Contents

1. Notification is needed to apply the MFN clause; No benefit if the country 4

joins OECD post-signing of the first treaty: SC
2. Mutuality does not exempt interest income of clubs even if banks are 5
corporate members: SC
3. Non-banking Co-op Society offering credit facilities to members eligible for 6
Section 80P relief: Supreme Court
4. Annual licence fee paid by Airtel to DoT is a capital expenditure amortizable 7
under Section 35ABB: SC
5. Supreme Court eliminates discrimination in Section 10(26AAA); Sikkimese 8
women marrying non-Sikkimese and old Indian settlers are eligible for
exemption
6. Section 271C penalty cannot be imposed for belated or non-payment of TDS: 10
Supreme Court
7. ALP determined by ITAT can be subject to scrutiny; no absolute proposition 11
of law that its decision is final: SC
8. Loss due to confiscation of smuggled stock-in-trade not allowable under 12
Section 37: Apex Court
9. ‘Bitumen’ is not a ‘valuable article’; No Section 69A addition if transporter 13
does not deliver it to Govt.: SC
10. AO rightly imposed a penalty under the Black Money Act for non-disclosure 14
of foreign assets in Schedule FA of ITR: ITAT
11. Portuguese law does not allow the wife to hold 50% voting rights in the 15
husband’s shares; deemed dividend applicable: HC
12. Cognizant liable to pay DDT on its Rs. 19,000 crores buyback: ITAT 16
13. CA firm can’t invoke MSMED Act to recover the balance amount of 18
remuneration for a special Audit: HC
14. 50% of the rent is taxable in the wife’s hand if the sale deed does not specify 20
her share in joint property: ITAT
15. Company is entitled to depreciation and maintenance expenses of sports car 21
purchased for commuting key managerial personnel: ITAT
16. Searches conducted before 01-06-2015 would be covered under amendment 22
by FA 2015 in Section 153C: SC
17. Sum paid to contract teachers cannot be treated as a ‘fee for professional 24
services’; No Section 194J TDS
18. Extended time limit provided by TOLA is not applicable for sanction of notice 25
under Section 151: HC
19. Explanations 6 & 7 to Sec. 9(1)(i) are to be given retro effect as they have to be 26
read along with Expl. 5: HC
20. Cost of acquisition of shares converted from FCCBs to be computed as per 27
FCCB Scheme 1993 and not as per Section 49(2A): SC
The year 2023 was loaded with several significant
Income-tax rulings a taxpayer and revenue will
need to remember. This article reviews the top
20 income-tax case laws of the year reported on
taxmann.com

All these reported case laws contain a three-line

digest and headnotes, which are drafted and
reviewed by a team of professionals. We focus on
bringing the issue involved and ratio decidendi
to the fore and integrating it with all connected
records so that you can have a holistic view of a
judgment
 Taxmann.com Recap:
Best Direct Tax Rulings in 2023
4

1. Notification is needed to apply the MFN

clause; No benefit if the country joins
OECD post-signing of the first treaty: SC
[Assessing Officer v. Nestle SA [2023] 155 taxmann.com 384 (SC)]

A significant development has unfolded as the Supreme Court ruled in favour of

the revenue regarding the applicability of the Most Favoured Nation (MFN) clause
contained in various Indian treaties. The Supreme Court’s decision effectively
overruled the judgment of the Delhi High Court in the case of Steria India and
Concentrix Services Netherlands BV.

The central issues at hand pertain to the invocation of the MFN clause in cases
where the third country, with which India has entered into a Double Tax Avoidance
Agreement (DTAA), was not a member of the OECD at the time of entering into the
DTAA but subsequently became an OECD member. Additionally, the question arises
whether the MFN clause can be triggered automatically or is contingent on issuing
a notification.

The Supreme Court held that the word ‘is’ appearing in Clause IV(2) of the India-
Netherlands DTAA need to be interpreted correctly. The clause is quoted below:

“If after the signature of this convention under any Convention or Agreement
between India and a third State which is a member of the OECD, India
should…………….”

The expression “is” has a present signification and derives meaning from the context.
The conclusion is that when a third-party country enters into DTAA with India, it
should be a member of the OECD for the earlier treaty beneficiary to claim parity.

The treaty practices of Switzerland, Netherlands, and France are influenced by their
unique constitutional and legal systems. In India, when a third state joins the OECD
after signing a DTAA, India must communicate and accept the beneficial effect
through a notification under Section 90. Therefore, the essential requirement of a
notification under Section 90 cannot be undermined.

If a DTAA or Protocol provision with one nation mandates equal treatment for a specific
matter, even after another nation (part of OECD) receives preferential treatment. In
that case, it does not automatically apply the same benefit to the DTAA of the first
nation that has an agreement with India. In this case, the terms of the earlier DTAA
need a separate amendment through a notification under Section 90.

Accordingly, for a court, authority, or tribunal to enforce a DTAA or any protocol that
alters existing legal provisions, a notification under Section 90(1) is essential and
obligatory.
 Taxmann.com Recap:
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5

2. Mutuality does not exempt interest

income of clubs even if banks are
corporate members: SC
[Secundrabad Club etc. v. CIT [2023] 153 taxmann.com 441 (SC)]

Assessee-club was a mutual association of persons existing solely for the benefit of
its members. The main object of the club was to promote social activities, including
sports and recreation, amongst its members and various services can be availed
of by its members. The surplus income generated by the club from members was
deposited as fixed deposits, post office deposits, national savings certificates, etc.

The issue before the Supreme Court was:

“Whether the deposit of surplus funds by Clubs by way of bank deposits in

various banks wouldn’t be subject to tax in the hands of the Clubs considering
the principle of mutuality?”

The Supreme Court held that the principle of mutuality is rooted in common sense.
This implies that a person cannot earn profit from an association that he shares a
common identity with. The essence of the principle lies in the commonality of
the contributors and the participants who are also beneficiaries. There has to be a
complete identity between the contributors and the participants. Therefore, it follows
that any surplus in the common fund shall not constitute income but will only be an
increase in the common fund meant to meet sudden eventualities.

The principle of mutuality would not apply to interest income earned on fixed deposits
made by the Clubs in the banks, irrespective of whether the banks are corporate
members of the club or not.

If there is an entry of a third party or non-member to utilise the funds of the club
and return the same with interest, then the parties’ relationship is not based on
privity of mutuality. The essential condition of mutuality, i.e., identity between the
contributors and participators, would end. The relationship would then be like any
other commercial relationship, such as between a customer and a bank where the
customer makes a fixed deposit to earn an interest income.

