Aditya Birla Group firm Grasim Industries on Saturday said it has received a ₹5,872.13 crore tax demand from the Income Tax Department with respect to its merger with Aditya Birla Nuvo and Aditya Birla Financial Services.

“The company has, on March 15, 2019, received an order dated March 14, 2019, issued by the Deputy Commissioner of Income Tax (DCIT) raising a demand of ₹5,872.13 crore on account of dividend distribution tax (including interest),” Grasim Industries said in regulatory filing.

Amounts to dividend

The DCIT held that as the demerger of the demerged undertaking is not in compliance with Section 2(19 AA) of the Act, the value of shares allotted by Aditya Birla Capital Ltd. (ABCL) to the shareholders Grasim Industries, in consideration of the transfer and vesting of the demerged undertaking into ABCL, amounted to dividend, within the meaning of the Act, the filing added.

The company said it is of the view that the tax order was not tenable in law.