Favourable ITAT Order for FY2009 Cuts Tax Exposure to ~₹1,259 Crore

Tata Steel received a favourable ITAT order (dated Sept 18, 2026) for FY2009, allowing its interest expenditure deduction of ₹813.65 crore claimed on loans used for the Corus acquisition.

Tue 29 Sep 2026

Interest Expenditure Deduction Allowed

₹813.65 crore

FY2009 Tax Exposure Reduction

~₹427 crore

Total Tax Exposure After Order

~₹1,259 crore (reduced from ~₹1,686 crore)

Original Aggregate Exposure FY2008-FY2015

~₹1,901 crore

ITAT Order Date

September 18, 2026

What the dispute is about

Income tax authorities had disallowed Tata Steel's claim of deduction for interest expenditure under Section 36(1)(iii) of the Income Tax Act, 1961, on loans borrowed and used to acquire Corus Group Plc, a foreign subsidiary, covering FY2008 through FY2015. The aggregate tax exposure from this issue was ~₹1,901 crore. The company had shared appeals before the Income Tax Appellate Tribunal.

FY2008 (earlier relief)

• On February 27, 2026, the company received a favourable order dated February 20, 2026 for FY2008, allowing the interest deduction.
• Tax exposure for FY2008 was ~₹215 crore, taking total exposure from ~₹1,901 crore down to ~₹1,686 crore once given effect.

FY2009 (the present update)

• The Deputy Commissioner of Income Tax, Circle 2(3)(1), Mumbai had, by order dated January 10, 2014, disallowed the claim of ₹813.65 crore towards interest expenditure deduction.
• The company shared an appeal on February 4, 2014; the final hearing took place in June 2026.
• On September 28, 2026, the company received a favourable order dated September 18, 2026, allowing the deduction, following the earlier FY2008 order.
• Tax exposure for FY2009 is ~₹427 crore. Once the Assessing Officer gives effect through a consequential order, total exposure reduces from ~₹1,686 crore to ~₹1,259 crore.

What happens next

• The company will make necessary adjustments in the contingent liability reported in notes to its financial statements.
• The company believes these orders will have a persuasive impact on co-related pending litigations on the same issue for FY2010 to FY2015.

How to read this

Contingent liability is a possible obligation that depends on the outcome of a future event, such as a court or tribunal ruling. A favourable order here reduces the amount the company has been carrying as a potential tax claim, subject to the Assessing Officer passing the consequential order.

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