The Assessing Officer has fastened buy-back tax under s.115QA on my company. Do I have a right of appeal, or must I go to the High Court by writ?
You have a right of appeal. The Supreme Court held that a determination of liability under s.115QA is covered by the words 'an order against the assessee, where the assessee denies his liability to be assessed under this Act' in s.246(1)(a) and s.246A(1)(a), so an appeal lies; and because that remedy exists, the High Court was right to refuse a writ petition.
Decided by the Supreme Court (Uday Umesh Lalit J and Indira Banerjee J) on 2019-11-22, reported as Civil Appeal No. 8945 of 2019 (arising out of Special Leave Petition (Civil) No. 20728 of 2019). It bears on section 115QA, section 115QB, section 115QC, section 246A(1)(a), section 246(1)(a), section 143, section 144 of the Income Tax Act 1961, in Appeals and Assessment & Scrutiny matters.
This is the case that closes the writ route and opens the appellate one for Chapter XII-DA demands. The Court's reasoning is that if the expression 'denies his liability to be assessed' were confined to s.143 and s.144 proceedings, there would be no appellate remedy at all against a s.115QA determination and every dispute — including disputes of pure fact about quantification — would have to be fought under Article 226, which is not a forum for disputed facts. Two limits matter. The Court expressly declined to decide whether s.115QA applies at all to a buy-back carried out under a court-sanctioned scheme of arrangement rather than under s.77A of the Companies Act 1956, leaving that to the appellate authorities. And the whole subject is now historical for new transactions: s.115QA does not apply to a buy-back taking place on or after 1 October 2024, so this decision governs the tail of old buy-backs and the appeals arising from them, not fresh ones.
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Genpact India Private Limited had a single shareholder, its Mauritius holding company Genpact India Investment. Out of an opening share capital of 25,68,700 shares, it bought back 2,50,000 shares in May 2013 at Rs 32,000 per share for Rs 800 crores. Chapter XII-DA, comprising ss.115QA, 115QB and 115QC, was inserted by the Finance Act 2013 on 10 May 2013 with effect from 1 June 2013. On 10 September 2013 the Delhi High Court approved a scheme of arrangement in Company Petition No. 349 of 2013, pursuant to which the company bought back a further 7,50,000 shares at Rs 35,000 per share for Rs 2,625 crores from the same Mauritius holding company. In its return for assessment year 2014-15 filed on 28 November 2014 the company gave details of the transactions in Schedule DDT but denied any liability to tax. The assessment order dated 31 December 2016 made ten additions, one of them a liability under s.115QA, rejecting the contention that the buy-back was pursuant to a court-approved scheme of arrangement under s.391 of the Companies Act 1956. The company filed Writ Petition (Civil) No. 686 of 2017 in the Delhi High Court contending the order was without jurisdiction. A preliminary objection on alternative remedy was recorded when notice was issued on 25 January 2017 but was not disposed of; the interim order was made absolute on 30 August 2017. By judgment dated 19 August 2019 the High Court declined to entertain the writ petition, and the company appealed to the Supreme Court.
The appeal was dismissed with no costs. An appeal is maintainable against the determination of liability under s.115QA, the expression 'where the assessee denies his liability to be assessed under this Act' in s.246(1)(a) and s.246A(1)(a) being wide enough to cover both the question whether the company is liable at all and the extent and computation of that liability (paras 12 to 14). The High Court committed no error in refusing to entertain the writ petition given the availability of that remedy, and the fact that the writ had been admitted and an interim order made absolute did not preclude dismissal on the alternative-remedy ground (paras 15 to 17). Whether the appellant was liable under s.115QA at all, and whether a buy-back under a scheme of arrangement falls within the statutory contours of the section, were left to be gone into by the concerned authorities (para 18).