In the principle of mutuality, where many people contribute to a fund, they are
ultimately paid the surplus from the fund. In that case, it is a mere repayment of the
contributors’ own money. However, if the very same surplus fund is not applied for
the common purpose of the club or towards the benefit of the members of the club
directly but is invested with a third party who has the right to utilise the said funds,
subject to payment of interest on it and repayment of the principal when desired by
the club, then, in such an event, the club loses its control over the said funds.

When surplus funds of a club are invested as fixed deposits in a bank, and the bank
has a right to utilise the said fixed deposit amounts for its banking business subject
to repayment of the principal along with interest, the identity is lost.

Thus, the interest income earned on fixed deposits made in the banks by the Clubs
has to be treated like any other income from other sources.
 Taxmann.com Recap:
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6

3. Non-banking Co-op Society offering

credit facilities to members eligible for
Section 80P relief: Supreme Court
[Kerala State Co-Operative Agricultural & Rural Development Bank Ltd. v. AO [2023]
154 taxmann.com 305 (SC)]

The assessee was a state-level agricultural and rural development bank governed as a
co-operative society under the Kerala Co-operative Societies Act, 1969. It was engaged
in providing credit facilities to its members.

In the relevant assessment year, the assessee filed its return and claimed a deduction
under Section 80P(2)(a)(i). The Assessing Officer (AO) disallowed the deduction on
the grounds that the assessee was a co-operative bank and, thus, was hit by Section
80P(4) and would not be eligible for deduction under Section 80P(2).

The matter reached the Supreme Court.

The Supreme Court held that banking is defined in Section 5(b) of the Banking
Regulation Act, 1949 to mean accepting, for the purpose of lending or investment,
deposits of money from the public, repayable on demand or otherwise, and
withdrawal by cheque, draft, order or otherwise. Therefore, a banking company must
transact banking business vis-à-vis the public.

If a co-operative society would not transact the business of banking as defined in

Section 5(b), it would not be a co-operative bank within the meaning of Section 56
of Banking Regulation Act and would be entitled to the benefit of deduction under
Section 80P.

Since the assessee society was an apex co-operative society within the meaning of
Kerala State Co-Operative Agricultural Development Banks Act, 1984 (State Act, 1984)
whose primary object was to provide financial accommodation to its members who
were all other co-operative societies and not members of the public, it was not a co-
operative bank within the meaning of Section 5(b) read with Section 56 of Banking
Regulation Act.

Accordingly, the deduction under Section 80P could not be denied by invoking
Section 80P(4).
 Taxmann.com Recap:
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7

4. Annual licence fee paid by Airtel to DoT is

a capital expenditure amortizable under
Section 35ABB: SC
[CIT v. Bharti Hexacom Ltd. [2023] 155 taxmann.com 322 (SC)]

The assessee company was engaged in the business of telecommunication services

and value-added related services. It initially procured a licence from the Government
for telecommunication services under the 1994 agreement, which New Telecom
Policy, 1999 subsequently governed. In terms of the licence agreement, the assessee
had to pay an entry fee payable up to 31-7-1999, and, thereupon, the licence fee was
payable as a percentage of gross revenue under the licence effective from 01-08-1999.
The Delhi High Court apportioned the licence fee as partly revenue and partly capital
by dividing the licence fee into two periods, i.e. before and after 31-7-1999. Accordingly, it
was held that the licence fee paid or payable for the period up to 31-7-1999, i.e., the date
set out in the Policy of 1999, should be treated as a capital expense, and the balance
amount payable on or after the said date should be treated as a revenue expense.
On appeal, the Supreme Court held that as per the Policy of 1999, there was a multi-
licence regime since any number of licences could be issued in a given service area.
Further, the licence was for a period of twenty years instead of ten years as per the
earlier regime. The migration to the Policy of 1999 was on the condition that the entire
policy must be accepted as a package, and consequently, all legal proceedings and
disputes relating to the period up to 31-7-1999 were to be closed. If the migration to
the Policy of 1999 was accepted by the assessees herein or the other service providers,
then all licence fee paid up to 31-7-1999 was declared as a one-time licence fee as stated
in the communication dated 22-7-1999 which was treated to be a capital expenditure.
The licence granted under the Policy of 1999 was non-transferable and non-assignable.
More importantly, if there was a default in the licence fee payment, the entire licence
could be revoked after sixty days’ notice.
The view of the Delhi High Court was not right in apportioning the expenditure
incurred towards establishing, operating and maintaining telecom services as partly
revenue and partly capital by dividing the licence fee into two periods, that is, before
and after 31-7-1999 and holding that the licence fee paid for the period upto 31-7-1999
should be treated as capital and the balance amount payable on or after the said
date should be treated as revenue.
The nature of payment being for the same purpose cannot have a different
characterisation merely because of the change in the manner or measure of payment
or, for that matter, the payment being made annually. Therefore, the nomenclature
and the manner of payment are irrelevant.
The payment post 31-7-1999 was a continuation of the payment made before 31-7-1999,
albeit in an altered format, which does not take away the essence of the payment. It
was a mandatory payment traceable to the foundational document, i.e., the license
agreement as modified post-migration to the 1999 policy. The consequence of non-
payment would result in the ouster of the licensee from the trade. Thus, this is a
payment which is intrinsic to the existence of the licence as well as trade itself.
Accordingly, variable annual licence fees paid by the assessees to the DoT under the
Policy of 1999 are capital in nature and may be amortised in accordance with Section
35ABB.
 Taxmann.com Recap:
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8

5. Supreme Court eliminates discrimination

in Section 10(26AAA); Sikkimese women
marrying non-Sikkimese and old Indian
settlers are eligible for exemption
[Association of Old Settlers of Sikkim v. UOI [2023] 146 taxmann.com 271 (SC)]

The Supreme Court ends discrimination against a Sikkimese woman marrying a non-
Sikkimese in the matter of Income-tax exemption under Section 10(26AAA). It also
directed the Govt. to amend the Explanation to Section 10(26AAA) to suitably include
a clause to extend the tax exemption to all Indian citizens domiciled in Sikkim on or
before 26th April 1975.

The Association of Old Settlers of Sikkim and others have filed a writ petition under
Article 32 of the Constitution of India, asking for a court order striking down Section
10(26AAA) of the Income-tax Act.

The petitioners have prayed to strike down Section 10(26AAA) to the extent it excludes
Indians who have settled in Sikkim before the merger of Sikkim with India on 26-04-
1975, but their names are not recorded as “Sikkim Subjects”.

