RRPR HOLDINGS PRIVATE LIMITED vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-18(1)

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W.P.(C)/1664/2016HC DelhiDLHC01057740201610 September 2024Bench: HON'BLE MR. JUSTICE RAVINDER DUDEJA,HON'BLE MR. JUSTICE YASHWANT VARMA4 pages
AI SummaryAllowed

What did the High Court hold?

The Delhi High Court allowed the writ petition. The Court found that the very foundation of the impugned reassessment action was factually wrong. The Assessing Officer had observed that the loan received by RRPR from VPCPL was in fact consideration for the transfer of 26% of NDTV shares. However, the Court noted that RRPR had acquired shares comprising 7.5% of NDTV's shareholding from promoters, and these shares continued to be held by RRPR in its own name and were never transferred to VPCPL. Since the basis for initiating reassessment was factually incorrect, the Court held that the impugned notice dated 23 March 2015 under Section 148 of the Income Tax Act, 1961, could not be sustained. Consequently, the Court quashed the notice. In a connected writ petition, the Court also set aside the impugned order of 25 October 2017, as conceded by the respondents in light of the order passed in the first petition.

What were the facts?

The assessee, M/s RRPR Holdings Private Limited (RRPR), incorporated in 2005, was equally held by Ms. Radhika Roy and Mr. Prannoy Roy. RRPR acquired 7.5% of New Delhi Television Limited (NDTV) shares. A loan agreement dated 21 July 2009 was entered into with Vishwa Pradhan Commercial Pvt. Ltd. (VPCPL). The loan proceeds were used to retire outstanding loans from ICICI Bank. The Assessing Officer (AO) alleged that the loan was consideration for the transfer of 26% of NDTV shares. However, it was factually incorrect as RRPR purchased shares from promoters, which it continued to hold and did not transfer to VPCPL. The challenge is to the notice under Section 148 of the Income Tax Act, 1961, dated 23 March 2015, for Assessment Year 2010-11.

What were the issues?

1. Whether the notice dated 23 March 2015 under Section 148 of the Income Tax Act, 1961, initiating reassessment proceedings for AY 2010-11 is valid, considering the factual inaccuracies in the reasons recorded by the Assessing Officer? Assessee's Contention: The assessee argued that the foundation of the reassessment action was factually wrong, as the loan received from VPCPL was not consideration for the transfer of NDTV shares, and the shares were never transferred to VPCPL. The assessee sought to quash the notice and prohibit further reassessment proceedings. Revenue's Contention: The revenue's contention is not explicitly recorded in the judgment, but their action was based on the AO's observation that the loan was consideration for the transfer of shares.

Which sections of the Income-tax Act were involved?

Section 148

AI-generated summary — verify with the full judgment below

Heard together (2 matters)

W.P.(C) 1664/2016
W.P.(C) 10063/2017

Read from the judgment's own cause title. This page is filed under one of them.

W.P.(C) 1664/2016 & connected Page 1 of 4 $~55 & 56 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 1664/2016 RRPR HOLDINGS PRIVATE LIMITED

.....Petitioner Through: Mr. Sachit Jolly, Mr. Rishabh Malhotra, Ms. Disha Jham, Ms. Soumya Singh, Mr. Devansh Jain, Advs. versus DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE- 18(1) .....Respondent Through: Mr. N.P. Sahni, Spl. Counsel with Mr. Indruj Singh, SSC with Mr. Sanjeev Menon, Mr Rahul Singh, Mr.Anmol Jagga, Advs. 56 + W.P.(C) 10063/2017 RRPR HOLDING PRIVATE LIMITED .....Petitioner Through: Mr. Sachit Jolly, Mr. Rishabh Malhotra, Ms. Disha Jham, Ms. Soumya Singh, Mr. Devansh Jain, Advs. versus THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-18(1), NEW DELHI & ANR. .....Respondents Through: Mr. N.P. Sahni, Spl. Counsel with Mr. Indruj Singh, SSC with Mr. Sanjeev Menon, Mr This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 13/09/2024 at 12:27:14

W.P.(C) 1664/2016 & connected Page 2 of 4 Rahul Singh, Mr.Anmol Jagga, Advs. CORAM: HON'BLE MR. JUSTICE YASHWANT VARMA HON'BLE MR. JUSTICE RAVINDER DUDEJA O R D E R %

10.09.2024 W.P.(C) 1664/2016 1. This writ petition has been preferred seeking the following reliefs: “a. Issue a writ in the nature of Certiorari or an order, quashing the impugned notice u/s 148 of the Act dated 23.03.2015 and the impugned letter/order dated 29.01.2016, disposing of the objections to the initiation of the reassessment proceedings of the respondent; b. Issue a writ in the nature of Certiorari or an order quashing the reassessment proceedings initiated by the respondent in pursuance to the impugned notice dated 23.03.2015 u/s 148 of the Act, for the assessment year 2010-11; c. Issue a writ in the nature of mandamus or an order prohibiting the respondent to frame reassessment under the relevant provisions of the Act; d. Issue a writ in the nature of Mandamus prohibiting the respondent from making fishing and roving inquiries; e. Pass any other order(s) as this Hon'ble Court may deem to be fit and more appropriate in order to grant interim relief to the petitioner;” 2. The challenge is to the initiation of reassessment action for Assessment Year [“AY”] 2010-11. As we go through the reasons which were recorded in support of the proposed action for reassessment, we find that the principal allegations are the following. 3. It is conceded before us that the petitioner, M/s RRPR Holdings Private Limited [“RRPR”], was incorporated in 2005 with its equity being held by Ms. Radhika Roy and Mr. Prannoy Roy in the This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 13/09/2024 at 12:27:14

W.P.(C) 1664/2016 & connected Page 3 of 4 percentage of 50% each. 4. It is further alleged that RRPR acquired shares comprising of 7.5% of the shareholding of New Delhi Television Limited [“NDTV”] for a price set out and noticed in paragraph 1 of the letter dated 06 October 2015. The transaction with Vishwa Pradhan Commercial Pvt. Ltd. [“VPCPL”] rested on a loan agreement dated 21 July 2009. 5. It is the admitted case of parties that the aforesaid loan proceeds were utilized by RRPR to retire certain outstanding loans which were owed to ICICI Bank. The AO, however, in paragraph 7 observes that the terms of the loan agreement would indicate that the loan received was in fact consideration for the transfer of 26% of shares of NDTV. 6. This clearly appears to be factually incorrect since the shares which were purchased from the promoters by RRPR are detailed in paragraph 2. Before us it is further conceded that those shares continue to be held by RRPR in its own name and were never transferred to VPCPL. 7. In view of the aforesaid, and since the very foundation of the impugned action for reassessment is found to be factually wrong, we find ourselves unable to sustain the impugned notice dated 23 March 2015 under Section 148 of the Income Tax Act, 1961. 8. We accordingly allow this writ petition and quash the impugned notice dated 23 March 2015. W.P.(C) 10063/2017 In light of the order passed by us in W.P.(C) 1664/2016, it is conceded by the respondents that the protective order which stands impugned in the instant writ petition would no longer sustain. Accordingly, we allow the present writ petition and set aside the This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 13/09/2024 at 12:27:14

W.P.(C) 1664/2016 & connected Page 4 of 4 impugned order of 25 October 2017. YASHWANT VARMA, J RAVINDER DUDEJA, J SEPTEMBER 10, 2024/ib This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 13/09/2024 at 12:27:14

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