High Court of Madras Issues Interim Order in Ponni Sugars Tax Litigation
Ponni Sugars (Erode) Limited reported receiving an interim order on May 26, 2026, from the Hon'ble High Court of Madras concerning ongoing tax litigation. The order addresses the Company's Writ Petition challenging a prior tax determination.The dispute centers on the determination of the Arm's Length Price (ALP) for the inter unit transfer of bagasse from the sugar unit to an eligible co-generation unit for the Assessment Year (AY) 2021-22.
The matter was initially drawn to light following an order dated 27.03.2026, passed by the Commissioner of Income Tax (Transfer Pricing) (CIT-TP), Chennai. This order had directed the Transfer Pricing Officer (TPO) to revise an earlier order dated 26.10.2023.
The Company had previously indicated that it was filing a Writ Petition before the Hon'ble High Court of Madras seeking to quash the CIT-TP order dated 27.03.2026 and grant an interim stay on its operation.
High Court Directives
In its order dated 27.04.2026, the Hon'ble High Court of Madras admitted the Writ Petition filed by the Company. While the Court directed the TPO to pass appropriate orders following the CIT-TP order dated 27.03.2026, it clarified that the effect and operation of any order passed by the TPO would remain subject to the final outcome of the Writ Petition. Furthermore, the directive was stated to be without prejudice to the Company's rights and contentions in the Petition.Litigation Details
The details regarding the litigation, the opposing parties, and the procedural developments are summarized below:| Particulars | Details |
|---|---|
| Opposing Parties | Commissioner of Income Tax (Transfer Pricing) (CIT-TP), Chennai; Deputy Commissioner of Income Tax (Transfer Pricing), Chennai (TPO); Deputy Commissioner of Income Tax, Large Taxpayer Unit, Chennai; The Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi. |
| Court/Tribunal | Hon'ble High Court of Madras |
| Development in Proceedings | CIT-TP vide order dt.27.03.2026 set aside the TPO's order for AY 2021-22 regarding the ALP of inter unit transfer of bagasse and directed the TPO to pass the order after applying correct law and giving due opportunity of being heard to the assessee. The Company filed a Writ Petition before the Hon'ble High Court of Madras praying to quash this order. The Hon'ble High Court of Madras vide its order dt.27.04.2026 directed the TPO to pass appropriate orders pursuant to CIT-TP order dt.27.03.2026. However, the effect and operation of the TPO order remain subject to the final outcome of this Writ Petition. |
| Date of Order Receipt | May 26, 2026 (15.21 hrs) received from Company's legal counsel. |
| Expected Financial Implications | There would be multiple consequential impact for several years. Precise quantification, though material, is not possible at this juncture. |
PONNIERODE Stock Price Movement
Shares of Ponni Sugars (Erode) Limited today shed 1.15% of their value, settling at ₹303.40. The equity recorded a total traded volume of 3,933 shares during the day's session.Disclaimer: Due care and diligence have been taken in compiling and presenting news and market-related content. However, errors or omissions may arise despite such efforts.
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