TaxTMI 
TaxTMI 
TaxTMI 
2019 (11) TMI 1118
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....0/- per share for a total consideration of Rs. 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 effect from 01.06.2013. Section 115QA as it stood prior to the amendment which came into effect on 01.06.2016 was to the following effect: "Section 115QA: Tax on distributed income to shareholders - (1) Notwithstanding anything contained in any other provision of this Act, in addition to the income-tax chargeable in respect of the total income of a domestic company for any assessment year, any amount of distributed income by the company on buy-back of shares (not being shares listed on a recognised stock exchange) from a shareholder shall be charged to tax and such company shall be liable to pay additional income-tax at the rate of twenty per cent on the distributed income. Explanation.-For the purposes of this section,- (i) "buy-back" means purchase by a company of its own shares in accordance with the provisions of section 77A of the Companies Act, 1956 (1 of 1956); (ii) "distributed income" means the considerat....
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....ability under Section 115QA of the Act. Since we are concerned in this appeal only with the issue with regard to liability under Section 115QA, we need not deal with other issues. (f) As regards the issue in question, the submissions advanced on behalf of the appellant-assessee were noted as under: "Vide Letter dated 28.12.2016, the assessee has submitted that the buy back of shares has been done in pursuance of scheme of arrangement under Section 391 of the Companies Act, 1956 approved by Hon'ble High Court of Delhi and in such manner that the same is not a buy back in terms of the Section 115QA of the Act." (g) The matter was dealt with by the first respondent as under: "The submission of the assessee was considered but was not found acceptable as it has no substance. Before discussing the facts of the case and argument in support of the revenue it is also important to understand the background of the Section 115QA. Section 115QA was inserted by Finance Act, 2013 to counter the tax avoidance practice mainly adopted by Indian subsidiaries to distribute income to shareholders to Mauritius based Holding company under the garb of Buyback of shares. Under Income Tax Act, buy....
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....t on 25.01.2017 when a preliminary objection was raised that alternate and efficacious remedy of filing an appeal was available. While issuing notice it was observed by the High Court: "Prima facie, in this Court's opinion, the non-obstante clause in Section 115QA of the Act restricts the nature of the levy to the transactions defined by the provision itself. The transactions defined are those covered by Section 77A of the Companies Act. Significantly, the Parliamentary intent to cover all manners of share acquisition by the Company of its own shares, is evident from a subsequent amendment to Section 115QA of the Act, when it explained the meaning of 'buy-back' in the First Explanation by not alluding merely to Section 77A of the Companies Act but all other provisions of law. That this provision was not given retrospective effect, in this Court's opinion, further strengthens the petitioner's submissions. In view of these prima facie reasons, the Court is of the opinion that the impugned demand to the tune it seeks to recover levy under Section 115QA of the Act should not be enforced till the next date of hearing. It is so directed. List on 28.03.2017." j) The matter thereaf....
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....ll 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. 24. The 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 assessement 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)." m) The High Court also recorded certain concessions made on behalf of the Revenue and disposed of the Writ Petition by its Judgment and Order dated 19.08.2019 with following directions: "(i) The Court declines to entertain this writ petition under Article 226 of the Constitution against the impugned demand raised by the Revenue by way of the impugned assessment order under Section 115QA of the Act against the Assessee. (ii) The Assessee is granted an opportunity to file an appeal under Section 246-A of the Act before the CIT (A) to challenge the impugned assessment order only insofar as it creates a demand under Section 115QA of the Act. (iii) If such an....
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.... taken up for preliminary hearing; since the preliminary objection was taken and despite such objection, discretion was exercised by the High Court which is evident from orders dated 25.01.2017 and 30.08.2017, the very same issue ought not to have weighed with the High Court; that the scheme of amalgamation was approved by the High Court and any buy back of shares in pursuance thereof would not be covered by the provisions of Section 115QA of the Act. On the other hand it was submitted by the Revenue that any order determining the liability to pay tax under Section 115QA would be appealable; any other view would entail tremendous prejudice to the concerned assessees; the concessions given on behalf of the Revenue which were recorded in the directions passed by the High Court, would completely take care of any inconvenience and prejudice that could possibly arise in the matter. 6. In its written submissions, the appellant submitted:- I. No statutory appeal has been provided against an order under section 115QA after it was introduced into the statute book with effect from 01.06.2013. A section 115QA order cannot possibly be equated with an assessment order passed under sectio....
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.... sub-section (2), any assessee aggrieved by any of the following orders of an Assessing Officer other than the Joint Commissioner may appeal to the Deputy Commissioner (Appeals) before the 1st day of June, 2000 against such order- (a) 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 subsection (IB) of section 143, where the assessee objects to the making of adjustments, or any order of assessment under sub-section (3) of section 143 or section 144, where the assesse objects to the amount of income assessed, or to the amount of tax determined, or to the amount of loss computed, or to the status under which he is assessed; (b) an order of assessment, reassessment or recomputation under section 147 or section 150; (c) an order under section 154 or section 155 having the effect of enhancing the assessment or reducing a refund or an order refusing to allow the claim made by the assesssee under either of the said sections; (d) an order made under section 163 treating the assessee as the agent of a non-resident; (e) an order under sub-section (2) or sub-section (3) of section 170;....
