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TMI Blog2019 (11) TMI 1118X X X X Extracts X X X X X X X X Extracts X X X X ..... t just confined to the question whether the company is liable at all but may also relate to other facets including the extent of liability and also with regard to computation. If the submission is accepted, every time the dispute will be required to be taken up in proceedings such as a petition under Article 226 of the Constitution, which normally would not be entertained in case of any disputed questions of fact or concerning factual aspects of the matter. The assessee may thus, not only lose a remedy of having the matter considered on factual facets of the matter but would also stand deprived of regular channels of challenges available to it under the hierarchy of fora available under the Act. We, therefore, reject the submissions advanced by the appellant and hold that an appeal would be maintainable against the determination of liability under Section 115QA of the Act. Whether the High Court was justified in refusing to entertain the writ petition because of availability of adequate appellate remedy ? - No infirmity in the approach adopted by the High Court in refusing to entertain the Writ Petition. The submission that once the threshold was crossed despite the prelimi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Justice Indira Banerjee Counsel for the Parties : Mr. S. Ganesh, Sr. Adv.Mr. Mahesh Agarwal, Adv.Mr. Rishi Agrawala, Adv.Mr. Ankur Saigal, Adv.Mr. Karan Luthra, Adv.Ms. Niyati Kohli, Adv.Mr. Shaishir S. Divatia, Adv.Mr. E. C. Agrawala, AOR Mr. Zoheb Hossain, Adv.Mr. Rajat Nair, Adv.Mr. Vivek Gurnani, Adv.Mrs. Anil Katiyar, AOR JUDGMENT Uday Umesh Lalit, J. 1. Leave granted. 2. This appeal arises out of the final judgment and order dated 19.08.2019 passed by the High Court of Delhi at New Delhi in Writ Petition No.686 of 2017. 3. The facts leading to the filing of the present appeal, in brief, are as under: (a) Out of opening share capital of 25,68,700 shares held by its sole shareholder and holding company Genpact India Investment, Mauritius, the appellant bought back 2,50,000 shares in May 2013 at the rate of ₹ 32,000/- per share for a total consideration of ₹ 800 crores. (b) On 10.05.2013, Chapter XIIDA consisting of Sections 115QA, 115QB and 115QC was inserted in the Income Tax Act, 1961 (hereinafter referred to as the Act ) by the Finance Act, 2013 which came into effec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpanies; (c) On 10.09.2013, a scheme for arrangement was approved by the High Court of Delhi in Company Petition No.349 of 2013. Pursuant thereto, the appellant bought back another tranche of 7,50,000 shares at the rate of ₹ 35,000 per share for a total consideration of ₹ 2,625 crores from said Genpact India Investment, Mauritius. (d) In the income tax return filed on 28.11.2014 by the appellant for the assessment year 2014-15, Details of tax on distributed profits of domestic companies and its payment were given in Schedule DDT where the details of aforesaid transactions were given but the liability to pay any tax was denied. A notice under Section 143(2) of the Act was issued to the appellant on 03.09.2015 seeking further explanation, pursuant to which requisite details were furnished. (e) The matter was thereafter considered and an assessment order was passed by the first respondent on 31.12.2016. As many as 10 additions were made by the first respondent, one of them being in respect of liability under Section 115QA of the Act. Since we are concerned in this appeal only with the issue with regard to liability under Section 115QA, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rging section which taxes amount distributed on buy back of shares. Rejecting the submission advanced on behalf of the appellant, the first respondent thus held that over and above nine heads under which additions were made, the appellant-assessee was also liable to pay tax at the rate of 20% in terms of Section 115QA of the Act in respect of distributed income of ₹ 2,625 crores. h. It may be mentioned that insofar as those nine additions made by the aforesaid assessment order by the first respondent are concerned, an appeal was filed by the appellant. We have been apprised that the appeal was decided in favour of the appellant but further challenge at the instance of the Revenue is under consideration. As regards the issue concerning tax under Section 115QA, the appellant filed Writ Petition (Civil) No.686 of 2017 in the High Court submitting, inter alia, that the order passed by the first respondent was without jurisdiction as buy back of shares in the instant case was in pursuance of the scheme of arrangement approved by the High Court. i) The matter came up before the High Court on 25.01.2017 when a preliminary objection was raise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that this demand under Section 115QA 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 115QA 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. l) On the issue whether the Writ Petition be