High Court
Madras HC TRAI-Star case: All parties keep options open
MUMBAI: Even as till late evening yesterday all those connected with the case filed by Star India and Vijay TV against regulator TRAI in Madras High Court kept waiting for the full text of the court order, options for future course of action were kept open, including whether the high court should be asked to clarify on some observations.
As the high court, by keeping its final verdict on hold, has given two weeks time to petitioners to consider appealing in the Supreme Court, which is already in summer vacation mode with just the vacation bench active, TRAI also cannot go ahead and get its tariff order implemented immediately.
Justice MM Sundresh, who was assigned to hear the Star TV and Vijay TV vs. TRAI case after another bench had given a split verdict, concurred with the view of Madras HC chief justice Indira Banerjee who, through an order dated 3 March 2018, had held that the TRAI Act confers upon the regulator sufficient jurisdiction to notify the said tariff order and interconnection regulation.
However, the judge also, reportedly, struck down some other aspects of the tariff order, including an important part that capped at 15 per cent the discounts that could be offered by TV channels.
That all stakeholders in this court drama are keeping their cards close to the chest can be gauged from the fact the only organisation to come out with an official statement welcoming the Madras HC order, AIDCF (All India Digital Cable Federation), too had nothing to offer on a time frame for implementation of TRAI tariff order. Efforts made to elicit responses from Star India, TRAI, Indian Broadcasting Foundation or even individual media industry players drew a blank. The common refrain was: we haven’t read the actual order, so can’t comment.
Still, after talking to various people in the industry a possible scenario that emerges hinges around petitioners going back to the Madras HC seeking clarifications on some of the observations of the court, which may take some time. After those clarifications come through, it would be decided whether to exercise the option of appealing in the Supreme Court, especially because a major pivot of the case is the copyright of TV channels over the content it generates and whether TRAI has any jurisdiction over such copyright issues.
With the present TRAI Chairman RS Sharma’s tenure ending in a few months time, he would ideally like to see the tariff order, issued during his tenure, implemented before his superannuation.
Also Read:
Third Madras high court judge gives TRAI tariff order thumbs up
Madras HC gives split verdict in Star India versus TRAI case
MSOs move Madras HC seeking relief on inter-connect pacts
Orders reserved by Madras HC on TRAI jurisdiction case
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.
