DAIWA PORTFOLIO ADVISORY (INDIA) PVT LTD vs. THE DEPUTY COMMISSIONER OF INCOME TAX 6 (2) (1) AND 2 OTHERS

On 28th September 2016, the following order came to be passed while admitting these petitions : “Heard.

RULE. Mr. Malhotra, learned Counsel appearing Gitalaxmi CNR No : HCBM020237302016 Uploaded on - 19/03/2024 Downloaded on - 31/10/2026 00:50:26

These two Petitions challenge two separate re- opening notices dated 31st March, 2016 issued under Section 148 of Income Tax Act, 1961, seeking to re-open Assessments for the Assessment Years 2009-10 and 2011-12, respectively. The reasons recorded in support of the impugned notices in both the Petitions, are identical. The reasons recorded in support of both the impugned notices proceed on the basis that the Assessing Officer has reason to believe that the share premium charged over and above the intrinsic value of its shares, has escaped Assessment. However, the reasons do not indicate the premium amount received in excess of the intrinsic value of the shares. This particularly in the absence of any determination of the intrinsic value of shares. Moreover, the receipt of share premium is on capital account as held by the decision of this Court in Vodafone Services Ltd. v/s. CIT 368 page 1. Thus, prima facie, we are of the view that there could be no reason to believe that any income on account of share premium, has escaped assessment.

Mr. Malhotra, learned Counsel appearing for the Respondent-Revenue places reliance upon the decision of this Court in M/s. Alliance Space Pvt. Ltd. v/s. Income Tax Officer (Writ Petition (L) No. 735 of 2015 decided on 27th March, 2013) to canvass the proposition that all cases of share premium cannot be considered to be covered by the decision of this Court in Vodafone Services Ltd. (supra). There can be no quarrel with the above proposition that each case has to be decided on its own merits. However, nothing is pointed out to indicate as to why the decision of this Court in Vodafone Services Ltd. (supra) holding that the share premium is on capital account, does not apply to the facts of this case.

It is a settled position of law that the validity of re- opening of notice is to be tested only by the reasons recorded in support of the same. Prima facie, we are of the view that the reasons recorded in support of the impugned notice do not indicate reasons to believe that income chargeable to tax has escaped Assessment.

In the above view, there shall be interim relief in terms of prayer clause (e) in both the Petitions. Gitalaxmi Uploaded on - 19/03/2024 Downloaded on - 31/10/2026 00:50:26

These two Petitions to be placed on board along with Writ Petition No. 415 of 2015 under the caption ‘for final hearing’.”

Counsels state that this position has been affirmed by a judgment of this Court in Godrej Projects Development Pvt. Ltd. v. Income Tax Officer, 1(1)(4) and Others1. 3. Therefore, Rule granted on 28th September 2016, is made absolute in terms of prayer clause (A), which reads as under : WRIT PETITION NO. 2212 OF 2016 : “A. that this Hon’ble Court may be pleased to issue a writ of Certiorari or a writ in the nature of Certiorari or any other appropriate writ, order or direction under Article 226 of the Constitution of India calling for the records of the Petitioner's case and, after examining the legality and validity of the impugned notice dated March 31, 2016 issued under section 148 of the Act (being EXHIBIT – ‘G’ hereto) and the impugned order dated August 16, 2016 (being EXHIBIT – ‘O’ hereto) quash and set aside the same.” WRIT PETITION NO. 2214 OF 2016 : “A. that this Hon’ble Court may be pleased to issue a writ of Certiorari or a writ in the nature of Certiorari or any other appropriate writ, order or direction under Article 226 of the Constitution of India calling for the records of the Petitioner's case and, after examining the legality and validity of the impugned notice dated March 31, 2016 issued under section 148 of the Act (being EXHIBIT – ‘F’ hereto) and the impugned order dated August 16, 2016 (being EXHIBIT – ‘N’ hereto) quash and set aside the same.” 1. 2024 SCC OnLine Bom 366. Gitalaxmi Uploaded on - 19/03/2024 Downloaded on - 31/10/2026 00:50:26

Petitions disposed. No order as to costs. (DR. NEELA GOKHALE, J.) (K. R. SHRIRAM, J.) Gitalaxmi GITALAXMI KRISHNA KOTAWADEKAR GITALAXMI KRISHNA KOTAWADEKAR Date: 2024.03.19 11:10:00 +0545 Uploaded on - 19/03/2024 Downloaded on - 31/10/2026 00:50:26 Powered by TCPDF (www.tcpdf.org)