Court Grants Interim Relief in Challenge to Tax Reopening Notice on Share Premium for 2009-2010 Assessment Year.

The court addressed a challenge to a reopening notice under Section 148 of the Income Tax Act, 1961, for the assessment year 2009-2010. The notice alleged that the share premium received exceeded the intrinsic value, suggesting escaped income. However, the court referenced a precedent and a circular indicating that share premium on a capital account cannot be taxed as income. Ad-interim reliefs were granted, and the petition was scheduled for a final hearing in the week beginning 19 October 2015.

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Issues:
Challenge to reopening notice under Section 148 of the Income Tax Act, 1961 for the Assessment year 2009-2010.

Analysis:
The petition challenges a reopening notice dated 30 March 2014 under Section 148 of the Income Tax Act, 1961, seeking to reopen the assessment for the Assessment year 2009-2010. The reasons for the notice suggest that the Assessing Officer believes the share premium amount received exceeds the intrinsic value of shares and constitutes escaped income. However, it is noted that the reasons do not assert that the share premium received is not actually share premium but proceed on the assumption that it is indeed share premium. The court opines that the basis of the notice is addressed in the decision of the court in Vodafone India Services Pvt. Ltd. Vs Union of India and others and Central Board Circular No.2 dated 29 January 2015, which state that share premium received on a capital account cannot be taxed as income.

The court was initially inclined to dispose of the petition at the admission stage after hearing the parties. However, the Additional Solicitor General expressed an inability to waive service at that point. Consequently, ad-interim reliefs were granted in terms of the prayer clause. The petition is scheduled for final hearing in the week commencing from 19 October 2015, as requested by the parties.

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