The Supreme Court on Monday dismissed a plea filed by the Income Tax department against Reliance Communications seeking to tax the company approximately Rs 4,800 crore from the proceeds of its Foreign Currency Convertible Bonds. The bench rejected the Special Leave Petition saying, “We find no reason to entertain this special leave petition, which is, accordingly, dismissed,” reported The Financial Express.
“The Supreme Court order has quashed [the] contingent tax liability of RCOM for about Rs 4,800 crore. Earlier, the Income-Tax Appellate Tribunal and the Bombay High Court had also upheld RCOM’s appeal against the order of the Income-Tax department,” the telecom company said in a statement.
RCom said it had issued FCCBs aggregating $1.5 billion (Rs 6,485 crore) in 2006-07, according to the guidelines of the Reserve Bank of India. However, the I-T department assessed the FCCB proceeds as “unexplained cash credits” and had thus demanded the payment, the statement added.
The I-T department had contested the Bombay High Court’s March 2016 judgement. It said in its appeal to the Supreme Court that the funds were mentioned in the books by RCom without providing the details of the actual subscribers to the FCCBs. The department also said that the assessing officer did not examine the assessments properly.
“The crucial conditions regarding identity, genuineness and creditworthiness of the subscribers to the FCCB as required u/s 68 of the Income Tax Act was not examined by the Assessing officer during the assessment proceedings,” the plea said.
RCom in November 2007 had declared zero income in tax returns, and the I-T department issued a notice to the company in March 2009. RCom won the case in the Income Tax Appellate Tribunal in February 2013 and then the Bombay High Court in March 2016.