High Court
HC reserves order on CAS petition
NEW DELHI: CAS might have moved one step nearer to implementation with the Delhi High Court yesterday reserving its verdict on a case filed by some MSOs after the government explained its stand on addressability.
The court had asked the government whether a central law — on CAS — could be kept in suspended animation forever. The government yesterday submitted a written submission explaining its position.
“It is extremely important to examine the entire issue, in a holistic manner, in order to safeguard the consumers’ interests and facilitate the consumers to make an informed choice. In case the CAS is implemented in the pre-suspended form in Delhi, Mumbai and Kolkata, the problems faced in implementation are likely to remain unaddressed,” the Centre said in its synopsis filed through counsel Rajive Mehra, according to a report by the Press Trust of India (PTI).
Hathway Cable Datacom, INCablenet and RPG had filed a case in the Delhi HC seeking direction to the Centre to implement CAS for viewing satellite TV channels in the country.
The petitioner had also pleaded that government inaction has resulted in financial losses to the MSOs who had invested in infrastructure for addressability.
Seeking time till 31 December, 2005 to examine Telecom Regulatory Authority of India’s recommendations and arrive at the final decision, the government submission said, “The actual implementation would have its own timeframe, which is difficult to predict at this stage and will depend on the content of the final policy decision by Competent Authority.”
The Centre also talked of Direct-to-Home (DTH) service, saying “the consumers are likely to have an alternative addressability on cable networks through DTH service” as private companies were being issued licences for DTH service, the PTI report stated.
Earlier, the court had asked the government to either implement the law (Cable TV Networks (Regulation) Act) or abrogate it. “Statute has prescribed it and you must implement it,” the court had observed.
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.
