UB SPORTS MANAGEMENT OVERSEAS LIMITED vs THE DISPUTE RESOLUTION PANEL-2

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 8TH DAY OF APRIL 2022

BEFORE

THE HON’BLE MR. JUSTICE B. M. SHYAM PRASAD

WRIT PETITION NO.35768/2018 C/W WRIT PETITION NO.35769/2018 (T-IT)

IN WP NO. 35768/2018

BETWEEN :

PALMER INVESTMENT GROUP LIMITED C/O UNITED SPIRITS LIMITED, NO.24, UB TOWERS, 6TH FLOOR, VITTAL MALLYA ROAD, BENGALURU-01 REP HEREIN BY ITS AUTHORISED REPRESENTATIVE MR.PRADEEP SIMHA. ... PETITIONER

(BY SRI. PERCY PARDIWALLA, SENIOR ADVOCATE FOR SMT. TANMAYEE RAJKUMAR , ADVOCATE)

AND :

THE DISPUTE RESOLUTION PANEL-2 ‘A’ WING 4TH FLOOR, KENDRIYA SADAN, KORAMANGALA, BENGALURU – 34.

REPRESENTED BY ITS SECRETARY.

THE DEPUTY COMMISIONER OF INCOME TAX INTERNATIONAL TAXATION, CIRCLE 1(2), BMTC BUILDING,

2 80 FEET ROAD, 6TH BLOCK, KORAMANGALA, BENGALURU – 09. ... RESPONDENTS (BY SRI. K.V. ARAVIND, ADVOCATE)

THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA PRAYING TO DIRECT R-1 TO ISSUE APPROPRIATE DIRECTIONS BY ADJUDICATING ON THE OBJECTION OF THE APPLICABILITY OF THE BENEFICIAL TAX RATE OF 10% ON LONG TERM CAPITAL GAINS ARISING FROM THE SALE OF LISTED SECURITIES BY THE PETITIONER KEEPING IN VIEW OF THE CIRCULAR 779 DATED 14.9.1999 (SUPRA) ISSUE DBY CBDT AND FAVORABLE JUDICIAL RULINGS OF THE DELHI HIGH COURT IN THE CASE OF CAIRN UK HOLDINGS LIMITED (SUPRA) AND MITSUBISHI MOTORS (SUPRA).

IN WP NO. 35769/2018

BETWEEN :

UB SPORTS MANAGEMENT OVERSEAS LIMITED C/O UNITED SPIRITS LIMITED, NO 24, UB TOWERS, 6TH FLOOR, VITTAL MALLYA ROAD, BENGALURU – 560 001 REPRESENTED HEREIN BY ITS AUTHORIZED REPRESENTATIVE MR PRADEEP SIMHA. ... PETITIONER

(BY SRI. PERCY PARDIWALLA, SENIOR ADVOCATE FOR SMT. TANMAYEE RAJKUMAR, ADVOCATE) AND :

THE DISPUTE RESOLUTION PANEL-2 ‘A’ WING 4TH FLOOR, KENDRIYA SADAN, KORAMANGALA BENGALURU – 560 034.

3 2. THE DEPUTY COMMISSIONER OF INCOME TAX INTERNATIONAL TAXATION CIRCLE 1(2) BMTC BUILDING , 80 FEET ROAD, 6TH BLOCK, KORAMANGALA BENGALURU – 560 009. ... RESPONDENTS (BY SRI. K.V. ARAVIND, ADVOCATE)

THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA PRAYING TO DIRECT THE R-1 TO ISSUE APPROPRIATE DIRECTIOS BY ADJUDICATING ON THE OBJECTION OF THE APPLICABILITY OF THE BENEFICIAL TAX RATE OF 10% ON LONG TERM CAPITAL GAINS ARISING FROM THE SALE OF LISTED SECURITIES BY THE PETITIONER KEEPING IN VIEW OF THE CIRCULAR 779 DATED 14.09.1999 (SUPRA) ISSUED BY CBDT AND FAVORABLE JUDICIAL RULINGS OF THE DELHI HIGH COURT IN THE CASE OF CAIRN UK HOLDINGS LIMITED (SUPRA) AND MITSUBISHI MOTORS (SUPRA).

THESE WRIT PETITIONS COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, THE COURT MADE THE FOLLOWING:-

O R D E R

The petitioners have impugned the directions dated 20.07.2018 issued by the Dispute Resolution Panel-2 [DRP]. The DRP’s corresponding directions are produced as annexures in the respective writ petitions.

4 2. Sri. Percy Pardiwalla, the learned Senior Counsel, submits that during the pendency of these writ petitions, the Assessment Orders have been passed incorporating the directions issued by the DRP on 20.07.2018 and these Assessment Orders have been called in question by the petitioners in their respective appeals under Section 253 of the Income Tax Act, 1961. The petitioners were before the DRP as against the Assessing Officer’s opinion in the Draft Assessment Order on two issues i.e., the arm’s length and the Rate. The Assessing Officer had opined that the petitioners would be liable to pay capital gains tax at the rate of 20% instead of 10% based on a decision that no longer holds the field. While the DRP has examined the first ground viz. the arm’s length and has issued certain directions which has resulted in the Assessment orders that are impugned in the respective appeals as aforesaid, the DRP has not examined the second ground on the question of its jurisdiction.

5 3. Sri. Percy Pardiwalla submits that the petitioners’ anxiety today is that the Department could contend in these appeals that the only question that could be gone into are as regards the incorporation of the DRP’s directions on arm’s length and because the DRP has not decided the question on rates, the same would be outside the consideration of the appellate Tribunal in the respective appeals. With necessary clarifications in this regard, the petitions could be disposed of lest the petitioners be excluded from the appellate remedy on such ground insofar as the Rate.

Sri. K.V. Aravind, learned counsel for the respondents, drawing the attention of this Court to paragraph-9 of the statement of objections, submits that the Department’s specific case is that the petitioner must avail the statutory remedy, and in the light of this stand, the Department cannot contend that the Tribunal in the appeals by the petitioners that the

6 Tribunal could only consider the question of arms length and not the question on Rate as canvassed by the petitioners.

This Court, in the peculiar circumstances of the case, and the fact that the Department does not dispute that the question of the Rate could also be gone into in the pending appeals, is of the considered view that there should be no impediment to the appellate Tribunal to consider the petitioners’ grounds even as regards the Rate. Therefore, the petitions must be disposed of with liberty to the petitioners to prosecute their appeals even as regards the Rate.

The petitions stand disposed of accordingly.

Sd/-

JUDGE

AN/-

UB SPORTS MANAGEMENT OVERSEAS LIMITED vs. THE DISPUTE RESOLUTION PANEL-2