Further, a request was also made to remove the Proviso to Section 10(26AAA), which
excludes “Sikkimese women” who marry non-Sikkimese after 01st April 2008, from
the exempt category.

The Supreme Court of India held the purpose of Section 10(26AAA) is to grant
exemption to the residents of Sikkim. Therefore, all such Indian citizens who settled
in Sikkim before the merger of Sikkim with India on 26-04-1975 are to be treated at
par as they form the same group/class.

Just because the Indian citizens settled in Sikkim did not relinquish their Indian
citizenship, or their ancestors were not registered under the Sikkim Subjects
Regulations, 1961, at the time of its enactment, it cannot be concluded that they are
no longer considered “Sikkimese”.

There is no nexus sought to be achieved in excluding the Indians, who had settled in
Sikkim before the merger of Sikkim with India on 26-04-1975, but their names are not
recorded as “Sikkim Subjects”. The Union of India has failed to satisfy any reasonable
classification and/or nexus to exclude such a class of Indians who have settled in
Sikkim before 26-04-1975.

Therefore, excluding long-time Indian settlers who settled in Sikkim before its merger
with India on 26th April 1975 from the definition of “Sikkimese” in Section 10(26AAA) is
unjust, unfair, and in violation of Article 14 of the Indian Constitution.

The Union of India shall amend the Explanation to Section 10(26AAA) to suitably
include a clause to extend the exemption from payment of income tax to all Indian
citizens domiciled in Sikkim on or before 26th April 1975.

Till such amendment is made by the Parliament, any individual whose name does
not appear in the Register of Sikkim Subjects, but it is established that such individual
was domiciled in Sikkim on or before 26th April 1975 shall be entitled to the benefit of
exemption. This direction is being issued in the exercise of powers under Article 142
of the Constitution.
 Taxmann.com Recap:
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About the objection to the Proviso in Section 10(26AAA) that excludes “a Sikkimese
woman who marries a non-Sikkimese after 01st April 2008” from the exemption
category, no valid reason has been provided by the Union of India for this exclusion.

It should be noted that there is no disqualification for a Sikkim man who marries a
non-Sikkimese after 01-04-2008. Thus, there is clear discrimination based on gender,
which is wholly violative of Articles 14, 15, and 21 of the Constitution of India.

A woman is not a chattel and has an identity of her own, and the mere factum of
being married ought not to take away that identity. Therefore, the Proviso to Section
10 (26AAA) is also struck down as being ultra vires Articles 14, 15, and 21 of the
Constitution of India.

Editor’s Note:
To settle the issue and incorporate the ruling of the Apex Court, the Finance Act
2023 has substituted clause (26AAA) of Section 10 with retrospective effect from
01-04-1990.
 Taxmann.com Recap:
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6. Section 271C penalty cannot be imposed

for belated or non-payment of TDS:
Supreme Court
[US Technologies International (P.) Ltd. v. CIT [2023] 149 taxmann.com 144 (SC)]

The assessee, a private limited company, was engaged in a software development

business. It deducted tax at source (TDS) in respect of salaries, contract payments,
etc., for the relevant assessment year. The assessee deposited the amount of TDS in
instalments with a delay ranging from 5 days to 10 months.

During the survey conducted by the AO, the delay in depositing the amount of
TDS was noticed, and interest under Section 201(1A) was charged. Further, the
Additional Commissioner (ACIT) levied a penalty equivalent to the amount of TDS
under Section 271C on the assessee. The High Court confirmed the penalty order
imposed by ACIT. Aggrieved by the order, the assessee preferred an appeal to the
Supreme Court.

The Supreme Court held that Section 271C(1)(a) applies in case of a failure on the
part of the assessee to “deduct” the whole or any part of the tax as required under
the provisions of the Act. The words used in Section 271C(1)(a) are very clear, and
the relevant words used are “fails to deduct.” It does not speak about the belated
remittance of the TDS.

Only a limited text involving Section 115-O(2) or the second proviso to Section 194B
alone would constitute an instance where a penalty can be imposed in terms of Section
271C(1)(b) for the non-payment of tax. The legislature has provided the consequences
of non-payment or belated remittance/payment of the TDS as in Section 201(1A) and
Section 276B of the Act.
As per the settled position of law, the penal provisions are required to be construed
strictly and literally. The cardinal principle of interpretation of the statute and, more
particularly, the penal provision are needed to be read as they are. Nothing is to be
added, or nothing is to be taken out of the penal provision.
The words “fails to deduct” occurring in Section 271C(1)(a) cannot be read into “failure
to deposit/pay the tax deducted”. Therefore, on the plain reading of Section 271C, no
penalty under Section 271C(1)(a) can be levied on belated remittance of the TDS after
the same is deducted by the assessee.
 Taxmann.com Recap:
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7. ALP determined by ITAT can be subject to

scrutiny; no absolute proposition of law
that its decision is final: SC
[Sap Labs India (P.) Ltd. v. ITO [2023] 149 taxmann.com 327 (SC)]

The issue before the Supreme Court was:

“Whether the High Court was correct in holding that the determination of arm’s
length price by the Tribunal shall be final against which the High Court cannot
entertain an appeal?”

The Supreme Court held that the tribunal must follow the guidelines stipulated
under Chapter X of the Income-tax Act, namely, Sections 92, 92A to 92CA, 92D, 92E
and 92F and Rules 10A to 10E while determining the arm’s length price (ALP). Any
determination of ALP under Chapter X dehors the relevant provisions of the Income-
tax Act is considered perverse and may be considered a substantial question of law
as perversity itself can be said to be a substantial question of law.

There cannot be any absolute proposition of law that in all cases where the tribunal
determined ALP, the same is final and cannot be scrutinised by the High Court in an
appeal under Section 260A of the Income-tax Act.

When the determination of ALP is challenged before the High Court, it is always
open for the High Court to consider and examine whether the ALP was determined
considering the relevant guidelines under the Act and the Rules.

Even the High Court can examine the comparability of two companies or the
selection of filters and whether the same is done judiciously and based on the
relevant material/evidence on record. The High Court can also examine whether
the comparable transactions have been taken into consideration properly, i.e., to the
extent non-comparable transactions are considered comparable or not.

Therefore, the view that in the matter of transfer pricing, the determination of
ALP by the tribunal shall be final and cannot be a subject matter of scrutiny is not
acceptable. The High Court is not precluded from examining the correctness of the
determination of ALP.

