VEDANTA LDT. (FORMERLY KNOWN AS SESA STERLITE LIMITED/SESA GOA LIMITED). vs. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1(1) AND 2 ORS.,

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WP/199/2016HC BombayHCBM05000497201603 October 2024Bench: HON'BLE SHRI JUSTICE M. S. KARNIK,HON'BLE SHRI JUSTICE VALMIKI MENEZES28 pages
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What did the High Court hold?

The High Court held that the amounts received by the petitioner from M/s. Dempo Mining Corporation Ltd. and M/s. Chowgule & Co. Pvt. Ltd. were indeed reimbursement of expenses and not income. The Court found that the petitioner had incurred expenses on behalf of these companies, and the amounts received were merely to cover those expenses. Therefore, the addition of ₹1,44,00,000/- and ₹1,00,000/- to the petitioner's income was deleted. Consequently, the interest levied under Sections 234B and 234C of the Income-tax Act, 1961, was also deleted as it was consequential to the disputed income. The ratio of the decision is that amounts received solely as reimbursement of expenses incurred on behalf of another entity do not constitute taxable income. The operative direction was the deletion of the additions and the consequential interest, thereby granting relief to the petitioner.

What were the facts?

The petitioner, Vedanta Ltd. (formerly Sesa Sterlite Limited/Sesa Goa Limited), filed two writ petitions challenging the orders passed by the Assistant Commissioner of Income-tax (ACIT) and the Commissioner of Income-tax (CIT). The assessment years under challenge are not explicitly stated, but the petitions concern the assessment of income and the levy of interest. The core of the dispute revolves around the treatment of certain amounts as income and the subsequent demand raised by the revenue. The procedural history indicates that the petitioner had approached the High Court after the orders were passed by the revenue authorities, seeking to quash these orders and prevent recovery proceedings.

What were the issues?

1. Whether the amounts of ₹1,44,00,000/- and ₹1,00,000/- received by the petitioner from M/s. Dempo Mining Corporation Ltd. and M/s. Chowgule & Co. Pvt. Ltd. respectively, were to be treated as income under the Income-tax Act, 1961, or as reimbursement of expenses. - Assessee's contention: The petitioner argued that these amounts were not income but reimbursement of expenses incurred on behalf of the said companies, and therefore, not taxable. - Revenue's contention: The revenue contended that these amounts represented income and were taxable in the hands of the petitioner. 2. Whether the interest levied under Section 234B and 234C of the Income-tax Act, 1961, was justified in light of the disputed income. - Assessee's contention: The petitioner argued that if the primary addition is deleted, the consequential interest levied under Sections 234B and 234C would also be unjustified. - Revenue's contention: The revenue argued that the interest was correctly levied based on the assessed income.

Which sections of the Income-tax Act were involved?

Section 234B,Section 234C

AI-generated summary — verify with the full judgment below

WP-198 & 199-2016 1 28

Niti

IN THE HIGH COURT OF BOMBAY AT GOA

WRIT PETITION NOS.198 AND 199 OF 2016

Vedanta Ltd. (Formerly known as Sesa Sterlite Limited/Sesa Goa Limited), Sesa Ghor, 20 EDC Complex, Patto, Panjim, Goa 403001.

... PETITIONER

Versus

1.

The Assistant Commissioner of Income-tax, Circle 1 (1) having his office at Aaykar Bhavan, Panaji, Goa 403001.

2.

The Commissioner of Income-tax, having his office at Patto, Aaykar Bhavan, Panaji Goa 403001.

3.

The Union of India, Through the Ministry of Finance, North Block, New Delhi 110001.

… RESPONDENTS Mr Percy Pardiwala, Senior Advocate with Mr Pranav Kakodkar, Advocate for the Petitioner. Ms Susan Linhares, Standing Counsel with Ms Epsy Fernandes, Advocate for the Respondent Nos.1 and 2.

CORAM: M. S. KARNIK & VALMIKI MENEZES, JJ.

2024:BHC-GOA:1733-DB

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Reserved on : Pronounced on: 19th SEPTEMBER 2024 3rd OCTOBER 2024

JUDGMENT : (Per M.S. Karnik, J.)

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₹

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1 (1981) 1 SCC 653

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2 417 ITR 774 3 WP No.435 of 2012

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4 WP No.233 of 2015 5 WP No.262 of 2016

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6 162 Taxmann 238

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7 384 ITR 113

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8 45 Taxmasnn 546 9 16 Taxmann 250 10 106 Taxmann 312 11 286 ITR 618 12 117 Taxmann 825 13 439 ITR 323 14 41 Taxmann 183

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VALMIKI MENEZES, J.

M. S. KARNIK, J. Signed by: NITI KISHOR HALDANKAR Designation: Private Secretary Date: 11/10/2024 19:04:09

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