Income tax tribunal quashes ₹2,337 cr tax demand against Hero MotoCorp

Hero MotoCorp, India’s largest two-wheeler manufacturer in terms of volumes, received a favourable order from the Income Tax Appellate Tribunal (ITAT) after it quashed ₹2,336.71 crore tax demand against the company for the assessment year 2011-12.

Hero MotoCorp had filed an appeal against the income tax demand which pertained to re-assessment proceedings. “The re-assessment was done notwithstanding the fact that full disclosure had been made at the time of original assessment,” Hero MotoCorp says in a stock exchange filing.

“The ITAT while hearing the appeal of the Company pronounced an order in favour of the Company on the issues pertaining to: (i) validity of the reassessment and (ii) Addition u/s 28(iv) of the Income Tax Act, 1961. Consequent to the above, the entire demand of Rs. 2,336.71 crore has been quashed,” the two-wheeler maker says.

Reacting to the development, shares of Hero MotoCorp rose 2.6% to hit a high of ₹5,545 on the BSE.

This comes a day after the Delhi High Court quashed summons issued against Hero MotoCorp executive chairman Pawan Kant Munjal in a case registered by the Directorate of Revenue Intelligence (DRI) relating to foreign currency.

The 40-year-old company operates in 48 countries released its annual report earlier this week.

“Driving growth in both our brand and the two-wheeler industry, we have broadened our product lineup to include bold and premium motorcycles. The Harley-Davidson X440, the iconic Karizma XMR, and the Mavrick 440, among others, are poised to reshape the automotive horizon. Our entry into the upper premium segment underscores our dedication to supporting India's evolving and progressive aspirations for growth,” Munjal said in the annual report.

Hero MotoCorp owns over 40% stake in electric scooter startup Ather Energy. During 2023-24, Ather Energy’s loss attributable to Hero MotoCorp stood at ₹389.77 crore.

Ather, India’s fourth largest electric scooter maker, sold 6,104 units in June compared with 6,045 units in May.

Together with Ather Energy, Hero’s EV brand VIDA has established India’s largest public-charging infrastructure for two-wheeler EVs. This collaboration will enable EV users to utilise both VIDA and Ather Grids, offering close to 2,000 fast-charging points across 200 cities in India.

“Our partnership with Zero Motorcycle will facilitate the development of new EV motorcycles targeted at a distinct customer segment, thereby expanding the overall market size,” Munjal said.

Hero MotoCorop, which retails e-scooters under its Vida brand, sold 3,069 electric two-wheelers in June as against 2,456 units in May.

Hero MotoCorop plans to take big strides in electric vehicles through product launches in the mid and affordable segments in the coming year. The automaker has expanded its emerging mobility brand, Vida, to 100 cities in the country.