TMI Blog2024 (1) TMI 426X X X X Extracts X X X X X X X X Extracts X X X X ..... x - Validity of reopening of assessment - investment in shares in an Indian subsidiary - as submitted notices u/s 148A(b) had been issued in the present batch of matters in accordance with the Risk Management Strategy formulated by the Central Board of Direct Taxes ( CBDT ) - HELD THAT:- The admitted facts in the present batch of matters are that the assessees are foreign companies who have made remittances/investment in shares of their Indian subsidiaries. It is an admitted position that the transactions in question are capital account transactions. Though there is a doubt expressed that the transactions in question may be a consequence of round tripping, yet no evidence or proof of the said allegations have been stated or annexed with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be open to it to take proceedings in accordance with law. The challenge to the vires to Explanation 1 to Section 148 of the Act is left open. - HON'BLE THE ACTING CHIEF JUSTICE HON'BLE MS. JUSTICE MINI PUSHKARNA W.P.(C) 15928/2023 CM APPL. 64160-64161/2023, W.P.(C) 7021/2023 CM APPL. 27339/2023, W.P.(C) 7543/2023 CM APPL. 29234/2023, W.P.(C) 7836/2023 CM APPL. 30212/2023, W.P.(C) 7859/2023 CM APPL. 30293/2023, W.P.(C) 9482/2023 CM APPL. 36223/2023, W.P.(C) 9493/2023 CM APPL. 36254/2023, W.P.(C) 11331/2023 For the Petitioner Through: Mr. Ved Jain, Ms. Nischay Kantoor, Ms. Soniya Dodeja, Advocates, Mr. Salil Kapoor, Ms. Ananya Kapoor, Mr. Sumit Lalchandani, Mr. Vibhu Jain, Advocates, Mr. Kamal Sawhney, Mr. Nikhil Agarwal, Mr. Nishan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersus Assistant Commissioner of Income Tax, Circle Int Tax 1(1)(1) Ors. being W.P.(C) 15928/2023 are mentioned, namely, that the petitioner is a foreign company and is a resident of Italy. Learned counsel for petitioner states that during FY 2018-19, the petitioner had subscribed to 15,00,000 shares at face value of Rs. 10 each by making foreign inward remittance of Rs. 1,50,00,000 in its wholly owned Indian subsidiary namely, Angelantoni Test Technologies India Pvt. Ltd. in accordance with applicable regulations. He further states that since the Petitioner had not earned any income from any source in India, the Petitioner did not file return of income in India. 3. Learned counsel for the Petitioners submit that the transactions in question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d notices. 6. It is settled law that investment in shares in an Indian subsidiary cannot be treated 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 inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said press note is reproduced hereinbelow: Acceptance of the Order of the High Court of Bombay in the case of Vodafone India Services Private Limited The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, in a major decision, has decided to accept the order of the High Court of Bombay in the case of Vodafone India Services Private Limited (VISPL) dated 10.10.2014. This is a major correction of a tax matter which has adversely affected investor sentiment. Based on the opinion of Chief Commissioner of Income-tax (International Taxation), Chairperson (CBDT) and the Attorney General of India, the Cabinet decided to: i. accept the order of the High Court of Bombay in WP No. 871 of 2014, dated 10.10.2014; and not to file SLP ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of a consideration received / given on capital account. 9. Further, this Court in Divya Capital One Private Limited (Earlier Known as Divya Portfolio Private Limited) vs. Assistant Commissioner of Income Tax Circle 7(1) Delhi Anr., 2022 SCC OnLine Del 1461 held that Whether it is information to suggest under amended law or reason to believe under erstwhile law the benchmark of escapement of income chargeable of tax still remains the primary condition to be satisfied before invoking powers under Section 147 of the Act . 10. Consequently, the impugned orders under Section 148A (d) of the Act and the notices passed under Section 148 of the Act and all consequential action taken thereto are set aside. It is clarified that if any material be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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