2015 (11) TMI 1696 - HC - Income Tax

Review petition - provisional attachment of bank accounts u/s 281B - Held that - Consequent to the order dated 20th November 2015 passed in the Review Petition the four Stand By Letters of Credit (SLBC) have been extended till 1st June 2016 by respondent no.5 Bank at the instance of respondent no.6 i.e. Jaiprakash Associates Ltd. The subject four SBLCs have been extended until 1st June 2016. The undertaking of Jaiprakash Associates Limited recorded in order dated 20th November 2015 i.e. that the SBLCs will continue to be extended and / or replaced from time to time for a period of six months each has become operative forthwith such that will secure the validity of the four SBLCs (including any extension or replacement thereof) for a period of eight clear weeks after disposal of the pending applications before the Authority for Advance Rulings instituted by the Review Petitioner Formula One World Championship (FOWC) and respondent no.6 Jaiprakash Associates Ltd. The provisional attachment of the four SLBCs by the Revenue under Section 281B of the Income Tax Act 1961 (first done by communication dated 10th March 2014) would continue to encumber the four SLBCs as renewed and / or replaced. This attachment of the four SLBCs as renewed and / or replaced will continue till such time as the Authority for Advance Ruling Rules on the pending application of FOWC and M/s. Jaiprakash Associates and for further period of eight weeks from the Ruling of the Authority for Advance Ruling.

Summary

Issues:
Extension of Stand By Letters of Credit (SBLCs)
Modification of order dated 1st September, 2014
Acceptance of SBLCs after the expiry of Race Promotion Contract (RPC)
Provisional attachment of SBLCs under Section 281B of the Income Tax Act, 1961
Dismissal of Writ Petition

Extension of Stand By Letters of Credit (SBLCs):
The High Court noted that in response to the order dated 20th November, 2015, the respondent bank extended the four SBLCs until 1st June, 2016 at the request of Jaiprakash Associates Ltd. The Court further specified that the SBLCs would be continuously extended and/or replaced for six months each, securing their validity for eight weeks after the pending applications before the Authority for Advance Rulings are resolved.

Modification of order dated 1st September, 2014:
The Court modified the order dated 1st September, 2014, with the consent of all parties. The modifications included extending the SBLCs until 1st June 2016, requiring confirmation of each extension by a UK confirming bank nominated by Formula One World Championship (FOWC) eight weeks before the SBLCs' expiry, and notifying FOWC four weeks prior to each SBLC's expiry.

Acceptance of SBLCs after the expiry of Race Promotion Contract (RPC):
Jaiprakash Associates Ltd. accepted that the SBLCs would remain in effect even after the expiry of the Race Promotion Contract on 31st December, 2015. The Court ruled that FOWC could draw upon the SBLCs post the RPC expiry, subject to certain conditions outlined in the judgment.

Provisional attachment of SBLCs under Section 281B of the Income Tax Act, 1961:
The Court determined that the provisional attachment of the SBLCs by the Revenue under Section 281B would continue to encumber the renewed or replaced SBLCs until the Authority for Advance Ruling rules on the pending application by FOWC and Jaiprakash Associates Ltd., and for an additional eight weeks thereafter.

Dismissal of Writ Petition:
Following the order in the Review Petition, the Senior Counsel for the petitioner sought to withdraw the Writ Petition (L) 3245 of 2015, which was dismissed as withdrawn by the Court, granting the requested liberty. The Review Petition was disposed of based on the terms outlined in the judgment.