Consequently, the matter was remitted back to the respective High Court for fresh
consideration after examining the arm’s length price in accordance with the relevant
provisions.
 Taxmann.com Recap:
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12

8. Loss due to confiscation of smuggled

stock-in-trade not allowable under
Section 37: Apex Court
[CIT v. Prakash Chand Lunia (D) [2023] 149 taxmann.com 416 (SC)]

The assessee was in the business of making jewellery. A search was conducted by the
Directorate of Revenue Intelligence (DRI) officers at the premises taken on rent by
the assessee and recovered slabs of silver.

Since the assessee failed to explain the source of the acquisition of silver, additions
were made under Section 69A and an assessment order was passed. Later, the
assessee claimed that the loss due to confiscation by the DRI official of the Customs
Department was a business loss.

The matter reached the High Court, wherein loss was duly allowed, relying upon
the Supreme Court Ruling in the case of Piara Singh [1980] 3 Taxman 67 (SC). The
revenue filed the instant appeal before the Supreme Court.

The Supreme Court held that the judgement in the case of Piara Singh wrongly relied
upon as the same pertained to an assessee who was engaged in the business of
smuggling currency notes and for whom confiscation of the currency notes was a
loss occasioned in pursuing his business.

In the instant case, the main business of the assessee was dealing in silver, and his
business cannot be said to be the smuggling of silver bars, as was the case in the case
of Piara Singh (supra).

In the assessee’s case, he was carrying on an otherwise legitimate silver business. To

make larger profits, he indulged in the smuggling of silver, which was an infraction
of the law.

The word ‘any expenditure’ mentioned in Section 37 takes in its sweep loss occasioned
in the course of business, being incidental to it. As a consequence, any loss incurred
by way of expenditure by an assessee for any purpose that is an offence or prohibited
by law is not deductible in terms of Explanation 1 to Section 37.

Such an expenditure/loss incurred for any purpose which is an offence shall not be
deemed to have been incurred for the purpose of business or profession or incidental
to it, and hence, no deduction can be made.

A penalty or a confiscation is a proceeding in rem. Therefore, a loss in pursuance to

the same is not available for deduction regardless of the nature of the business, as a
penalty or confiscation cannot be said to be incidental to any business. Therefore, an
appeal of revenue was allowed, and an order passed by the High Court was set aside.
 Taxmann.com Recap:
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9. ‘Bitumen’ is not a ‘valuable article’; No

Section 69A addition if transporter does
not deliver it to Govt.: SC
[D. N. Singh v. CIT, [2023] 150 taxmann.com 301 (SC)]

The assessee carried on business as a carriage contractor for bitumen. It was involved
in a scam of misappropriating the bitumen and not delivering the quantity lifted to
the various divisions of the Road Construction Department of the Government of
Bihar. Finding out that the actual quantity was not delivered, the AO invoked Section
69A and made additions due to the short supply of bitumen.

The matter reached the Supreme Court of India.

The Supreme Court held that the assessee at any point did not claim ownership over
the bitumen not delivered to the authorities. It was also not a case where the assessee
exercised rights available in law, entitling it to possess goods as of right or pass on
the title to another under law as permitted. At best, the assessee’s possession was a
shade better than that of a thief as the possession had its origin under a contract of
bailment.

It would be straining the law beyond justification if the Court recognised a thief as
the property owner within the meaning of Section 69A. Recognising a thief as the
property owner would also mean that the owner would cease to be recognised as the
owner, which would indeed be the most startling result.

When the facts are clear that the assessee is not the owner and somebody else is the
owner, then treating the assessee as the owner may produce the most illegal results
apart from being unjust.

The intention behind introducing Section 69A was to get at income not reflected in
the books of account but found to belong to the assessee. Not only must it belong to
the assessee, but it must be other valuable articles.

Applying the Principle of Ejusdem Generis, bitumen would stand out as a strange
bedfellow in the company of its immediate predecessor words, viz., money, bullion,
and jewellery. Bitumen is a clear misfit and could not have been the legislative
intention to treat it as another valuable article.

Bitumen is a residual product in petroleum refineries and is usually used in road

construction. It may be found in small quantities or large quantities. If the ‘article’ is
to be found ‘valuable’, then in small quantity, it must not just have some value, but it
must be ‘worth a good price’ or ‘worth a great deal of money’. If this is so, Section 69A
would then stand attracted.

But if treating it as a ‘valuable article’ requires ownership in large quantity and

multiplying the value in large quantity, a ‘good price’ or a ‘great deal of money’ is
arrived at, then it would not be valuable.

Thus, the AO acted illegally in holding that the assessee was the ‘owner’ and made
the addition under Section 69A on the said basis.
 Taxmann.com Recap:
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10. AO rightly imposed a penalty under the

Black Money Act for non-disclosure of
foreign assets in Schedule FA of ITR: ITAT
[Ms. Shobha Harish Thawani v. Jt. CIT [2023] 154 taxmann.com 564 (Mumbai - Trib.)]

The Mumbai Tribunal has confirmed the imposition of a penalty on the taxpayer for
failing to disclose foreign assets in the Schedule FA of ITR. The tribunal stated that
reporting interest income in the ITR from said foreign asset does not exempt the
taxpayer from the obligation to disclose the assets in Schedule FA.
The assessee and her husband jointly invested in Global Dynamic Opportunity Fund
Ltd. The assessee’s share in the said investment was 40%. The assessee invested out
of funds transferred from India to HSBC Bank in Jersey.
The assessee declared interest income from the foreign investment in AY 2016-17.
Said asset was sold, and capital gain was offered to tax in AY 2019-20. However, the
assessee did not disclose foreign assets while filing the return of income (ITR) for AY
2016-17 to AY 2018-19 under Schedule FA.
The AO levied a penalty towards the non-disclosure under Section 43 of the Black
Money Act 2015 (BMA) for each of the assessment years. On appeal, the CIT(A) upheld
the levy of penalty. The aggrieved assessee filed the instant appeal before the tribunal.
The Mumbai Tribunal held that Section 43 of the BMA contains provisions for the levy
of penalty for failure to furnish information or furnish inaccurate particulars about an
asset (including financial interest in any entity) located outside India in ITR.
As per said section, a resident and ordinarily resident person is liable for a penalty
if he fails to furnish or files inaccurate particulars of investment outside India while
filing the return of income under Section 139. Foreign investments/assets are to be
disclosed in ITR Schedule FA.
It is apparent from the language of Section 43 that the disclosure requirement is
not only for the undisclosed asset but any asset held by the assessee as a beneficial
owner or otherwise. Undisputedly, the assessee had not disclosed the foreign asset in
the Schedule FA of ITR. Thus, the penalty was rightly levied upon the assessee.
The assessee contended that the penalty is not mandatory but is at the discretion of
the AO since the word used in the section is that the AO “may” levy a penalty.
It was held that even if it is assumed that in the light of the expression “may” used in
Section 43 of BMA, the AO has the discretion to levy a penalty. The assessee failed to
substantiate that the AO has exercised his discretion extravagantly.
After examining the facts of the case, AO formed his opinion on levying a penalty. He
exercised his discretion judiciously. No material was brought to show that AO levied
penalty arbitrarily and unjustifiedly.
Further, the provisions of Section 43 do not provide any room not to levy a penalty
even if the foreign asset is disclosed in books since the penalty is levied only towards
non-disclosure of foreign assets in Schedule FA.
 Taxmann.com Recap:
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11. Portuguese law does not allow the

