INCOME TAX ACT, 1961

Article 226 Section 245D(4)

Writ - Maintainability - Order passed by Settlement Commission under section 245D(4) - Alleged piecemeal challenge to order of Settlement Commission

The Commission, through the impugned Order, dated 14-9-2015 held that the sum of Rs. 1,37,19,75,000 advanced by RSPL to RTPL was to be assessed as deemed dividend in the hands of the petitioner, along with the income returned in each of the years and the additional income offered in the application. This order was put under challenge in the present writ petition. Various arguments advanced by petitioner, were to the effect that the impugned order of the Commission was not in accordance with the provisions of the Act. Among the various grounds raised by the petitioner, two primary grounds were to the effect that advances in the nature of commercial transactions would not fall within the ambit of section 2(22)(e) and that dividend was not taxable as per the provisions of section 10(34). These grounds were predominantly to the effect that the findings rendered by the Settlement Commission in the impugned order were not in accordance with the provisions of the Act. Revenue sbmitted that piece-meal acceptance of the Settlement Commission's order and a challenge to the remaining portion was impermissible. Held: The various legal propositions put forth before the court, assailing the orders of the Settlement Commission, were to the effect that the impugned order of the Commission was not in conformity with the provisions of the Act and by applying the ratio laid down in Jyotendrasinhji's case, it can be said that the present writ petition was maintainable. The application for settlement was made since the petitioner was not able to prove that the seized cash was out of the sale of trees. Apprehending that the amounts advanced by RSPL to RTPL may be assessed as deemed dividend in the hands of the petitioner, it was also mentioned in the application that the petitioner was a shareholder, holding more than 20% of equity share capital in both the Companies and that RSPL had advanced the money in the ordinary course of its business as corporate loans to RTPL. The contention of the department that a piecemeal challenge to the Settlement Commission's order was not maintainable, could not be sustained. Challenge to the impugned order of the Settlement Commission by invoking article 226 of the Constitution of India in this writ petition was, therefore, maintainable.

Applied:Iyotendrasinhji v. S.I. Tripathi & Ors. (1993) 201 ITR 611 (SC) : 1993 TaxPub(DT) 1331 (SC). Relied:C.A. Abraham v. Asstt. CIT (2002) 255 ITR 340 (Mad) : 2002 TaxPub(DT) 67 (Mad-HC), Mathurbhai Bhimjbhai Rudani v. ITSC 37 Taxman.com 333 (Guj-HC).

REFERRED : R.B. Shreeram Durga Prasad & Fatechand Nursing Das v. Settlement Commission ((1989) 176 ITR 169 (SC) : 1989 TaxPub(DT) 874 (SC).

FAVOUR : In assessee's favour/Petitioner's favour.

A.Y. :

INCOME TAX ACT, 1961

Section 119 Section 245C

SUBSCRIBE FOR FULL CONTENT