Sangal Papers Limited Wins Income Tax Appeal for Assessment Year 2024-25
Sangal Papers Limited has won its appeal against an Income Tax Department order for Assessment Year 2024-25, with the Commissioner of Income Tax (Appeals) ruling in favor of the company regarding a Rs. 46,32,996 bonus payment disallowance. The original tax demand of Rs. 14,74,300 was challenged successfully, with the appellate authority directing verification of bonus payment timing before allowing the deduction claim. The company has disclosed this as a positive development under SEBI regulations.
*this image is generated using AI for illustrative purposes only.
Sangal Papers Limited has successfully appealed an Income Tax Department order, securing a favorable ruling that could result in significant tax savings. The company disclosed the receipt of an appellate order dated 28/01/2026 from the Commissioner of Income Tax (Appeals) for Assessment Year 2024-25 under Regulation 30 of SEBI Listing Regulations.
Appeal Details and Financial Impact
The original controversy centered around a disallowance of employee bonus expenses totaling Rs. 46,32,996 under section 43B of the Income Tax Act, 1961. This disallowance had resulted in a tax demand of Rs. 14,74,300 from the Central Processing Centre (CPC) of the Income Tax Department.
| Parameter | Details |
|---|---|
| Bonus Amount Disputed | Rs. 46,32,996 |
| Tax Demand Raised | Rs. 14,74,300 |
| Appeal Authority | Commissioner of Income Tax (Appeals), Delhi |
| Order Date | 28/01/2026 |
| Appeal Outcome | Allowed for statistical purposes |
Legal Grounds and Company's Defense
The company's appeal was based on the timing of bonus payments to employees. While the Tax Audit Report indicated that Rs. 46,32,996 remained unpaid as of March 31, 2024, Sangal Papers contended that the entire outstanding bonus liability was discharged before the extended due date for filing the return of income on November 15, 2024.
The key legal provisions involved:
- Section 43B of the Income Tax Act allows deduction of employee bonus if paid before the return filing due date
- Section 36(1)(ii) governs deductions for employee compensation
- The proviso to Section 43B specifically permits deductions when payment is made before the statutory filing deadline
Appellate Authority's Decision
The Commissioner of Income Tax (Appeals) ruled in favor of Sangal Papers, noting that the Tax Audit Report disclosure was merely for reporting purposes and could not solely justify the disallowance. The appellate authority emphasized that subsequent payment before the statutory due date, when properly evidenced, satisfies the legal requirements.
| Aspect | Ruling |
|---|---|
| Primary Finding | CPC adjustment under section 143(1) unsustainable in law |
| Direction to AO | Verify actual bonus payment before return filing date |
| Legal Basis | Clear statutory provisions and factual position |
| Appeal Status | Allowed for statistical purposes |
The order specifically directs the Assessing Officer to "verify that the bonus is actually paid before the date of filing the return and allow the claim of the appellant accordingly."
Business and Financial Implications
This favorable ruling represents a positive development for Sangal Papers Limited, as indicated in their regulatory disclosure. The successful appeal could result in:
- Relief from the Rs. 14,74,300 tax demand
- Validation of the company's bonus payment practices
- Confirmation of proper compliance with employee compensation regulations
The company has characterized the impact as positive, noting that the order supports their position on the bonus payment timing and related tax treatment. This outcome demonstrates the importance of maintaining proper documentation for employee benefit payments and understanding the timing requirements under tax regulations.
Historical Stock Returns for Sangal Papers
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| -3.45% | -11.11% | -5.08% | -12.95% | -30.43% | +120.18% |
20