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....er section 115WG; (b) an order of assessment, reassessment or recomputation under section 147 except an order passed in pursuance of directions of the Dispute Resolution Panel or an order referred to in subsection (12) of section 144BA or section 150; (ba) an order of assessment or reassessment under section 153A 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; (bb)an order of assessment or reassessment under sub-section (3) of section 92CD; (c) an order made under section 154 or section 155 having the effect of enhancing the assessment or reducing a refund or an order refusing to allow the claim made by the assessee under either of the said sections except of an order referred to in subsection (12) of section 144BA; (d) an order made under section 163 treating the assessee as the agent of a non-resident; (e) an order made under sub-section (2) or sub-section (3) of section 170; (f) an order made under section 171; (g) an order made under clause (b) of sub-section (1) or under sub-section (2) or sub-section (3) or subsection (5) of section 185 in respect of an asse....
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....l be substituted by "Joint Commissioner" and "Joint Director" respectively." 8. One of the key expressions appearing in Section 246(1)(a) as well as in Section 246A(1)(a) is "where the assessee denies his liability to be assessed under this Act." 9. Similar expression occurring in Section 30 of the Income Tax, 1922 came up for consideration before this Court in Commissioner of Income Tax, U.P., Lucknow v. Kanpur Coal Syndicate AIR (1965) SC 325 : 1964 (53) ITR 225. The relevant part of Section 30(1) as quoted in the decision was:- "30.(1) Any assessee objecting to the amount of income assessed under Section 23 ... or the amount of tax determined under Section 23 ... or denying his liability to be assessed under this Act ... may appeal to the Appellate Assistant Commissioner against the assessment or against such refusal or order:" The contention raised by the assessee was considered as under:- "The Income Tax Officer may reject its contention and may assess the total income of the association as such and impose the tax on it. Under Section 30 an assessee objecting to the amount of income assessed under Section 23 or the amount of tax determined under the said section or....
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....i) Any order of assessment under sub-section (3) of Section 143 or Section 144, where the assessee objects:- to the amount of income assessed, or to the amount of tax determined, or to the amount of loss computed, or to the status under which he is assessed. The contingencies detailed in (ii) and (iii) hereinabove arise out of assessment proceedings under Section 143 or Section 144 of the Act but the first contingency is a standalone postulate and is not dependant purely on the assessment proceedings either under Section 143 or Section 144 of the Act. The expression "denies his liability to be assessed" as held by this Court in Kanpur Coal Syndicate AIR (1965) SC 325 : 1964 (53) ITR 225 is quite comprehensive to take within its fold every case where the assessee denies his liability to be assessed under the Act. 12. Section 115QA of the Act stipulates that in case of buy back of shares referred to in the provisions of said Section, the company shall be liable to pay additional income tax at the rate of 20% on the distributed income. Any determination in that behalf, be it regarding quantification of the liability or the question whether such company is liable or not....
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....by this Court. It is settled law that non-entertainment of petitions under writ jurisdiction by the High Court when an efficacious alternative remedy is available is a rule of self-imposed limitation. It is essentially a rule of policy, convenience and discretion rather than a rule of law. Undoubtedly, it is within the discretion of the High Court to grant relief under Article 226 despite the existence of an alternative remedy. However, the High Court must not interfere if there is an adequate efficacious alternative remedy available to the petitioner and he has approached the High Court without availing the same unless he has made out an exceptional case warranting such interference or there exist sufficient grounds to invoke the extraordinary jurisdiction under Article 226. (See State of U.P. v. Mohd. Nooh AIR 1958 SC 86, Titaghur Paper Mills Co. Ltd. v. State of Orissa (1983) 2 SCC 433 : 1983 SCC (Tax) 131, Harbanslal Sahnia v. Indian Oil Corpn. Ltd. (2003) 2 SCC 107 and State of H.P. v. Gujarat Ambuja Cement Ltd. (2005) 6 SCC 499) 12. The Constitution Benches of this Court in K.S. Rashid and Son v. Income Tax Investigation Commission AIR 1954 SC 207, Sangram Singh v. Electio....
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....sm for redressal of grievance still holds the field. Therefore, when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation." Recently, in Authorised Officer, State Bank of Travancore & Anr. v. Mathew K.C. (2018) 3 SCC 85, the principles laid down in Chhabil Dass Agarwal (2014) 1 SCC 603 were reiterated as under: "The discretionary jurisdiction under Article 226 is not absolute but has to be exercised judiciously in the given facts of a case and in accordance with law. The normal rule is that a writ petition under Article 226 of the Constitution ought not to be entertained if alternate statutory remedies are available, except in cases falling within the well-defined exceptions as observed in CIT v. Chhabil Dass Agarwal (2014) 1 SCC 603 ..." 16. We do not, therefore, find any 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 preliminary objection being raised, the High Court ought not to have considered the issue regarding alternate remedy, may not be correct. The first order dated ....