wife to hold 50% voting rights in the
husband’s shares; deemed dividend
applicable: HC
[Dattaprasad Kamat v. Asst. CIT [2023] 153 taxmann.com 702 (Bombay)]

The assessee-individual held 33% shares in a private limited company. He was married
to his spouse as per the provisions of the Portuguese Civil Code, as applicable to the
State of Goa.

As per Section 5A of the Income-tax Act, if the Portuguese Civil Code governs the
husband and wife, the income of the husband and wife under any head of the income,
except income derived from “salaries”, shall be apportioned equally between them.

A search was conducted in the company’s office and director’s residences. After the
search, the Assessing Officer (AO) held that various payments made by the assessee
through the company were deemed dividends under Section 2(22)(e).

Applying the Portuguese Civil Code, the assessee contended that his wife was the
beneficial owner of half of the 33% shares (16.5% shares) in the said company. Since
the qualifying limit of 20% referred to in Section 2(22)(e) is not satisfied, the deemed
dividend provisions are not applicable.

The Bombay High Court held that if the wife does not make any statement under
Section 187C(2) of the Companies Act, 1956, asserting her ownership of a 50% beneficial
interest in the shares held by her husband, then the husband would be considered
sole owner of entire 33% share portion. This ownership would come with complete
voting rights and authority linked to these shares.

A shareholder would be one whom the company recognises as the person to whom
dividends declared are legally payable. The Memorandum of Articles essentially binds
the company’s shareholders through the various covenants contained therein, which
regulate and restrict the liabilities of the shareholders in relation to the company,
which is a separate juristic entity.

In the present case, the wife did not claim to have had a name entered into the
Register or Members of the Company. She did not participate in passing resolutions
or exercising any voting rights, as she did not hold any shares in the company.

The provisions of the Civil Code could not create any right for a spouse who is not
a registered shareholder of the company. The Company Act provisions exclusively
regulate the relationship between the company and a shareholder. The wife would
have no voting powers under the scheme of the Companies Act attached to any of
the shares, which have been exclusively registered in the husband’s name.

Consequently, the submission that the wife of the assessee, married under the
provisions of the Portuguese Civil Code, would be entitled to the beneficial ownership
of the husband’s shares was to be rejected. Thus, the provisions of section 2(22)(e)
would fully apply to the husband.
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12. Cognizant liable to pay DDT on its Rs.

19,000 crores buyback: ITAT
[Cognizant Technology Solutions India (P.) Ltd. v. Asst. CIT [2023] 154 taxmann.com
309 (Chennai - Trib.)]

The assessee (Cognizant Technology) had purchased its own shares from non-
resident shareholders in a ‘Scheme of Arrangement & Compromise’ sanctioned by
the High Court of Madras in terms of provisions of Section 391-393 of the Companies
Act, 1956.

In accordance with the scheme, the assessee purchased 94,00,534 equity shares
from its shareholder at the price of Rs. 20,297 per share and paid a total consideration
of Rs. 19,080.26 crores.

The share capital of the assessee company was held by four non-resident shareholders,
out of which three shareholders are residents of the USA, and one shareholder is a
tax resident of Mauritius. The net effect of the scheme was that post-sanction of the
scheme, the only shareholder left was Cognizant Mauritius Ltd.

The AO held that consideration paid by the assessee to its shareholders for the
purchase of its own shares was liable to tax as deemed dividend under Section 2(22)
(d). Consequently, the assessee was liable to pay Dividend Distribution Tax (DDT)
under Section 115-O.

On the other hand, the assessee submits that the ‘Scheme of Arrangement &
Compromise’ was sanctioned by the High Court of Madras in terms of Sections 391
to 393 of the Companies Act, 1956. It cannot be considered as a buyback of shares in
terms of provisions of Section 77A or a reduction of capital in terms of Sections 100-
104/402 of the Companies Act, 1956.

On appeal, the CIT(A) upheld the findings of AO. The matter reached before the
tribunal.

The tribunal held as follows:

Two essential prerequisites must be satisfied to come within the ambit of Section
2(22)(d). First, there must be a distribution to the shareholders on the reduction of the
capital, and second, it must be to the extent that the company possess accumulated
profits. In the present case, it was evident from the audited financial statement that
the share capital has been reduced by around Rs. 9.4 crores, which is equivalent to
54.70% of the total paid-up share capital. The Supreme Court, in CIT v. G. Narasihan
236 ITR 327, has clarified that Section 2(22)(d) is automatically attracted once these
parameters are satisfied. Further, Clause 7 of the scheme clarifies that the distribution
of money will be out of the general reserves and accumulated credit balance in the
profit and loss account. Thus, both conditions are satisfied to treat the transaction
within Section 2(22)(d).

The assessee also argued that the scheme of purchase of own shares was made
through offer and acceptance. This involves an element of quid pro quo, and thus,
there was no ‘distribution of the purpose of section 2(22)(d). The tribunal held that the
definition of ‘distribution’ does not contain any aspect of quid pro quo or lack thereof.
The prerequisites for distribution are that there must be payment, and the disbursal
must be made to more than one person. Section 2(22)(d) does not distinguish whether
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the reduction of share capital is the intended result of the resultant consequence of
the scheme.

The assessee’s transaction would either fall under Section 391-393 r.w. Section 77 and
Section 100 of the Companies Act, 1956 or Sections 391-393 r.w Section 77A of the
Companies Act, 1956. The scheme clearly states that it is not a buyback under Section
77A. Therefore, once the assessee states it is not buyback under section 77A, it should
automatically fall back to Section 77 r.w Sections 100-104 of the Companies Act, 1956.
If said sections are applied, then said transaction was nothing but the reduction of
capital and distribution of accumulated profits.

