DCM Limited received an order u/s 147 read with section 144(b) of the Income Tax Act, 1961 (`Act') from Assessment Unit, Income Tax Department, wherein the Company has received an Assessment Order u/s 147 read with section 144(b) of the Income Tax Act, 1961 dated March 30, 2024 wherein an addition of INR 258,948,981/- to the total income of the Company for the Assessment Year 2019-20 has been made. The notice for initiating penalty proceedings u/s 271 (a) (c) of Income Tax Act has also been issued. The Income Tax Department has passed Assessment Order dt.

March 30, 2024 that the erstwhile Textile Business Undertaking (referred as Demerged Undertaking) of the Company which was demerged into DCM Nouvelle Limited under a scheme of arrangement, had made bogus purchases of INR 258,948,981/- from a supplier during the Fiscal Year 2018-19. In the Assessment Order, the said conclusion has been drawn by the Department primarily on account of non-receipt of information/reply from the said supplier in pursuance of notice issued by the Department to the said supplier u/s 133(6) of the Act and in the absence of any corroborative evidence from the said supplier. As per the notice of demand u/s 156 of Income Tax Act, zero demand has been determined to be payable by the Company (basis of the said notice of demand has not been made available in detail and hence the impact is not quantified appropriately as on date).

All legal proceedings against DCM Limited relating to the Demerged Undertaking shall be enforced by or against DCM Nouvelle Limited as per para 9.1 of the said scheme. Also as per the order of NCLT dated 01.05.2019, all liabilities and dues of the demerged undertaking shall stand transferred to DCM Nouvelle Limited. Pursuant to the above, management does not expects the said order to have any material impact on the financial, operation or other activities of the Company as any liability and/or demand arisen under the said assessment order pertains and belongs to DCM Nouvelle Limited.

The Company intends to file an appeal before the Appellate Authority against the said Assessment order within time limits prescribed under Income Tax Act including contesting the penalty proceedings initiated u/s 274 read with section 271 AAC(1) of the Act. The said proceedings shall be initiated by the Company on notice or as per the advice of DCM Nouvelle Ltd. for their benefit and at their cost and consequences.