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TMI Blog2019 (8) TMI 997X X X X Extracts X X X X X X X X Extracts X X X X ..... er was heard on this aspect earlier as well. The fact remains that the Respondent raised the objection at the first available opportunity. Due to reasons noted hereinbefore, the issue could not be decided till now. It would, however, not be correct to state that this Court has impliedly overruled such an objection and decided to hear the petition on merits. Court also notes in this context that the Assessee has in fact succeeded in its appeal before the CIT (A) on other issues arising out of the same impugned assessment order and it is the Revenue which is now in appeal before the ITAT. There is no reason why this one other issue arising from the impugned assessment order cannot also be examined by the CIT(A). The Court is conscious that nearly three years have elapsed since the passing of the impugned assessment order. However, in view of the statement made on behalf of the Revenue that they would raise no objection regarding maintainability of the appeal u/s 246A before the the CIT (A) and would also not raise any objection regarding limitation, the Court sees no prejudice being caused to the Assessee by being relegated to the CIT (A). Most importantly, with the Revenue agreeing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... waj, Central Govt. Standing Counsel for R-2 with Ms Anubha Bhardwaj, Advocate. ORDER Dr. S. Muralidhar, J.: 1. Aggrieved by one portion of the assessment order concerning the alleged liability of the Petitioner (hereafter the 'Assessee') under Sections 115-QA and 115-QB of the Income Tax Act, 1961 ('Act') in the impugned assessment order dated 31st December, 2016 passed by the Assessing Officer ('AO') (Respondent No. 1), the Assessee has approached this Court with the present petition under Article 226 of the Constitution of India. Along with the petition, an application being CM No.3141/2017 was filed seeking interim directions to restrain the Respondents from enforcing the demand in terms of the impugned order. 2. By the impugned assessment order, inter alia, a demand was sought to be created under Section 115-QA of the Act in relation to the Assessee buying back 10 lakhs equity shares out of opening share capital of 25,68,700 shares from M/s. Genpact India Investment, Mauritius ('GII') in two phases in May and October, 2013. The case of the Revenue was that the scheme adopted to buyback such shares was a colourable device to evade 'buyback distribution tax liability' under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in terms of Section 11A of the Companies Act, 1956. It was submitted that in all other instances where buy-back arrangements are resorted to in accordance law, such as for approval of a scheme of compromise and arrangement under Section 391 of the Companies Act, the levy would not apply. 8. Learned counsel relied upon the order of this Court in GENPACT India (CP No. 349/2013, decided on 10.09.2013) where an identical argument was urged by the Regional Director of the Income Tax, who contended that the buy-back was contrary to law as it was meant to circumvent the provisions of Section 11A of the Companies Act. This Court had, it is pointed out, overruled the submission. Likewise, the applicant relied upon the judgment of Capgemini India (P) Ltd (Co. Scheme Petition No 434 of 2014, decided by the Bombay High Court on 28.04.2015). 9. Learned counsel for the Revenue, appearing on advance notice, has opposed the petition on the ground of the interim relief arguing that an alternative remedy under Section 250 is available. It is submitted that though the levy, is a special one, forms part of the Income Tax Act and, therefore, the AO's order is appealable. It is argued on the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p for hearing. Even on 22nd May, 2019 and 3rd July, 2019, adjournments were sought by the Respondent stating that the ASG, who had to appear on their behalf was in some difficulty. 7. In the rejoinder filed to the counter affidavit on the issue of maintainability of the petition, it is contended by the Assessee that since the Court had already heard the matter at some length on two occasions, and thereafter "entertained the writ petition", it is clear that the Court intended to decide the matter on merits. It is further submitted that the matter raises a "pure question of law" regarding the interpretation of Section 115QA of the Act and that this Court should decide the said question as it will impact a number of other Assessees as well. 8. In the meanwhile, the Revenue filed CM No. 29390/2019 praying that this Court should pass an order on the maintainability of the writ petition and dismiss it on the ground of the availability of an alternative remedy. 