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SUPREME COURT OF INDIA
UDAY UMESH LALIT, INDIRA BANERJEE, JJ.
Genpact India Private Limited - Appellant
Versus
Deputy Commissioner Of Income Tax & Anr. - Respondents
Civil Appeal No.8945 of 2019 (Arising out of Special Leave Petition (Civil) No.20728 of 2019)
Decided on : 22-11-2019
(a) Income Tax Act, 1961 - Sections 246(1), 246A(1) and 115QA - “Denial of the assessee’s liability to be assessed under this Act” - Not confined to assessment u/s 143 or 144 - Includes assessment u/s 115QA - Held, an appeal would be maintainable against determination of liability under Section 115QA. (Para 13, 14)
(b) Constitution of India - Article 226 - Availability of adequate appellate remedy - Even after admission, the Writ Petition could be dismissed on the ground of alternate remedy. (Para 16, 17)
Facts of the case:
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 Rs.32,000/- per share for a total consideration of Rs.800 crores.
On 10.05.2013, Chapter XIIDA consisting of Sections 115QA, 115QB and 115QC was inserted in the Income Tax Act, 1961 by the Finance Act, 2013 which came into effect from 01.06.2013.
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 Rs.35,000 per share for a total consideration of Rs.2,625 crores from said Genpact India Investment, Mauritius.
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.
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.
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 Rs.2,625 crores.
The High Court declined to entertain the writ petition and gave liberty to the appellant to avail of statutory appeal.
Finding of the Court:
An appeal would be maintainable u/s 246(1), 246A(1) against determination of liability under Section 115QA.
Even after admission, the Writ Petition could be dismissed on the ground of alternate remedy.
Result: Appeal dismissed.
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 Rs.32,000/- 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 consideration paid by the company on buy-back of shares as reduced by the amount which was received by the company for issue of such shares.
(2) Notwithstanding that no income-tax is payable by a domestic company on its total income computed in accordance with the provisions of this Act, the tax on the distributed income under sub-section (1) shall be payable by such company.
(3) The principal officer of the domestic company and the company shall be liable to pay the tax to the credit of the Central Government within fourteen days from the date of payment of any consideration to the shareholder on buyback of shares referred to in sub-section (1).
(4) The tax on the distributed income by the company shall be treated as the final payment of tax in respect of the said income and no further credit therefore shall be claimed by the company or by any other person in respect of the amount of tax so paid. (5) No deduction under any other provision of this Act shall be allowed to the company or a shareholder in respect of the income which has been charged to tax under subsection (1) or the tax thereon.”
The Explanation in relation to “buy back” was, however, amended and with effect from 01.06.2016, it reads as:-
“(i) “buy-back” means purchase by a company of its own shares in accordance with the provisions of any law for the time being in force relating to companies;”
(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 Rs.35,000 per share for a total consideration of Rs.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
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