Delhi High Court - Orders
Religare Enterprises Limited (As ... vs Assistant Commissioner Of Income Tax & ... on 14 May, 2024
Author: Yashwant Varma
Bench: Yashwant Varma, Purushaindra Kumar Kaurav
$~64
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 6929/2024 & CM APPL. 28824/2024
RELIGARE ENTERPRISES LIMITED (AS SUCCESSOR-IN-
INTEREST OF RELIGARE SECURITIES LTD)
..... Petitioner
Through: Mr.Rohit Jain, Mr.Aniket
D.Agrawal, Mr.Abhishek
Singhvi, Advs.
versus
ASSISTANT COMMISSIONER OF INCOME TAX & ANR.
..... Respondent
Through: Mr.Sunil Agarwal, Sr.SC with
Mr.Shivansh B.Pandya, Jr.SC
and Mr.Utkarsh Tiwari, Adv for
I.T.Dept.
CORAM:
HON'BLE MR. JUSTICE YASHWANT VARMA
HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR
KAURAV
ORDER
% 14.05.2024 CM APPL. 28825/2024 (Exemption) Allowed, subject to all just exceptions.
Application is disposed of.
W.P.(C) 6929/2024 & CM APPL. 28824/2024
1. Notice. Since the respondents are duly represented let a reply be filed within a period of three weeks. The petitioner shall have two weeks therefrom to file a rejoinder affidavit.
2. Prima facie, we find ourselves unable to sustain the initiation of action under Section 147 of the Income Tax Act, 1961 ["Act"] bearing in mind the undisputed fact which emerges from the record that 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 31/05/2024 at 21:28:12 Religare Securities Ltd. had come to be merged in terms of a Scheme of Arrangement which was sanctioned by the National Company Law Tribunal vide order dated 08 December 2017. Post amalgamation, consolidated returns were filed for the consideration of the Department and which were also subjected to due assessment.
3. While responding to Section 148A(b) notice, the petitioner had proffered the following explanation:-
"A. Rebuttal on the ground that, no income tax return is required to be filed by RSL for the AY 2020-21 ;
The RSL was a wholly owned subsidiary of Religare Enterprises Limited. A joint petition was filed by eleven (11) entities of Religare Group (including RSL) before the National Company Law Tribunal ('NCLT') for the purpose of approval of Composite scheme of Arrangement vide petition no. CP(CAA) 168 (PB)/2017 (connected with CA(CAA)-46 (PB) of 2017) and consequent to the merger application, the NCLT vide its order dated December 08, 2017 has approved the composite scheme of arrangement. As a result of the approval of the composite scheme of arrangement by the NCLT :
(i) Broking business of RSL was demerged and taken over by the entity Religare Broking Limited ('RBL' or 'Resulting company') having PAN AAHCR8454M as going concern; and
(ii) RSL (with assets and liabilities pertaining to businesses other than the broking business) was amalgamated in the Religare Enterprises Limited (herein-after referred as 'transferee company' or 'REL' or 'successor company') w.e.f. 01.04.2016.
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a. Payment received in respect of Fees for professional or technical services (TDS Form 26Q, Section 194J) amounting to Rs. 65,67,273/-
In this regard, at the outset, we wish to submit that, payment received in respect of fee for professional or technical services amounting to Rs. 65,67,273, reported on the PAN of RSL and appearing in Form 26AS is not pertaining to RSL. In this regard, we wish to submit as under:
> The party, who has reported the transactions amounting to Rs. 65,67,273 on the PAN of RSL is 'M/s. Ranvik Autocomponents Private Limited' was never a client of RSL in preceding previous year(s) or a client of resulting company in previous years. > The resulting company i.e. RBL has not claimed any such TDS in its ITR, deducted by the vendor 'M/s. Ranvik Autocomponents Private Limited'. Relevant extract of ITR filed by resulting entity for FY 2019-20 (AY 2020-21) duly proving no TDS has been 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 31/05/2024 at 21:28:12 claimed by RBL, deducted by 'M/s. Ranvik Autocomponents Private Limited', in its ITR is enclosed as Annexure-18. > M/s. Ranvik Autocomponent Pvt. Ltd. has deposited TDS, on PAN of RSL very late i.e. after two years from the end of the relevant previous year. Referring to form 26 AS stating transactions on PAN of RSL enclosed as Annexure-19, it can be evidenced that 'Date of Booking' of transactions is '30-Jan- 2022'. > On detailed analysis, it has been discovered that, 'M/s. Ranvik Autocomponents Private Limited' had an ongoing loan in FY 2019- 20 from M/s. Religare Finvest Limited (PAN: AAFCS6801H) [here-in-after referred as 'RFL'], a fellow subsidiary of RBL. M/s.