entertained in the face of availability of an alternate remedy, the High Court considered relevant case law touching upon the issue and observed: 23. The question regarding the interpretation of Section 115QA of the Act, as it stood at the relevant time, can definitely be gone into by the CIT (A). Further, this Court has in fact not expressed any view yet on the maintainability of the petition, although as rightly pointed out the matter 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 decid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filing the appeal before the CIT (A) within ten days from today. (vi) It is made clear that this Court has not expressed any view whatsoever on the contentions of either party on the merits of the case. 4. Challenge to the aforesaid view taken by the High Court was raised by way of Special Leave Petition No.20728 of 2019 filed in this Court on 26.08.2019. Within the time limit of 10 days as afforded by the High Court, an appeal was also preferred by the appellant without prejudice on 30.08.2019 against the demand raised/order passed under Section 115QA . The aforesaid Special Leave Petition came up before this Court on 06.09.2019, whereafter the matter was adjourned on few occasions and then taken up for final disposal. 5. We heard Mr. Mukul Rohatgi and Mr. S. Ganesh, learned Senior Advocates for the appellant and Mr. Zoheb Hossain, learned Advocate for the respondents. It was submitted by the appellant that in relation to an order passed under Section 115QA of the Act, no right of appeal would be available under the provisions of the Act and as such the premise on which the High Court proceeded was wrong; in any case plea of existence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arly exercised it s discretion again in favour of the Petitioner on 26.07.2017 and 30.08.2017. It was therefore not open for another Division Bench, which heard the matter on 19.08.2019 to exercise it s discretion in a fundamentally different way, as compared to the two earlier Division Benches . .the objection of alternative remedy can only be raised at the admission stage and not at the stage of final hearing, after the completion of the pleadings 7. Two issues arise for consideration, one regarding availability of appellate remedy and the other concerning refusal to exercise Jurisdiction under Article 226 because of availability of an alternate efficacious remedy. In essence, the matter revolves around the question whether there is in fact an appellate remedy available, in case any determination is made under Section 115QA of the Act that the Company is liable to pay additional income tax at the rate of 20% on the distributed income . For the purpose of considering whether there is any such appellate remedy, we must note the concerned Sections in the Act dealing with appellate remedy and provisions touching upon exercise of such right of appeal. Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 272B or section 273, as they stood immediately before the 1st day of April, 1989, in respect of any assessment for the assessment year commencing on the 1st day of April, 1988, or any earlier assessment years. 246A. Appealable orders before Commissioner (Appeals). (1) Any assessee or any deductor or any collector aggrieved by any of the following orders (whether made before or after the appointed day) may appeal to the Commissioner (Appeals) against (a) an order passed by a Joint Commissioner under clause (ii) of sub-section (3) of section 115VP or an order against the assessee where the assessee denies his liability to be assessed under this Act or an intimation under sub-section (1) or sub-section (1B) of section 143 or sub-section (1) of section 200A or sub-section (1) of section 206CB, where the assessee or the deductor or the collector objects to the making of adjustments, or any order of assessment under sub-section (3) of section 143 except an order passed in pursuance of directions of the Dispute Resolution Panel or an order referred to in sub-section (12) of section 144BA or section 144, to the income assessed, or to the amount of tax determ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the 1st day of April, 1989, in respect of any assessment for the assessment year commencing on the 1st day of April, 1988, or any earlier assessment years; (ja) an order of imposing or enhancing penalty under sub-section (1A) of section 275; (k) an order of assessment made by an Assessing Officer under clause (c) of section 158BC, in respect of search initiated under Section 132 or books of account, other documents or any assets requisitioned under section 132A on or after the 1st day of January, 1997; (l) an order imposing a penalty under sub-section (2) of section 158BFA; (m) an order imposing a penalty under section 271B or section 271BB; (n) an order made by a Deputy Commissioner imposing a penalty under section 271C, section 271CA, section 271D or section 271E; (o) an order made by Deputy Commissioner or a Deputy Director imposing a penalty under section 272A; (p) an order made by a Deputy Commissioner imposing