Ponni Sugars gets HC interim order on tax dispute for AY 2021-22
Ponni Sugars (Erode) Limited received an interim order from the Hon'ble High Court of Madras concerning its tax litigation for Assessment Year 2021-22. The court admitted the Writ Petition and directed the Transfer Pricing Officer (TPO) to pass appropriate orders pursuant to an earlier directive from the Commissioner of Income Tax (Transfer Pricing). The operation of the TPO's order remains subject to the final outcome of the Writ Petition.
*this image is generated using AI for illustrative purposes only.
Ponni Sugars (Erode) Limited has received an interim order from the Hon'ble High Court of Madras concerning its tax litigation for Assessment Year 2021-22. The court admitted the Writ Petition filed by the company and directed the Transfer Pricing Officer (TPO) to pass appropriate orders pursuant to an earlier directive from the Commissioner of Income Tax (Transfer Pricing). The operation of the TPO's order remains subject to the final outcome of the Writ Petition.
The dispute relates to the determination of the Arm's Length Price (ALP) for the inter-unit transfer of bagasse from the sugar unit to the eligible co-generation unit. On March 27, 2026, the CIT-TP had set aside the TPO's earlier order dated October 26, 2023, and directed a revision. The company subsequently filed the Writ Petition to quash the CIT-TP order and seek an interim stay.
In its order dated April 27, 2026, the Hon'ble High Court of Madras instructed the TPO to issue orders following the CIT-TP's directive. However, the court clarified that the effect and operation of the TPO's order would remain subject to the final outcome of the Writ Petition and without prejudice to the company's rights and contentions.
The company received a copy of the interim order from its legal counsel on May 26, 2026. The disclosure was made to the exchanges under Regulation 30 of the SEBI (LODR) Regulations, 2015.
Litigation Details
The following table outlines the key particulars of the litigation and the court's order:
| Particulars | Details |
|---|---|
| Opposing Parties | 1) Commissioner of Income Tax (Transfer Pricing) (CIT-TP), Chennai; 2) Deputy Commissioner of Income Tax (Transfer Pricing), Chennai (TPO); 3) Deputy Commissioner of Income Tax, Large Taxpayer Unit, Chennai; 4) The Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi. |
| Court/Authority | Hon'ble High Court of Madras |
| Development | The Hon'ble High Court of Madras admitted the Writ Petition and directed the TPO to pass appropriate orders pursuant to the CIT-TP order dated March 27, 2026. The operation of the TPO's order is subject to the final outcome of the Writ Petition. |
| Date of Order | April 27, 2026 |
| Date of Receipt | May 26, 2026 |
| Financial Impact | The company stated that there would be multiple consequential impacts for several years, but precise quantification is not possible at this juncture. |
Historical Stock Returns for Ponni Sugars Erode
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| +0.25% | -0.77% | -0.56% | +6.93% | -9.77% | +60.63% |
What is the estimated timeline for the TPO to issue the revised order following the High Court's directive?
How will the uncertainty regarding the final tax liability impact Ponni Sugars' financial planning and cash flow management for the upcoming fiscal year?
Could the outcome of this Writ Petition set a precedent for how the Income Tax Department treats inter-unit transfers of bagasse for other sugar manufacturers?
16
Access Market Heat-map & Insights 
Create, Save & Share your Screener 
Use 200+ Screening Filters 