Ranvik Autocomponents Private Limited had taken a loan against properly from Religare Finvest Limited amounting to Rs. 6,42,00,000 on 25.03.2014. The said loan was outstanding in the FY 2019-20 and the Religare Finvest Limited has earned income aggregating to Rs. 65,64,310, which comprises interest income of Rs. 62,88,767 from this loan & other charges such as Cheque BouncIng/Overdue/statement of account request charges amounting to Rs. 2,75,543, which has been duly offered to tax in the Income tax return filed by the Religare Fivest Limited for the FY 2019-20. However, no TDS has been deducted by 'M/s. Ranvik Autocomponents Private Limited' u/s. 194A of the Act on the interest income paid to the RFL instead it has deducted TDS u/s. 194J of the Act and deposited on the wrong PAN i.e. AAACF1952D, which belongs to RSL which ceased to exist after 01.04.2016.
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From the factual position stated above, it can be evidenced that, the transactions reported on the PAN of RSL, after two years from the relevant period i.e. on 30.01.2022, does not pertain to RSL or resulting entity RBL, while the same pertains to RFL. As RFL has earned income amounting to Rs. 65,64,310 from M/s. Ranvik Autocomponents Pvt. Ltd in the relevant FY 2019-20 and M/s. Ranvik has not deducted TDS on such interest u/s. 194A of the Act instead it has deducted TDS u/s. 194 J of the Act reported on the PAN of RSL. It is further pertinent to note that, RFL has duly offered this interest income of Rs. 65,64,3 lOto tax without claiming any TDS benefit, which resulted into TDS loss to the RFL as TDS deducted but not deposited on the PAN of RFL.
In view of the above, basis the incorrect transactions reported on the PAN of a nonexistent company and ground that no ITR has been filed by a non-existent entity, issuing notice under section 148 of the Act would be illegitimate. Therefore, captioned show cause notice deserved to be dropped immediately.
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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 31/05/2024 at 21:28:12 b. Purchases or supplies received as per GSTR-1 of suppliers Amounting to Rs. 32,72,702/-.
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Therefore, consequent to the transfer of broking business to RBL w.e.f. 01.04.2016, the RSL has stopped undertaking any transactions on the GSTIN of RSL w.e.f. 29.12.2017 (effective date of merger order) and all the transactions relating to the broking business was undertaken by the RBL. However, some of the vendors have inadvertently mentioned GSTINs of RSL instead of RBL on the transactions entered by RBL. Accordingly, certain transactions, inadvertently reported, are appearing on the GSTINs of RSL.
In this regard, it is further submitted that, your goodself has captured transactions amounting to Rs.32,72,702 in the captioned notice. Though the captioned notice show cause notice does not give any transaction/party wise detail of Rs. 32,72,702. However, the information summary, provided with the notice, states party wise Purchases (Sales reported by other PAN on GSTIN of RSL) for transaction value aggregating to Rs. 51,94,331. On analysis of such report, it has been identified, the transaction amounting to Rs. 32,72,702, captured in the notice, primarily comprises following:
xxxx xxxx xxxx From the details stated above, it can be evidenced that, all the transactions reported on the GSTIN of RSL, captured in the notice, is already booked in the books of accounts of resulting entity i.e. RBL and offered to tax in the ITR filed by RBL for the FY 2019-20 vide acknowledgement no. 257641381130221 dated 13.02.2021. ................
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4. Despite the explanation which was offered, the Assessing Officer ["AO"] while proceeding to pass an order under Section 148A(d) of the Act has merely observed that the explanation was not found tenable. The matter requires consideration.
5. We consequently provide that while it shall be open for the respondents to proceed further with the impugned decision for reassessment, any order adverse to the writ petitioner, if passed, shall not be given effect to till the next date of listing.
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 31/05/2024 at 21:28:12
6. Let the matter be called again on 27.08.2024.
YASHWANT VARMA, J.
PURUSHAINDRA KUMAR KAURAV, J.
MAY 14, 2024/MJ 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 31/05/2024 at 21:28:12