The assessee also contended that Section 115QA was amended in 2016, and the
present transaction would only be taxable per the amended provisions. The
assessee’s arguments were not accepted for two reasons. Firstly, there is a distinction
between the purchase of own shares upon reduction of share capital and buyback.
Buyback is a term used only with respect to transactions covered under Section 77A.
If all conditions of Section 115-O r.w Section 2(22) are satisfied, the same cannot be
impliedly excluded based on the amendment to Section 115QA.
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13. CA firm can’t invoke MSMED Act

to recover the balance amount of
remuneration for a special Audit: HC
[Pr. CIT v. Micro & Small Enterprise Facilitation Council [2023] 152 taxmann.com 177
(Delhi)]

A CA firm, registered as a `Micro Enterprise’ under the provisions of the MSMED Act,
was on the IT Department panel as a Special Auditor. After completing a Special Audit
assignment and submitting the final audit reports, the CA Firm raised four invoices
in respect of the said audits.

Even after raising the invoices, the full payment was not received. Accordingly, the
CA firm invoked the provisions of the MSMED Act and approached the Micro & Small
Enterprise Facilitation Council (MSEFC) for arbitration. Aggrieved by this, the Principal
CIT filed a writ petition challenging the directions for reference to arbitration by the
CA Firm.

The High Court held that a combined reading of Section 142(2A) to 142(2D) of the
Income-tax Act and Rule 14B of the Income-tax Rules would show that the IT
Department maintains a panel of accountants. The empanelled accountants are
fully aware of the nature of the assignment when the nomination is made. Such
accountants are also aware of the finality attached to the determination of the
remuneration under Section 142(2D). The accountant is under no obligation to accept
the nomination. The purpose of a Special Audit is to help and assist the AO. It is also
to facilitate the assessment and properly determine the tax liability after arriving at a
correct taxable income. After completing the Special Audit, the Chief Commissioner
or the Commissioner plays a crucial role in determining remuneration.

Rule 14B(5) stipulates that the number of hours claimed by the accountant for billing
purposes has to be commensurate with the size and quality of the report submitted
by the accountant. This provision clearly shows that the invoice the accountant may
raise is not to be straightaway accepted.

The Chief Commissioner or the Commissioner is required to assess various factors,

including:

(a) The nature of the work assigned to the accountant;

(b) The quantum of work;

(c) The duration of the work;

(d) The quality of the report;

(e) Whether the hours claimed are exaggerated or commensurate with the work.

The nature of the audit and how remuneration is to be determined would require
domain expertise and knowledge that the MSEFC cannot possess.

The IT Department cannot be termed as a ‘buyer’ when it is nominating the accountant

for conducting a Special Audit; neither can the CA Firm be termed as a ‘supplier’. The
remuneration payable to the accountant cannot also be termed as ‘consideration’ as
the Special Audit is a statutory duty being performed by the accountant for and on
behalf of the AO.
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The MSMED Act has no applicability to the nature of the assignment given to the
CA Firm. The CA Firm may be registered as a Micro or Small enterprise and may be
entitled to the invocation of the jurisdiction of the MSMED Act for other purposes.

Insofar as the assignment emanates from a statute, i.e., under Section 142(2A), the
determination of the remuneration is solely the prerogative of the Commissioner or
the Chief Commissioner. The same would not be liable to be called into question
either in a civil court or a commercial or civil suit for recovery of money. The Special
Auditor nomination for a Special Audit is governed by the Income Tax Act and Rules
provisions.

Thus, the invocation of the provisions of the MSMED Act under such circumstances,
with respect to Special Audit remuneration under Section 142(2D), would not be
tenable.
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14. 50% of the rent is taxable in the wife’s

hand if the sale deed does not specify her
share in joint property: ITAT
[Smt. Shivani Madan v. ACIT [2023] 147 taxmann.com 423 (Delhi - Trib.)]

A search was conducted on the premises of the assessee. The search revealed that
the assessee was a joint owner of a property along with her husband. However, the
assessee did not disclose income from such house property while filing a return of
income.

Since the registered sale deed of the property had not defined ownership share
between the co-owners, the Assessing Officer (AO) considered 50-50 ownership of
the property between the assessee and her husband. Accordingly, he assessed 50%
of rental income in the hands of the assessee.

The assessee contended that she made a minor contribution to acquire such house
property. Thus, taxing 50% of house property income in the hands of the assessee
was not justified.

The tribunal held that the ownership is considered as per the mutation records. The
sale deed only mentioned that the assessee is a co-owner of the property, but the
share of each co-owner was not definite and ascertainable. The contention of the
assessee that her share is limited to the amount paid by her (approximately 5.4%) is
baseless as the facts and circumstances do not affirm such a fact.

The Allahabad High Court in Saiyad Abdulla v. Ahmad AIR 1929 All 817 has held that
in the absence of specification of the shares purchased by two persons in the sale
deed, it must be held that both purchased equal shares.

Following such a decision, it must be held that the husband and wife purchased
equal shares. Therefore, AO was justified in taxing 50% of the income from house
property in the hands of the assessee.
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15. Company is entitled to depreciation

and maintenance expenses of sports
car purchased for commuting key
managerial personnel: ITAT
[Silver Spark Apparel Ltd. v. DCIT [2023] 147 taxmann.com 500 (Mumbai - Trib.)]

The assessee, a private limited company, filed its return of income for the relevant
assessment year. For the year, the assessee’s case was selected for scrutiny. During
proceedings, the AO noticed that the assessee purchased a sports car and claimed a
deduction for depreciation and maintenance expenses for the same.

The AO contended that the sports car was used primarily for car racing activities.
The requirement of such a car in the case of the assessee, being a unit engaged
in manufacturing suits and trousers, cannot be considered wholly and exclusively
necessary for the purpose of the business. He disallowed the deduction for
depreciation and maintenance expenses.

Aggrieved by the order, the assessee preferred an appeal to CIT(A). CIT(A) upheld the
additions, and the matter reached the Mumbai Tribunal.

The tribunal held that the assessee was a private limited company and was to be
considered a separate person and distinct assessable entity as per Section 2(31) of the
Act. A company is inanimate, and there cannot be anything personal about such an
entity. By virtue of its very nature, the company cannot have any “personal use”.

It cannot be stated the vehicle is used personally by the company, even though
the vehicle is used by the directors for personal purposes. In addition, once the
expenditure was in terms, as provided in Sections 309 and 198 of the Companies Act,
1956, there could not be any ‘non-business’ purpose.

