The Income Tax Appellate Tribunal has ruled in favour of Indus Towers Ltd. in various matters, including denial of depreciation on assets received through merger.
The ruling helped the company reduce Rs 3,500 crore from its contingent liability, according to an exchange filing on Monday.
In 2020, the merger between Indus Towers and Bharti Infratel, a subsidiary of Bharti Airtel Ltd., helped in creating one of the largest telecommunication tower companies in India. As part of the merger, Indus Tower demanded depreciation on the assets, which were transferred during the merger.
But the tax authorities denied providing depreciation on the transferred assets, leading to disputes. The current ruling will allow the company to claim depreciation on the assets transferred during the merger.
The ruling also addressed other related issues, including disallowance of provision for expenses and amortisation of Asset Retirement Obligation and provision for SLA Credit.
On Dec. 4, UK's Vodafone Group Plc decided to sell its entire 3% stake in Indus Tower through an open market deal. Through its domestic units — Omega Telecom Holdings Pvt. and Usha Martin Telematics Ltd. — Vodafone Group will divest 7.9 crore shares.
The funds received through the selloff will be utilised in repaying Vodafone's outstanding borrowings of around $101 million to existing lenders, secured against Vodafone's Indian assets.
Shares of Indus Towers closed 0.86% higher at Rs 353 apiece on the National Stock Exchange, compared to a 0.4% fall in the benchmark Nifty. The share price has risen 77.55% on a year-to-date basis.
Twelve out of the 24 analysts tracking the company have a 'buy' rating on the stock, six recommend a 'hold' and as many suggest 'sell', according to Bloomberg data. The average of 12-month analysts' price targets implies a potential upside of 15.1%.
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