2024 (8) TMI 565

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....tioner is registered with the Security & Exchange Board of India (SEBI) as a Foreign Institutional Investor ('FII')/Foreign Portfolio Investor ('FPI') in India. 3. During the year under consideration, petitioner received inward remittances in India for the purpose of subscribing to the securities and carried out certain transactions on the recognized Stock Exchange in India in relation to purchase of listed securities as reproduced below:- S.No. Name of scrip Date of subscription Quantity Amount (in INR) 1 Yaari Digital Integrated Services Limited (erstwhile Indiabulls Integrated Services Limited) 14.05.2018 8,92,500 47,48,10,000 2 Dhani Services Limited (erstwhile Indiabulls Ventures Limited) 08.05.2018 20,00,000 90,00,00,000   Total     137,48,10,000 4. As per the averments in the petition, petitioner has not earned income of any nature accruing or arising in India or taxable in India. Petitioner only used the funds remitted into India for subscription of the above mentioned securities and made outward remittance of the excess funds, which are summarized as under:- Date of Transaction Particulars Amount (in INR) 02.05.2018 Inward remit....

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....s Ventures Ltd.") at Rs. 450/- per share on 08.05.2018 and as per the exchange rate (NSE) on 14.05.2018 and it was noted that the share price of Indiabulls Integrated Services Ltd. was between Rs. 575.20 to Rs. 585 per share and similarly the share price of Dhani Services Ltd. on 08.05.2018 was between Rs. 498 to Rs. 525. Thus, discrepancy was noted in the share price as provided by the petitioner. SUBMISSIONS: 12. Learned counsel for the petitioner has argued that respondent has failed to take note that no income had accrued or was received in India in the impugned AY by the petitioner and thus the petitioner was not obligated to file a return and thus no income had escaped from assessment. 13. It was further argued that the petitioner provided various documentary evidences such as minutes of the Extraordinary General Meetings of both the companies to refute the allegation made in the impugned order that there was difference between the fair market value and the value at which the shares were purchased by the appellant. 14. It is submitted that the reason/information provided to the petitioner in the impugned notice dated 22.03.2023 do not satisfy the test of "information" wit....

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....d as 'income' as the same is in the nature of "capital account transaction" not giving rise to any income. In Nestle SA Versus Assistant Commissioner of Income Tax (W.P.(C) No. 12643/2018), this Court held that the allegation of the Revenue that the investment in the shares of Indian subsidiary amounted to 'income' is flawed. The relevant portion of the said judgment is reproduced hereinunder: "24. The principal objection of the Petitioner that its investment in the shares of its subsidiary cannot be treated as 'income' is well founded. The decision of the Bombay High Court in Vodafone India Services Pvt. Ltd. v. Union of India (supra) holding such investment in shares to be a 'capital account transaction' not giving rise to income was accepted by the CBDT. Para 2 of Instruction No.2 of 2015 dated 29th January, 2015 reads thus: "2. It is hereby informed that the Board has accepted the decision of the High Court of Bombay in the above mentioned Writ Petition. In view of the acceptance of the above judgment, it is directed that the ratio decidendi of the judgment must be adhered to by the field officers in all cases where this issue is involved. This may also be brought to the no....

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....ther sanctions vacillation nor can a decision to trigger reassessment be sustained based upon an attempted supplementation aimed at bolstering or buttressing the original opinion. The reasons on the basis of which a reassessment is proposed to be initiated is not a field of shifting sand and which authorises the AO to continually alter the basis on which the action is sought to be initiated. 29. These fundamental precepts assume added significance when viewed in light of the right to object which stands statutorily conferred upon an assessee. If the ultimate decision to justify initiation of reassessment be based on entirely new or previously undisclosed material or reasoning, it would clearly result in deprivation of a right to effectively object to the proposed action. It is these aspects which constrain us to come to the conclusion that the impugned action is rendered wholly unsustainable. 30. The aforenoted imperatives were duly highlighted by us in our recent decision in ATS Infrastructure Limited Vs. Assistant Commissioner of Income Tax Circle 1(1) Delhi & Ors. and where we had an occasion to deal with a similar challenge. While ruling on these aspects, we in ATS Infrastr....