SML Mahindra Limited has disclosed receiving an appeal effect order from the Income Tax Department with total adjustments of ₹16.41 lacs for Assessment Year 2022-23. The company communicated this development to stock exchanges on December 10, 2025, in compliance with regulatory disclosure requirements.

Income Tax Order Details

The Assistant Commissioner of Income Tax - Transfer Pricing, Delhi issued the appeal effect order on December 9, 2025, following directions from the Dispute Resolution Panel under section 144C(5). The company received and downloaded the order from the Income Tax portal on December 10, 2025, at 3:12 PM.

Transfer Pricing Disputes

The Income Tax Authority has raised disputes regarding two key areas of the company's transfer pricing practices. The primary concerns involve the Arms Length Price and methodology adopted by SML Mahindra Limited for payment of Corporate Guarantee fees to Associated Enterprises. Additionally, the authority has questioned the method used for ascertaining Arms Length Price in the company's manufacturing segment operations.

Previous Developments

This latest order represents a continuation of ongoing transfer pricing proceedings. Earlier, the Dispute Resolution Panel had issued directions under section 144C(5) on November 22, 2025, for the same assessment year with adjustments of ₹9.92 lacs. The company had previously communicated these developments to stock exchanges on November 22, 2025, through letter number SML/SEC/2025-26-083.

Potential Penalties and Company Response

The order indicates that the Assessing Officer may examine the initiation of penalty proceedings under section 270A of the Income Tax Act, 1961. This provision typically relates to penalties for underreporting of income or misreporting of facts in tax returns.

SML Mahindra Limited has stated its intention to file an appeal against this order, indicating the company's disagreement with the tax authority's assessment and adjustments. The company continues to maintain compliance with regulatory disclosure obligations by promptly informing stock exchanges of these developments.

Regulatory Compliance

The disclosure was made pursuant to Regulation 30(2) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, read with Clause 20 of Para A of Part A of Schedule III. This ensures transparency regarding material developments that could impact the company's financial position or operations.

SML Mahindra Limited , a player in the automotive sector, has encountered a setback in its recent tax dispute. The Transfer Pricing Officer has passed an order under Section 92CA(3) of the Income-tax Act, 1961, potentially impacting the company's financial position.

Key Developments

1. Transfer Pricing Adjustment: The order includes transfer pricing adjustments amounting to Rs 168.64 lakhs to SML Mahindra's international transactions.

2. Disputed Areas: The tax authority has questioned the company's methodology in two key areas:

   • The arms length pricing methods for the manufacturing segment
   • The method used for corporate guarantee fee payments to associated enterprises

3. Company's Response: SML Mahindra plans to file an appeal against this order.

4. Potential Penalties: The company may face penalty proceedings under section 270A of the Income-tax Act.

Transfer Pricing Dispute Details

Company Response

SML Mahindra Limited has stated its intention to contest the decision. The company plans to file an appeal against the order passed by the Transfer Pricing Officer. This move indicates that SML Mahindra is prepared to pursue further legal avenues to challenge the transfer pricing adjustments.

Implications for Investors

Investors and stakeholders of SML Mahindra Limited should closely monitor the developments in this tax dispute. The adjustment amount of Rs 168.64 lakhs could potentially impact the company's financial position. Additionally, the possibility of penalty proceedings adds another layer of financial risk.

As the situation evolves, it will be crucial to watch for any updates on the company's appeal and the outcome of potential penalty proceedings. These developments may provide further insights into the potential financial implications and the company's approach to managing its tax affairs.

The resolution of this dispute could affect the company's tax planning strategies. Stakeholders should stay informed about the progress of this case and its potential impact on SML Mahindra's operations and financial performance.