Therefore, the action of AO in disallowing depreciation and maintenance charges on

the sports car owned and used by the assessee for the purpose of business was not
justified.
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16. Searches conducted before 01-06-2015

would be covered under amendment by
FA 2015 in Section 153C: SC
[ITO v. Vikram Sujitkumar Bhatia [2023] 149 taxmann.com 123 (SC)]

In a significant ruling on search cases, the Supreme Court has given retrospective
effect to the amendment to Section 153C by the Finance Act, 2015. The object and
purpose of Section 153C was to address persons other than the searched person.
The Apex Court held that the amendment to Section 153C shall apply to searches
conducted before 1-6-2015.

A search was conducted in 2013 on the premises of a business group. During the
search proceedings, the AO received no original document belonging to the assessee.
Only a hard disk containing references to the assessee’s name was seized.

The assessee-individual filed its return of income for the relevant assessment year
by declaring business income from a partnership firm and other incomes. After the
search proceedings, the AO initiated the proceedings against the assessee under
Section 153C based on seized material. A Panchnama was prepared before 01-06-
2015. However, notice was issued under Section 153C after 01-06-2015.

Section 153C pertains to the assessment of the income of any other person. Under
the unamended Section 153C, the proceeding against other persons (other than
the searched person) was based on the books of account or documents seized or
requisitioned that “belongs or belong to” a person other than the searched person.
The Finance Act 2015, w.e.f., 01-06-2015, amended Section 153C by replacing the words
“belongs or belong to” with the words “pertains or pertain to”.

On receiving notice, the assessee claimed that there were only references to the
assessee’s name, and thus, the AO could not have initiated proceedings under the
amended provisions of Section 153C. The matter reached the Apex Court.

The Supreme Court held that the Delhi High Court, in the case of Pepsico India
Holdings Private Limited [2014] 50 taxmann.com 299 (Delhi), interpreted the
expression “belong to”. The High Court observed and held that there is a difference
and distinction between “belong to” and “pertain to”. The HC gave a very narrow and
restrictive meaning to the expression/word “belongs to” and held that the ingredients
of Section 153C have not been satisfied.

The observation made by the Delhi High Court led to a situation where, though
incriminating material pertaining to a third party/person was found during search
proceedings under Section 132, the revenue could not proceed against such a third
party.

This necessitated the legislature to clarify by substituting the words “belongs or

belong to” for the words “pertains or pertain to” and to remedy the mischief that was
noted pursuant to the judgment of the Delhi High Court.

If the assessee’s submission is accepted, i.e., although the incriminating materials

were found from the premises of the searched person, they may still not be subjected
to the proceedings under Section 153C solely on the ground that the search was
conducted before the amendment. In this case, the very object and purpose of the
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amendment to Section 153C, which is to substitute the words “belongs or belong to”
for the words “pertains or pertain to” shall be frustrated.

Any interpretation which may frustrate the very object and purpose of the Act/Statute
shall be avoided by the Court. If the interpretation as canvassed by the assessee was
accepted, the object and purpose of the section shall be frustrated.

Section 153C is a machinery provision that has been inserted to assess persons other
than the searched person under Section 132. As per the settled position of law, the
Courts, while interpreting machinery provisions of a taxing statute, must give effect
to its manifest purpose by construing it in such a manner as to effectuate the object
and purpose of the statute.

Therefore, the amendment brought to Section 153C vide the Finance Act 2015 shall
apply to searches conducted under Section 132 before 01-06-2015, i.e., the date of the
amendment.
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17. Sum paid to contract teachers cannot be

treated as a ‘fee for professional services’;
No Section 194J TDS
[Dist. Intermediate Educational Office v. ITO (TDS) [2023] 150 taxmann.com 439
(Hyderabad - Trib.)]

The assessee was an authority appointed by and working under the directions
of the State Government. Its primary function was to disburse the Honorarium/
Remuneration to the teachers with whom the colleges agreed to perform the
teaching work entrusted by the college committee following the curriculum of the
intermediate syllabus.

During the assessment proceedings, the AO held that the payments to teachers fall
within the ambit of ‘fee for professional services’ as per Section 194J. Accordingly,
the AO made additions and treated the assessee as ‘assessee-in-default’ for non-
deduction of tax on payment to contracted teachers under Section 194J.

The matter reached the Hyderabad Tribunal.

The tribunal held that for Section 194J, “professional services” shall mean services
rendered by a person in the course of carrying on legal, medical, engineering or
architectural profession or the profession of accountancy or technical consultancy or
interior decoration or advertising or such other profession as notified by the Board.

Notification No. 88/2008 dated 28-01-2008 issued by CBDT notified the services
rendered by the following persons in relation to the sports activities as “Professional
Services”:

• Sports Persons,

• Umpires and Referees,

• Coaches and Trainers,

• Team Physicians and Physiotherapists,

• Event Managers,

• Commentators,

• Anchors and

• Sports Columnists.

The words’ fee for professional services means’ left no scope for interpretation, and the
categories mentioned therein as on the date are exhaustive by the explanation itself
or by the notification of CBDT. Such an exhaustive definition excludes the payments
to contract teachers in intermediate colleges.

Either in the Explanation to Section 194J or in the notification issued, the contract
teachers referred to as teaching professionals by AO are not covered. Thus, payments
made to contract teachers did not answer the ‘fee for professional services’ description
to levy TDS under Section 194J.
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18. Extended time limit provided by TOLA

is not applicable for sanction of notice
under Section 151: HC
[Siemens Financial Services (P.) Ltd. v. Dy. CIT [2023] 154 taxmann.com 159 (Bombay)]

The assessee was a Non-Banking Finance Company (NBFC) and classified as an Asset
Finance Company. In June 2021, it received a Section 148 notice stating that there was
reason to believe that income chargeable to tax for AY 2016-2017 had escaped.

Later, the AO referred to the order of the Supreme Court in the case of Union of India
v. Ashish Agarwal (2022) 138 taxmann.com 64 (SC) and treated Section 148 notice
as show cause notice in terms of Section 148A(b). Later, an order was passed under
Section 148A(d).

The assessee contended that the Finance Act 2021 amended Section 151, which
provides for sanction for the issue of notice. AY 2016-2017, three years elapsed on 31st
March 2020; hence, the provisions of amended Section 151(i) and 151(ii) would have
to be fulfilled, which have not been complied with. The matter reached before the
Bombay High Court.