9. Mr S. Ganesh, learned Senior Counsel appearing for the Assessee, first submitted that there was no alternative remedy available to the Assessee as far as the demand created under Section 115 QA of the Act was concerned. Acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the CA. The buyback was pursuant to a scheme of arrangement under Section 391 of the CA which was approved by the High Court of Delhi. He referred to the fact that prior to its amendment with effect from 1st June, 2016, Explanation 1 to Section 115-QA clarified that for the purposes of the said section buyback meant purchase by a company of its own shares in accordance with the provisions of Section 77-A of the CA. The amendment to Explanation 1 by the Finance Act 2016, substituted the words 'Section 77-A of the Companies Act, 1956' with the words "any law for the time being in force relating to companies." This amendment was expressly made effective only from 1st June, 2016. Accordingly, it is submitted that the entire demand created under Section 115-QA of the Act in respect of the above buyback of its own shares from GII was unsustainable in law. 13. An additional point raised on merits by Mr Ganesh, which admittedly is not pleaded in the writ petition, is based on the recent decision dated 25th July, 2019 of the Supreme Court in CA No. 5409/2019 [Pr. Commissioner of Income Tax, New Delhi v Maruti Suzuki India Limited 2019 (10) SCALE 21]. Elaborating this point, Mr Ganesh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment order and that it is something separate from it. While it is true that the demand under Section 115-QA of the Act would be in addition to the total income, the fact of the matter is that in the present case it forms an integral part of the impugned assessment order under Section 143 (3) of the Act. Reading the assessment order as a whole, it is plain to the Court that this demand under Section 115-QA of the Act is in addition to demands under other issues, all of which form part of the impugned assessment order. In fact, Paragraph 11 of the impugned assessment order, which gives the computation of the total taxable income, includes the demands raised under all heads and it includes the demand under Section 115-QA of the Act. Therefore, it is not possible for this Court to read this part of the order separate from the rest of the assessment order. 17. The decisions cited by both sides appear to indicate that depending on the facts of the particular case, the Supreme Court has expressed the view that the High Courts either should not have entertained the writ petition under Article 226 of the Constitution in the face of the availability of an efficacious alternative remedy or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess against the Petitioner by means of a show cause notice ('SCN') was challenged in a writ petition under Article 226 of the Constitution of India before the High Court of Bombay. The Bombay High Court refused to entertain the challenge to the SCN by the following short order: "Challenge is to a show cause notice issued by the Corporation demanding certain payment of cess on the value of goods imported from Aurangabad and Daman. Petitioners may file their reply to the show cause notice and produce the relevant documents within two weeks. In case the order is adverse to the petitioner no recovery shall be made for a period of four weeks from the date of service of the order on the petitioner." 20. On the facts of the case, the Supreme Court was of the view that the authority issuing the SCN had already formed an opinion as regards the liability of the Assessee. It proceeded to observe as under: "If in passing the order the respondent has already determined the liability of the appellant and the only question which remains for its consideration is quantification thereof, the same does not remain in the realm of a show cause notice. The writ petition, in our opinion, was maint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o reason why this one other issue arising from the impugned assessment order cannot also be examined by the CIT(A). 25. The Court is conscious that nearly three years have elapsed since the passing of the impugned assessment order. However, in view of the statement made on behalf of the Revenue that they would raise no objection regarding maintainability of the appeal under Section 246A of the Act before the the CIT (A) and would also not raise any objection regarding limitation, the Court sees no prejudice being caused to the Assessee by being relegated to the CIT (A). Most importantly, with the Revenue agreeing not to enforce the demand till the conclusion of the appellate proceedings before the CIT (A), the Assessee is not going to be inconvenienced. Moreover, this Court proposes to issue directions for a time bound disposal of the appeal by the CIT (A). 26. On the additional point raised by Mr. Ganesh on whether the impugned assessment order was framed against an entity which ceased to exist at the time of passing of the impugned order, on the strength of the decision of the Supreme Court in Pr. Commissioner of Income Tax, New Delhi v Maruti Suzuki India Limited (supra), thi ..... 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