THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 05.04.2013
+ W.P.(C) 8645/2011 & CM 19553/2011
RPG CELLULAR INVESTMENT &
HOLDINGS (P) LTD & ANR ... Petitioners
versus
ASSISTANT COMMISSIONER
OF INCOME-TAX & ANR ... Respondents
Advocates who appeared in this case:
For the Petitioner : Mr Somnath Shukla for Mr Ajay Vohra
For the Respondents : Mr Abhishek Maratha with Ms Anshul Sharma
CORAM:-
HON'BLE MR JUSTICE BADAR DURREZ AHMED
HON'BLE MR JUSTICE R.V.EASWAR
JUDGMENT
BADAR DURREZ AHMED, J (ORAL)
1. This writ petition is directed against the notice dated 30.03.2011
issued by the Assistant Commissioner of Income Tax, Circle- 15(1), New
Delhi under Section 148 of the Income Tax Act, 1961 (hereinafter
referred to as `the said Act') seeking to re-open the assessment of the
petitioner in respect of the assessment year 2004-05 on the allegation that
income had escaped assessment within the meaning of Section 147 of the
said Act.
WP(C) 8645/2011 Page 1 of 9
2. The purported reason for initiating the proceedings under Section
148 were recorded on 28.03.2011 and a copy thereof was forwarded to
the petitioner along with the impugned notice dated 30.03.2011 itself.
The purported reason for the allegation that the income had escaped
assessment was, inter alia, as under:-
"1. The assessment of M/s RPG Cellular Investment and
Holdings Pvt. Ltd. for the assessment year 2004-05 was
completed after scrutiny under Section 143(3) on 26.10.2006
determining a loss of ` 3,04,45,816/-. After verifying the
record it is seen that the assessee claimed and was allowed
exemption of ` 1,30,86,32,213/- towards long term capital gain
under Section 10(23g) of the Income Tax Act, 1961, though
approval for claiming the exemption was not received from the
Government. The omission resulted in underassessment of
income of ` 1,30,86,32,213/-."
(underlining added)
3. The petitioner furnished its objections to the said proposed re-
assessment proceedings. Those objections were disposed of by virtue of
an order dated 21.11.2011. In the said order dated 21.11.2011, which is
also impugned in this writ petition, the Deputy Commissioner of Income
Tax, Circle-15(1), New Delhi, inter alia, observed as under:-
"6.1 From the above, it is clear that no approval was granted
to the assessee company. The assessee company has furnished
wrong evidence as the name of the assessee company appears
WP(C) 8645/2011 Page 2 of 9
on the certificate of M/s. RPG Cellular Services Ltd and not
RPG Cellular Investment and Holding Pvt Ltd. Therefore, the
assessee is not entitled for exemption under Section 10(23G) as
the Notification filed by the assessee is not in the name of the
assessee company."
(underlining added)
4. It is the contention of the learned counsel for the petitioner that the
purported reason for initiation of the re-assessment proceedings is non-
existent. According to the learned counsel for the petitioner it appears
that, as per the reason recorded on 28.03.2011, no approval had been
obtained for exemption under Section 10(23G) of the said Act. It was not
clear as to whether the revenue was referring to the approval to be given
by the investee company (RPG Cellular Services Limited) or by the
investor company (RPG Cellular Investment & Holdings Private Limited
the petitioner herein). However, the petitioner made it clear in its
objections that the approval had been obtained by the investee company
(RPG Cellular Services Limited), which was the requirement in law. In
the present case, the petitioner is the investor company (RPG Cellular
Investment and Holding Private Limited), whereas the investee company
is M/s. RPG Cellular Services Limited.
WP(C) 8645/2011 Page 3 of 9
5. The learned counsel for the petitioner also pointed out that the
order dated 21.11.2011 and, in particular, paragraph 6.1 thereof is clearly
erroneous inasmuch as the approval that is required for entitlement of
exemption under Section 10(23G) is with regard to the investee company
and not the investor company. However, in the said paragraph 6.1 of the
order dated 21.11.2011, it has been noted that the certificate, which has
been furnished, was wrong inasmuch as it was in the name of M/s. RPG
Cellular Services Limited and not RPG Cellular Investment and Holding
Private Limited, implying thereby that the approval should have been
given in respect of the investor company and not the investee company.
6. We entirely agree with the submission made by the learned
counsel for the petitioner that the approval and the certificate that is
required for exemption under Section 10(23G) of the said Act has to have
reference to the investee company and not the investor company. Section
10(23G), as it existed at the relevant time, to the extent relevant, is set out
as under:-
"(23G) any income by way of dividends, other than
dividends referred to in section 115-O, interest or long-term
capital gains of an infrastructure capital fund or an
infrastructure capital company or a co-operative bank from
investments made on or after the 1st day of June, 1998 by way
WP(C) 8645/2011 Page 4 of 9
of shares or long-term finance in any enterprise or undertaking
wholly engaged in the business referred to in sub-section (4) of
section 80-IA or sub-section (3) of section 80-IAB or a housing
project referred to in sub-section (10) of section 80-IB or a
hotel project or a hospital project and which has been approved
by the Central Government on an application made by it in
accordance with the rules made in this behalf and which
satisfies the prescribed conditions:
xxxx xxxx xxxx xxxx"
A plain reading of the said provision makes it clear that it is the
investee company which has to have approval of the Central Government.
This becomes further clear from a reading of the Rule 2E of the Income
Tax Rules, 1962 ((hereinafter referred to as `the said Rules'). Sub-rules
(3) and (4) of Rule 2E are relevant. They are set out herein below:-
"(3) The Central Government shall approve an enterprise for
the purposes of clause (23G) of section 10, if such enterprise is
wholly engaged in the eligible business.
