissioner of Income Tax (Appeals) through an order dated August 30, 2025. In response, the company filed an appeal on October 29, 2025, before the Income Tax Appellate Tribunal, Mumbai, challenging these disallowances.

Company's Response and Legal Strategy

The Indian Hume Pipe Co. Ltd. plans to file appeals against both penalty orders before the Commissioner of Income Tax (Appeals). The company maintains that the rejection of deductions is due to differences in legal interpretation rather than non-reporting or wrong reporting of income.

Key Arguments:

• The penalty under Section 270A (200% of tax involved) is not justified
• Company has adequate factual and legal grounds to substantiate its position
• The disputes arise from interpretation differences, not misreporting
• Appeals are already pending before ITAT Mumbai for the underlying disallowances

Financial Impact Assessment

Despite the significant penalty amounts, the company expects the entire demand to subside based on its legal position. Management has stated there is no material impact expected on the company's financial, operational, or other activities. The company's confidence stems from its belief in having strong factual and legal grounds to challenge both the underlying disallowances and the penalty orders.

The disclosure was made in continuation of earlier submissions dated March 26, 2025, and August 31, 2025, maintaining transparency with stakeholders about pending litigation matters as required under SEBI regulations.

Indian Hume Pipe Company Limited has achieved complete release of all pledged equity shares through formal regulatory disclosure by SBICAP Trustee Company Limited. The security trustee officially communicated the release of 1,16,94,995 equity shares representing 22.20% of the company's total share capital on March 25, 2026.

Official SBICAP Trustee Disclosure

SBICAP Trustee Company Limited submitted comprehensive disclosures under Regulation 29(2) of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. The formal communication was addressed to BSE Limited, National Stock Exchange of India Limited, and The Indian Hume Pipe Company Limited through reference number 9029/STCL/OPR/ST/2025-26 dated March 25, 2026.

Share Release Transaction Details

The complete release involved 1,16,94,995 equity shares that were previously encumbered as pledge security. The shares were released on March 24, 2026, eliminating all outstanding encumbrances held by SBICAP Trustee Company Limited in its capacity as security trustee.

Company Capital Structure and Compliance

The Indian Hume Pipe Company Limited maintains total equity share capital of 5,26,81,770 equity shares with face value of Rs. 2.00 each, aggregating to Rs. 10,53,63,540. The shareholding pattern referenced in the disclosure is based on BSE data as of December 31, 2025.

SBICAP Trustee Role and Operations

SBICAP Trustee Company Limited operates as security trustee, debenture trustee, and share pledge trustee without engaging in direct lending or borrowing activities. The company holds securities created in its favor for the benefit of debenture holders and lenders as required under transaction documents, with enforcement capabilities in case of default situations.

The complete release of pledged shares marks the elimination of all encumbrances on the promoter group's shareholding, demonstrating improved financial flexibility and successful completion of underlying security arrangements with the banking consortium.