The Supreme Court on Friday quashed a tax reassessment of news channel NDTV that the Income Tax Department had initiated, The Indian Express reported. The tax department had claimed that NDTV had Rs 400 crore worth of unaccounted money in a British subsidiary firm.
The tax case relates to the issue of step-up coupon bonds amounting to $100 million (Rs 763.57 crore at current exchange rates) issued in July 2007 by Network PLC, an NDTV firm incorporated in London. NDTV had agreed to furnish corporate guarantee for this transaction at the time.
Various entities subscribed to these bonds. They were to be redeemed at a premium of 7.5% after five years. However, these bonds were redeemed in advance at a discounted price of $74.2 million (Rs 566.57 crore at current exchange rates) in November 2009.
The tax department had alleged that Network PLC had virtually no net worth, it had no business and therefore it could not have issued convertible bonds of $100 million. The tax department imposed a guarantee fee at 4.68% by treating it as a business transaction and added Rs 18.72 crore to NDTV’s income in an order passed in August 2012.
However, in its judgement, the Supreme Court said that there had been “no non-disclosure of material facts” by NDTV, contrary to the tax department’s claim. However, the tax department can still issue a fresh notice to NDTV under a rule that allows it to reopen assessment of firms for up to 16 years, which have derived income from a foreign entity.
“The Supreme Court has today ruled in favour of NDTV in a tax case which baselessly accused the company of money laundering while raising funds abroad in 2007 for its non-news business,” the news network said in a statement. “The Supreme Court has proved that the rule of law prevails above all else.”