The Bombay High Court held that the Taxation and Other Laws (Relaxation and
Amendment of certain provisions) Act, 2020 [TOLA] provided for a relaxation of
certain provisions of the Income-tax Act, 1961. Where any time limit for completion
or compliance of an action, such as completion of any proceedings or passing of
any order or issuance of any notice, fell between the period 20th March 2020, to 31st
December 2020, the time limit for completion of such action stood extended to 31st
March 2021.

Thus, TOLA only seeks to extend the limitation period and does not affect the scope
of Section 151. AO cannot rely on the provisions of TOLA and the notifications issued
thereunder as Finance Act, 2021, amended Section 151, and the provisions of the
amended section would have to be complied with by AO, w.e.f., 01st April 2021.

Hence, the AO cannot take the shelter of TOLA as subordinate legislation cannot
override any statute enacted by the Parliament. Further, the notification extending
the dates from 31st March 2021 to 30th June 2021 cannot apply once the Finance Act
2021 is in existence.

The sanction of the specified authority has to be obtained in accordance with the law
existing when the sanction is obtained. Therefore, the sanction must be obtained
by applying the amended Section 151(ii). Since the sanction was obtained in Section
151(i), the impugned order and notice were bad in law and should be quashed and
set aside.
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19. Explanations 6 & 7 to Sec. 9(1)(i) are to be

given retro effect as they have to be read
along with Expl. 5: HC
[CIT (International Taxation) v. Augustus Capital PTE. Ltd. [2023] 157 taxmann.com 88
(Delhi)]

The issue before the Delhi High Court was:

“Whether Explanations 6 and 7 appended to Section 9(1)(i), which was inserted by

the Finance Act 2015 with effect from 01.04.2016, can operate retrospectively?”

The Delhi High Court held that Section 9(1)(i) inter-alia seeks to impose tax albeit via
a deeming fiction qua all income accruing or arising, whether directly or indirectly,
through or from any property in India or through or from any asset or through transfer
of asset situated in India, or the transfer of a capital asset situated in India.

The judgment of the Supreme Court rendered in the case of Vodafone International
Holdings BV v. Union of India excluded from the scope and ambit of Section 9(1)(i)
gain or income arising from the transfer of shares of a company located outside India.
However, the value of the shares was dependent on assets situated in India. To cure
this gap in the legislation, Explanations 4 and 5 were introduced by the Finance Act
2012, which was effected from 1-4-1962.

Explanations 4 and 5 presented difficulties in that the expressions’ share and

interest’ and ‘substantially’ found in the explanations were vague, resulting in undue
hardship for transferors where the percentage of share or interest transferred was
insignificant. Explanations 6 and 7 alone would have no meaning if they were not
read along with Explanation 5. Therefore, if Explanations 6 and 7 have to be read
along with Explanation 5, which concededly operates from 1-4-1962, they would have
to be construed as clarificatory and curative.

Accordingly, it was concluded that although Explanations 6 and 7 were indicated in

the Finance Act 2015 to take effect from 1-4-2016, they could be treated as retrospective
having regard to the legislative history that led to the insertion of Explanations 6 and 7.

Accordingly, the appeal was dismissed.

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20. Cost of acquisition of shares converted

from FCCBs to be computed as per FCCB
Scheme 1993 and not as per Section
49(2A): SC
[CIT (International Taxation) v. Kingfisher Capital Clo Ltd [2023] 153 taxmann.com 163 (SC)]
The assessee, a Cayman Island entity, purchased Foreign Currency Convertible Bonds
(FCCBs) from a non-resident as per the scheme notified by the Central Government
in 1993. During the year under consideration, the assessee converted such bonds into
equity shares and sold a part of such shares on the stock exchange. To compute the
quantum of capital gains, the assessee relied on clause 7(4) of the FCCB scheme and
adopted the closing price of equity shares on the date of conversion of FCCBs into shares
as its cost of acquisition. Accordingly, the computed gains were offered to tax as short-
term capital gains.
In the assessment proceedings, the AO held that the cost of acquisition must be computed
in accordance with Section 49(2A), which provides that the the cost of converted shares
or debentures is taken at the price paid for the acquisition of original bonds, debentures
or debenture certificate. The assessee filed a writ before the Bombay High Court.
The High Court held that Clause 7 of the scheme specified the cost of acquisition for
conversion of FCCBs would be conversion price determined based on the price of the
shares at the Bombay Stock Exchange or the National Stock Exchange on the date of the
conversion of FCCBs into shares.
The Supreme Court held that AO’s contention was with respect to the interpretation of
Section 47(xa), which was introduced through an amendment from the Finance Act,
2008, with effect from 01-10-2008. It was urged that a combined reading of that provision
with Section 115AC ought to have led to a correct conclusion that the date of acquisition
of the bonds by the assessee was the determinative time for its valuation.
The Apex Court upheld the findings of the High Court wherein it was held that the
assessee was right in his contention that the AO fell in clear error in taking assistance
from the amendments made by the Finance Act, 2008. The authority was not right in
holding that the cost of acquisition of the shares as per clause 7(4) of the FCCB Scheme
is not tenable.
AO attempted to read the provisions of the Income-tax Act introduced with effect from
1-4-2008 in relation to Foreign Currency Exchangeable Bond Scheme, 2008 and apply it
to the FCCB Scheme of 1993. This is not correct.
It was evident that any scheme prior thereto, particularly the FCCB Scheme notified by the
Central Government in 1993 and applicable with effect from 01st April 1992 and enabling
the computation of cost of acquisition, in terms thereof, was held to be unaffected.
The bonds issued in the instant case did not answer the description of the Foreign
Currency Exchangeable Bond Scheme, 2008. They confirmed with the earlier scheme
relating to the Foreign Exchange Convertible Bonds Scheme 1993. The distinction
between the two schemes is that one relates to the issuance of Exchange Convertible
Bonds, whereas the other relates to Foreign Currency Exchangeable Bonds.
Thus, there was no infirmity with the Bombay High Court’s reasoning; accordingly, the
revenue’s appeal was dismissed.
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Mobile: +91-9391041461/09322293945 | Email: bdurgaprasad@taxmann.com, sales.hyderabad@taxmann.com

Pune: Office No. 14, First Floor, Prestige Point, 283 Shukrwar Peth, Opp.Chinchechi Talim, Nr. BSNL office, Bajirao
Road, Pune - 411002
Mobile: 9822411811, 9834774266, 9322293945 | Email: sales.pune@taxmann.com

For Contact & Assistance:

Tel. : +91-11-45562222 | E-mail : support@taxmann.com, sales@taxmann.com

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