Back
2018 Supreme(Bom) 1887
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
S.C. DHARMADHIKARI, B.P. COLABAWALLA, JJ.
HDFC Bank Ltd. – Petitioner
Vs.
Assistant Commissioner of Income Tax and Ors. – Respondents
Writ Petition No. 462 of 2017
Decided On : 20-12-2018
For the Petitioner: Mr. J.D. Mistri Sr. Counsel a/w Mr. Madhur Agarwal i/b Mr. Atul Karsandas Jasani
For the Respondent: Mr. P.C. Chhotaray
Headnote:
Transactions are required - Assistance to Revenue - Beneficial ownership - Income Tax Act, 1961 - Section 92CA (1), 40A (2)(b) - By this Petition, Petitioner bank seeks a writ of certiorari for quashing impugned order and impugned reference - Impugned order passed by Respondent No. 1 holds that certain transactions entered into by Petitioner are “Specified Domestic Transactions” as per section 92BA(i) of the, I.T. Act 1961 and Arms Length Price of said transactions are required to be determined by making a reference to Respondent No. 2 - It is pursuant to this order that reference was made to Respondent No. 2 under s 92CA (1) of I.T. Act for determination of ALP in Petitioners case for Assessment Year 2014-15 - It is case of Petitioner that impugned order as well as impugned reference are ex-facie without jurisdiction, illegal, unsustainable, contrary to principles of natural justice and contrary to law, and therefore, ought to be quashed and set aside by us in our writ jurisdiction - This is how present Writ Petition has been filed - Petitioner is a public limited company registered under Act, 1956 and is also registered as a banking company with RBI - Petitioner, along with return of income, also filed Form 3CEB inter alia disclosing certain ‘specified domestic transactions’ entered into by it during relevant year - Thereafter, Petitioner’s case was selected for scrutiny assessment - During scrutiny, Petitioner again filed a copy of Form 3CEB - This was held by TPO in his order - It is in these circumstances that Petitioner has averred that it was surprised to receive a show cause notice from Respondent No. 1 vide an e-mail, for alleged non-reporting of certain related party transactions and required Petitioner to provide reasons why same should not be reported to Respondent No.2 for determination of ALP - According to Respondent No.1 certain transactions were entered into by Petitioner with related parties as per section 40A(2)(b) which were not reflected in form 3CEB filed by Petitioner – Held, Court fail to see that this judgment can be of any assistance to Revenue in facts and circumstances of present case -Supreme Court was considering completely different sections of I.T. Act and whose wordings are materially different from wordings of s40A(2)(b) of Act -Court therefore find that reliance placed by Mr Chhotaray on this decision is also wholly misplaced - In view of foregoing discussion, Court find that none of three transactions that form subject matter of this Petition fall within meaning of a SDT as required under s 92BA(i) of I. T. Act - This being case, Court find that Respondent No 1 was clearly in error in concluding that these transactions were SDTs, and therefore required to be disclosed by Petitioner by filing Form 3CEB - He therefore could not have referred these transactions to Respondent No.2 for determining ALP - In these circumstances, and in view of foregoing discussion, Writ Petition is allowed in terms of prayer clause (a) - Rule is made absolute in aforesaid terms - However, in facts and circumstances of case, there shall be no order as to costs - Petition is allowed.
B.P. COLABAWALLA, J.
1. By this Petition, the Petitioner – bank seeks a writ of certiorari for quashing the impugned order dated 29th December, 2016 (Exh “F”) and the impugned reference dated 29th December, 2016. The impugned order dated 29th December, 2016 (Exh “F”) passed by Respondent No.1 holds that certain transactions entered into by the Petitioner are “Specified Domestic Transactions” (for short “SDTs”) as per section 92BA(i) of the Income Tax Act, 1961 (for short the “I.T. Act”) and the Arms Length Price (“ALP”) of the said transactions are required to be determined by making a reference to Respondent No.2. It is pursuant to this order that the reference dated 29th December, 2016 was made to Respondent No.2 under section 92CA(1) of the I.T. Act for determination of the ALP in the Petitioner's case for the Assessment Year (for short “A.Y.”) 2014-15. It is the case of the Petitioner that the impugned order as well as the impugned reference are ex-facie without jurisdiction, illegal, unsustainable, contrary to the principles of natural justice and contrary to law, and therefore, ought to be quashed and set aside by us in our writ jurisdiction. This is how the present Writ Petition has been filed.
2. Before we set out the legal submissions of the respective parties, the brief facts of the case and which would be necessary to determine the controversy before us, are as under:-
(a) The Petitioner is a public limited company registered under the Companies Act, 1956 and is also registered as a banking company with the Reserve Bank of India (“RBI”). The primary business of the Petitioner is banking. The Petitioner filed its assessment of income for the Assessment Year (“A.Y.”) 2014-15 on 30th November, 2014 declaring a total income of Rs.12595,27,63,920/-. The Petitioner, along with the return of income, also filed Form 3CEB inter alia disclosing certain ‘specified domestic transactions’ entered into by it during the relevant year. Thereafter, the Petitioner’s case was selected for scrutiny assessment. During the scrutiny, the Petitioner again filed a copy of Form 3CEB on 11th June, 2016. It is the case of the Petitioner that the SDTs entered into by it and reported in Form 3CEB were similar to the transactions entered into by the Petitioner in the earlier assessment year, namely, A.Y. 2013-14 and the Transfer Pricing Officer (for short the “TPO”) had accepted that all the transactions entered into by the Petitioner were at an ALP. This was held by the TPO in his order dated 24th October, 2016.
(b) It is in these circumstances that the Petitioner has averred that it was surprised to receive a show cause notice from Respondent No.1 on 29th December, 2016 at 01.39 a.m., vide an e-mail, for the alleged non-reporting of certain related party transactions for the A.Y. 2014-2015 and required the Petitioner to provide the reasons why the same should not be reported to Respondent No.2 for determination of the ALP. This show cause notice was to be replied to by the Petitioner by 11.00 a.m. on the same date i.e. 29th December, 2016. According to Respondent No.1 certain transactions (mentioned hereinafter) were entered into by the Petitioner with related parties as per section 40A(2)(b) which were not reflected in form 3CEB filed by the Petitioner. Those transactions are as under:
(i). The Petitioner purchased Loans from HDFC Ltd and its subsidiaries amounting to Rs.5164 Cr and Rs.27.72 Cr respectively.
(ii). The Petitioner has received services from HBL Global Private Ltd. (for short “HBL Global”) for which the Petitioner paid an amount 492.5 Cr. and the Petitioner was having beneficial ownership of HBL Global.
(iii). The Petitioner has paid interest amount 4.41 Crore to HDB Welfare Trust which was a Trust created by the Petitioner.
(c) Since Respondent No.1 was of the opinion that these transactions were entered into with related parties as set out in section 40A(2)(b) of the IT Act, they ought to have found place in Form 3CEB filed b
