High Court
Ad cap case adjourned to 24 March
NEW DELHI: The Delhi High Court today adjourned the petition by the News Broadcasters Association (NBA) and others challenging the advertising cap of 12 minutes per hour sought to be imposed by the government to 24 March.
The bench was unable to hear the case today in view of the pendency of large number of part-heard matters.
The assurance given by TRAI to not take any action against any channel pending the petition, will continue and the Court has, at the regulator’s instance, directed that all channels to keep a record of the advertisements run by them. It can be noted that the ad cap case was adjourned to 21 January, 2015 when it last came up for hearing on 20 November, 2014.
During the hearing on 25 September, NBA counsel Nisha Bhambani had sought adjournment in view of the senior counsel S Ganesh not being in Delhi.
Earlier on 15 July, the Court had adjourned the case as the final hearing of the bunch of petitions challenging the ad cap sort to be imposed by TRAI as the authority had not finalised its rejoinder.
The case had been previously heard in the High Court on 17 December, 2013 and 13 March, 2014.
The NBA had challenged the ad cap rule, contending that TRAI does not have jurisdiction to regulate commercial airtime on television channels.
Apart from the NBA, the petition have been filed by Sarthak Entertainment, Pioneer Channel Factory, E24 Glamoru, Sun TV Network, TV Vision, B4U Broadband, 9X Media, Kalaignar, Celebrities Management, Eanadu Television and Raj Television.
The news and regional broadcasters fear that the capping of commercial airtime will curtail their ad revenues. They also argue that the ad cap must be brought only after the benefits of cable TV digitisation start kicking in.
High Court
Delhi HC quashes tax notices against Prannoy Roy & Radhika Roy, fines department Rs 2 Lakh
NEW DELHI: In a sharp rap on the knuckles for tax overreach, the Delhi High Court has told the Income Tax Department that it cannot keep knocking on the same door hoping for a different answer, especially when it has already been opened, inspected and firmly shut.
Quashing reassessment notices issued to veteran broadcaster Prannoy Roy and media professional Radhika Roy, the court on January 19 ruled that the tax authorities had acted without jurisdiction, reopening a settled assessment on nothing more than a change of opinion. To underline its displeasure, the court imposed a token cost of Rs 1 lakh each, Rs 2 lakh in total, on the department, payable to the Roys.
The case, like a badly written sequel, centred on Assessment Year 2009–10, an old chapter the tax department tried to reread years later.
Radhika Roy had filed her income tax return for AY 2009–10 on July 31, 2009, declaring an income of Rs 1.66 crore. The return was processed and accepted under Section 143(1), with the intimation issued on February 22, 2011.
Then came the first knock. In July 2011, the department reopened the assessment under Sections 147 and 148, citing transactions involving shares of New Delhi Television Ltd (NDTV) between the Roys and their holding company, RRPR Holding Pvt Ltd. The reassessment culminated in an order dated March 30, 2013, assessing Radhika Roy’s income at Rs 3.17 crore. This included a major addition of Rs 1.30 crore as short-term capital gains, along with smaller additions of Rs 20.74 lakh as house property income and Rs 2,750 relating to Section 80G.
Crucially, during these proceedings, the assessing officer had specifically examined interest-free loans received by the Roys from RRPR. A show-cause notice issued on March 6, 2013 proposed treating these loans as “deemed dividends” under Section 2(22)(e). After examining RRPR’s audited books, balance sheets and shareholding pattern, the officer dropped the proposal. No addition was made on this count.
Three years later, on March 31, 2016, the department reopened the same assessment yet again, issuing fresh notices under Section 148 to both Prannoy Roy and Radhika Roy. This time, the department leaned on “complaints” and an internal review of RRPR’s records, arguing that interest-free loans given to the Roys should be taxed as “deemed income” under Section 2(24)(iv).
The figures were hefty. RRPR had borrowed Rs 375 crore from ICICI Bank in October 2008 at an interest rate of 19 per cent per annum. From this loan, it extended interest-free advances of Rs 20.92 crore to Prannoy Roy and Rs 71 crore to Radhika Roy. According to the department, RRPR suffered interest costs of nearly Rs 35 crore in that year, and an estimated Rs 6.79 crore of “benefit” had accrued to Radhika Roy alone due to non-charging of interest.
A bench of justices Dinesh Mehta and Vinod Kumar held that the so-called “new information” was neither new nor hidden. The interest-free loans were already disclosed, examined and consciously accepted during the earlier reassessment proceedings.
“Section 147/148 powers are an exception, not a licence for repeated harassment,” the court observed, noting that the same transaction cannot be reopened merely because a different officer believes another legal provision should have been applied.
Calling Sections 2(22)(e) and 2(24)(iv) “two sides of the same coin”, the court said the department had every opportunity in 2013 to tax the alleged benefit if it believed it was taxable. Revisiting the issue years later was nothing but a change of opinion, a settled no-go zone in tax law.
The court also rejected the department’s attempt to invoke the extended six-year limitation period by alleging failure to disclose material facts. The Roys, it said, had disclosed all primary facts, including RRPR’s audited accounts, which explicitly recorded the interest-free loans. Drawing on Supreme Court precedents, the bench reiterated that an assessee is not required to disclose inferences or help the tax officer draw conclusions.
Allowing both writ petitions, the High Court quashed the 2016 notices and all consequential proceedings. While noting that “no amount of cost can be treated enough” for such cases, it imposed Rs 1 lakh as cost in each petition, a symbolic but pointed message.
Beyond the Roys, the ruling sends a wider signal. Reassessment powers are not a rewind button. Once the taxman has examined the facts, applied his mind and passed an order, he cannot keep returning with fresh labels for the same transaction.
In short, the court told the department to stop re-editing old tapes, especially when the credits have already rolled.