a penalty under section 272AA; (q) an order imposing a penalty under Chapter XXI; (r) an order made by an Assessing Officer other than a Deputy Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dividually. The expression denial of liability is comprehensive enough to take in not only the total denial of liability but also the liability to tax under particular circumstances. In either case the denial is a denial of liability to be assessed under the provisions of the Act. In one case the accessee says that he is not liable to be assessed to tax under the Act, and in the other case the assessee denies his liability to tax under the provisions of the Act if the option given to the appropriate officer under the provisions of the Act is judicially exercised. We, therefore, hold that such an assessee has a right of appeal under Section 30 of the Act against the order of the Income Tax Officer assessing the association of members instead of the members thereof individually. It was concluded that the expression denial of liability is comprehensive enough to take in not only the total denial of liability but also the liability to tax under particular circumstances. 10. The submission advanced on behalf of the appellant, however, is that denial of the assessee s liability to be assessed in Section 246A is confined to his liability to be assessed under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expression. There is no reason why the scope of the such expression be restricted and confined to issues arising out of or touching upon assessment proceedings either under Section 143 or Section 144 of the Act. 13. If the submission of the appellant is accepted and the concerned expression as stated hereinabove in Section 246(1)(a) or in Section 246A(1)(a) is to be considered as relatable to the liability of an assessee to be assessed under Section 143(3) as contended, there would be no appellate remedy in case of any determination under Section 115QA. The issues may arise not just confined to the question whether the company is liable at all but may also relate to other facets including the extent of liability and also with regard to computation. If the submission is accepted, every time the dispute will be required to be taken up in proceedings such as a petition under Article 226 of the Constitution, which normally would not be entertained in case of any disputed questions of fact or concerning factual aspects of the matter. The assessee may thus, not only lose a remedy of having the matter considered on factual facets of the matter but would also stand deprived of r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suitable relief elsewhere, it can refuse to exercise its jurisdiction. The Court, in extraordinary circumstances, may exercise the power if it comes to the conclusion that there has been a breach of the principles of natural justice or the procedure required for decision has not been adopted. [See N.T. Veluswami Thevar v. G. Raja Nainar AIR 1959 SC 422 , Municipal Council, Khurai v. Kamal Kumar AIR 1965 SC 1321 : (1965) 2 SCR 653 , Siliguri Municipality v. Amalendu Das (1984) 2 SCC 436 : 1984 SCC (Tax) 133 , S.T. Muthusami v. K. Natarajan (1988) 1 SCC 572 , Rajasthan SRTC v. Krishna Kant (1995) 5 SCC 75 : 1995 SCC (L S) 1207 : (1955) 31 ATC 110 , Kerala SEB v. Kurien E. Kalathil (2000) 6 SCC 293 , A. Venkatasubbiah Naidu v. S. Chellappan (2000) 7 SCC 695 , L.L. Sudhakar Reddy v. State of A.P. (2001) 6 SCC 634 , Shri Sant Sadguru Janardan Swami (Moingiri Maharaj) Sahakari Dugdha Utpadak Sanstha v. State of Maharashtra (2001) 8 SCC 509 , Pratap Singh v. State of Haryana (2002) 7 SCC 484 : 2002 SCC L S) 1207 : (1995) 31 ATC 110 and GKN Driveshafts (India) Ltd. v. ITO (2003) 1 SCC 72 .] 15. Thus, while it can be said that this Court has recognised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rlier interim order absolute. However, the preliminary objection having not been dealt with and disposed of, the matter was still at large. In State of U.P. v. U.P. Rajya Khanij Vikas Nigam Sangharsh Samiti and others (2008) 12 SCC 675 this Court dealt with an issue whether after admission, the Writ Petition could not be dismissed on the ground of alternate remedy. The submission was considered by this Court as under: 38. With respect to the learned Judge, it is neither the legal position nor such a proposition has been laid down in Suresh Chandra Tewari AIR 1992 All 331 (Suresh Chandra Tewari vs. District Supply Officer) that once a petition is admitted, it cannot be dismissed on the ground of alternative remedy. It is no doubt correct that in the headnote of All India Reporter (p. 331), it is stated that petition cannot be rejected on the ground of availability of alternative remedy of filing appeal . But it has not been so held in the actual decision of the Court. The relevant para 2 of the decision reads thus: (Suresh Chandra Tewari case, AIR p. 331) 2. At the time of hearing of this petition a threshold question, as to its ..... X X X X Extracts X X X X X X X X Extracts X X X X
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