(4) The Central Government may, before approving an
enterprise, call for such documents (including audited annual
accounts) or information from the enterprise, as it thinks
necessary in order to satisfy itself that such enterprise is wholly
engaged in the eligible business and that Government may also
make such enquiries as it may deem necessary in this behalf."
It is apparent that the approval that is to be granted by the Central
Government is with respect to an enterprise which is wholly engaged in
WP(C) 8645/2011 Page 5 of 9
the eligible business. `Eligible business' has also been defined in the
Explanation to Rule 2E as, inter alia, the business referred to in Section
80-IA(4) and which fulfils the conditions specified in Section 80-IA(4).
In the present case, this has reference to the investee company which is
M/s. RPG Cellular Services Limited. Therefore, the respondents were
wrong in requiring the petitioner to furnish an approval with regard to the
petitioner company, which is the investor company. Insofar as the
investee company is concerned, the petitioner had already placed on
record an approval under Section 10(23G) dated 18.11.2004, which is to
the following effect:-
(TO BE PUBLISHED IN PART II SECTION 3(ii) OF THE
GAZETTE OF INDIA)
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
CENTRAL BOARD OF DIRECT TAXES
New Delhi, the 18th November, 2004
NOTIFICATION
S. No. It is notified for general information that the
approval to the enterprise, listed at para (3) below has been
renewed by the Central Government for the purpose of section
10(23G) of the Income-tax Act, 1961, read with rule 2E of the
Income-tax Rules, 1962 with effect from the Asstt. Year 2004-
05 to the Asstt. Year 2015-16 (upto 29.11.2014) i.e. upto the
end of period of 20 years as mentioned in Ministry of
WP(C) 8645/2011 Page 6 of 9
Communications, Department of Telecommunications (VAS
CELL) letter F. No. 842-47/2000-VAS/Vol.IV dated
29.01.2001 issued to amend the terms of licence agreement No.
842-21/93-TM dated 30th November, 1994 of earlier, in the
event of violation of the terms of the agreement aforesaid.
2. The approval is subject to the conditions that
(i) the enterprise/ undertaking will conform to and
comply with the provisions of section 10(23G) of
the Income-tax Act, 1961, read with rule 2E of the
Income-tax Rules, 1962;
(ii) the Central Government shall withdraw this
approval if the enterprise/ undertaking:-
(a) ceases to carry on the eligible business as
defined in Explanation (b) to Rule 2E of I.T.
Rules, 1962; or
(b) fails to maintain books of account and get such
accounts audited by an accountant as required
by sub-rule (6) of rule 2E of the Income-tax
Rules, 1962; or
(c) fails to furnish the audit report as required by
sub-rule (6) of rule 2E of the Income-tax Rules,
1962.
3. The enterprise/undertaking approved is
M/s Aircel Cellular Limited (formerly M/s RPG Cellular
Services Ltd and M/s Mobile Telecom Services Ltd), 5th Floor,
Spencer Plaza, 769, Anna Salai, Chennai for their project of
providing Cellular Mobile Telephone Service in Chennai Metro
Service Area as per licence agreement No. 842-21/93-TM dated
30th November, 1994 and as amended vide Ministry of
Communications, Department of Telecommunications (VAS
WP(C) 8645/2011 Page 7 of 9
CELL) letters F. No. 842-47/2000-VAS/Vol. IV dt 29.01.2001
and 25.09.2001 consequent to Migration to revenue sharing
regime of New Telecom Policy -19999 (F. No 205/56/2000-
ITA-II) (Vol.I)
Sd/-
(Nidhi Singh)
Under Secretary to the Government of India
Central Board of Direct Taxes
Notification No. 282/2004 (F. No. 205/56/2000/ITA.II) (Vol.I)
To
The Manager,
Government of India Press,
Mayapuri, New Delhi.
Copy to:-
1. The applicant.
2. All CCsIT and DGsIT
3. C & AG of India
4. Joint Secretary and Legal Advisor, Ministry of Law, New
Delhi.
5. Addl. Secretary (Admn.), Deptt. Of Revenue, New Delhi.
6. DIT (RSP & PR) (Bulletin Section), New Delhi.
7. Ministry of Communications, Department of
Telecommunications, Govt. of India, New Delhi.
(Nidhi Singh)
Under Secretary to the Government of India
Central Board of Direct Taxes"
This notification had also been produced at the time of the original
assessment under Section 143(3) of the said Act. Apart from this, we had
asked the learned counsel for the petitioner to produce the original
approval granted by the Central Government inasmuch as the notification
WP(C) 8645/2011 Page 8 of 9
dated 18.11.2004 appears to be a renewal granted by the Central
Government. The learned counsel for the petitioner has, today, placed
before us a notification dated 16.01.2001, whereby the Central
Government had granted the original approval for the purposes of Section
10(23G) of the said Act read with Rule 2E of the said Rules in respect of
the assessment years 2001-02, 2002-03 and 2003-04. The said
notification clearly applies to the investee company, namely, M/s. RPG
Cellular Services Limited. The present case is concerned with the
assessment year 2004-05 for which the approval had already been placed
on record being the notification dated 18.11.20004.
7. In the aforesaid circumstances, there is absolutely no reason for re-
opening the assessment under Section 147 of the said Act. The purported
reason for re-opening does not exist. Consequently, we set aside and
quash the notice dated 30.03.2011 as also the order dated 21.11.2011.
The writ petition is allowed. There shall be no order as to costs.
BADAR DURREZ AHMED, J
R.V.EASWAR, J
APRIL 05, 2013
SR
WP(C) 8645/2011 Page 9 of 9
|
