HDFC BANK LTD. vs. ASSISTANT COMMISSIONER OF INCOME TAX-2(3)(1) AND 3 ORS.

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WP/670/2018HC Bombay20 December 2018Bench: HON'BLE SHRI JUSTICE S.C. DHARMADHIKARI, HON'BLE SHRI JUSTICE B.P. COLABAWALLA3 pages
AI SummaryAllowed

What did the High Court hold?

The High Court allowed the writ petition in terms of prayer clause (a). This prayer sought a Writ of Certiorari or any other appropriate writ, order, or direction to call for the records leading to the passing of the impugned order dated November 29, 2017, and the impugned reference dated December 8, 2017, and to quash, cancel, and set aside these impugned actions. The Court stated that for the detailed reasons already set out in Writ Petition No. 462 of 2017, this writ petition was also allowed for the same reasons. The operative direction was to quash the impugned order and reference. No specific issue was left undecided; the entire challenge was allowed. The ratio decidendi would be that the impugned order and reference were vitiated by illegality, as elaborated in the prior judgment.

What were the facts?

The petitioner, HDFC Bank Ltd., filed a writ petition challenging an order dated November 29, 2017, and a reference dated December 8, 2017, passed by the revenue authorities. The assessment year in question is 2015-2016. A new party, HDB Financial Services Limited, was involved in this assessment year. The petitioner had purchased non-convertible debentures of HDB Financial Services Limited for Rs. 485 Crores. The revenue contended that this transaction constituted a Specified Domestic Transaction as it was entered into with a party mentioned in Section 40A(2)(b) of the Income Tax Act, 1961. This writ petition was stated to be identical to Writ Petition No. 462 of 2017.

What were the issues?

1. Whether the purchase of non-convertible debentures of HDB Financial Services Limited by HDFC Bank Ltd. for Rs. 485 Crores for Assessment Year 2015-2016 constitutes a Specified Domestic Transaction under the Income Tax Act, 1961, by virtue of Section 40A(2)(b) of the Act. Assessee's Contention: The judgment does not explicitly record the assessee's arguments. However, by allowing the writ petition in terms of prayer clause (a), it implies the assessee's challenge to the impugned order and reference was accepted. Revenue's Contention: The revenue contended that the transaction of purchasing non-convertible debentures of HDB Financial Services Limited was a Specified Domestic Transaction because it was entered into with a party as mentioned in Section 40A(2)(b) of the Income Tax Act, 1961.

Which sections of the Income-tax Act were involved?

Section 40A(2)(b)

AI-generated summary — verify with the full judgment below

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION

WRIT PETITION NO. 670 OF 2018

HDFC Bank Ltd.

] HDFC Bank House, Senapati Bapat Marg ] Lower Parel, Mumbai 400 013

] ...Petitioner.

Vs.

1) Assistant Commissioner of Income Tax ] 2(3)(1), Mumbai, Room No.552, 5th ] Floor, Aayakar Bhavan, Maharshi ] Karve Marg, Mumbai 400 020

2) Deputy Commissioner of Income Tax ] (Transfer Pricing) 2(2)(2), Room No.14 ] 20th Floor, Air India Building, Nariman ] Point, Mumbai - 400 021

3) Principal Commissioner of Income Tax -2

] Room No.384, 3rd Floor, Aaykar Bhavan] M. K. Marg, Mumbai400020]

4) Union of India, Through the Secretary ] Department of Revenue, Ministry of ] Finance, Govt. of India, North Block ] New Delhi 110 001

...Respondents.

.....

Mr J.D. Mistri Sr. Counsel a/w Mr Madhur Agarwal i/b Mr Atul Karsandas Jasani for the Petitioner Mr P.C. Chhotaray for the Respondents.

CNR No : HCBM020049432018 Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 07:50:09

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CORAM : S. C. DHARMADHIKARI &

B.P.COLABAWALLA, JJ.

RESERVED ON : 29th August, 2018 PRONOUNCED ON : 20th December, 2018

JUDGMENT ( Per B.P.Colabawalla J. ):

Rule. Respondents waive service. By consent of parties, Rule made returnable forth with and heard finally.

As far as this Writ Petition is concerned, it is common ground before us that this Writ Petition is more or less identical to Writ Petition No. 462 of 2017 except that the Assessment Year in question in this Writ Petition is Assessment Year 2015-2016 and in this year a new party, namely HDB Financial Services Limited is involved. The Petitioner had purchased non convertible debentures of HDB Financial Services Limited to the tune of Rs. 485 Crores. As far as this transaction was concerned, it was the case of the Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 07:50:09

wp.670.18.hdfc..doc Aswale 3/3 Revenue that this also would be a Specified Domestic Transaction as it is entered into with a party, as mentioned in Section 40A (2)(b) of the Income Tax Act,1961.

For the detailed reasons that we have already set out in Writ Petition No. 462 of 2017, even this Writ Petition and for the same reasons is allowed in terms of prayer clause (a) which reads thus:- “a) this Hon'ble Court be pleased to issue a Writ of Certiorari or any other writ order or direction under Article 226 of the Constitution of India calling for the records of the case leading to the passing of the impugned order dated 29th November, 2017 (Exhibit-F) and impugned reference dated 8th December, 2017 and after going through the same and examining the question of legality thereof quash, cancel and set aside the impugned order dated 29th November, 2017 (Exhibit F) and impugned reference dated 8th December, 2017.”

Rule is made absolute in the above terms. However, there shall be no order as to costs.

( B.P. COLABAWALLA, J. ) (S. C. DHARMADHIKARI, J.) Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 07:50:09 Powered by TCPDF (www.tcpdf.org)

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