The Court reasoned from consequence. If the denial-of-liability expression were read as confined to liability to be assessed under s.143(3), there would be no appellate remedy at all against any determination under s.115QA, and every dispute — whether the company is liable, the extent of the liability, the computation — would have to be taken up under Article 226, which is not normally entertained where questions of fact are disputed; the assessee would lose both a factual forum and the regular hierarchy of appeals under the Act (para 13). There was no reason to confine the expression to issues arising out of assessment proceedings under s.143 or s.144 (para 12). On the writ, the Court applied the summary of the alternative-remedy rule in Commissioner of Income Tax v. Chhabil Dass Agarwal, reiterated in Authorised Officer, State Bank of Travancore v. Mathew K.C., and applied State of U.P. v. U.P. Rajya Khanij Vikas Nigam Sangharsh Samiti to reject the argument that a writ once admitted cannot be dismissed for alternative remedy; it also noted that the preliminary objection had never been disposed of, so the matter was still at large (para 16). Concessions recorded by the Revenue before the High Court took care of any prejudice, so the appellant would have a fuller, adequate and efficacious remedy by way of appeal (para 17).
We, therefore, reject the submissions advanced by the appellant and hold that an appeal would be maintainable against the determination of liability under Section 115QA of the Act.
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Handle my notice → Ask a CA on WhatsAppYou have a right of appeal. The Supreme Court held that a determination of liability under s.115QA is covered by the words 'an order against the assessee, where the assessee denies his liability to be assessed under this Act' in s.246(1)(a) and s.246A(1)(a), so an appeal lies; and because that remedy exists, the High Court was right to refuse a writ petition. This was decided by the Supreme Court (Uday Umesh Lalit J and Indira Banerjee J) and bears on section 115QA, section 115QB, section 115QC, section 246A(1)(a), section 246(1)(a), section 143, section 144 of the Income Tax Act 1961. It is reported as Civil Appeal No. 8945 of 2019 (arising out of Special Leave Petition (Civil) No. 20728 of 2019). This is the case that closes the writ route and opens the appellate one for Chapter XII-DA demands. The Court's reasoning is that if the expression 'denies his liability to be assessed' were confined to s.143 and s.144 proceedings, there would be no appellate remedy at all against a s.115QA determination and every dispute — including disputes of pure fact about quantification — would have to be fought under Article 226, which is not a forum for disputed facts. Two limits matter. The Court expressly declined to decide whether s.115QA applies at all to a buy-back carried out under a court-sanctioned scheme of arrangement rather than under s.77A of the Companies Act 1956, leaving that to the appellate authorities. And the whole subject is now historical for new transactions: s.115QA does not apply to a buy-back taking place on or after 1 October 2024, so this decision governs the tail of old buy-backs and the appeals arising from them, not fresh ones. If it applies to you, the first step is this: If a s.115QA demand is raised, file the appeal under s.246A within thirty days and plead the denial-of-liability ground expressly — do not let the limitation run while considering a writ.
Genpact India Private Limited had a single shareholder, its Mauritius holding company Genpact India Investment. Out of an opening share capital of 25,68,700 shares, it bought back 2,50,000 shares in May 2013 at Rs 32,000 per share for Rs 800 crores. Chapter XII-DA, comprising ss.115QA, 115QB and 115QC, was inserted by the Finance Act 2013 on 10 May 2013 with effect from 1 June 2013. On 10 September 2013 the Delhi High Court approved a scheme of arrangement in Company Petition No. 349 of 2013, pursuant to which the company bought back a further 7,50,000 shares at Rs 35,000 per share for Rs 2,625 crores from the same Mauritius holding company. In its return for assessment year 2014-15 filed on 28 November 2014 the company gave details of the transactions in Schedule DDT but denied any liability to tax. The assessment order dated 31 December 2016 made ten additions, one of them a liability under s.115QA, rejecting the contention that the buy-back was pursuant to a court-approved scheme of arrangement under s.391 of the Companies Act 1956. The company filed Writ Petition (Civil) No. 686 of 2017 in the Delhi High Court contending the order was without jurisdiction. A preliminary objection on alternative remedy was recorded when notice was issued on 25 January 2017 but was not disposed of; the interim order was made absolute on 30 August 2017. By judgment dated 19 August 2019 the High Court declined to entertain the writ petition, and the company appealed to the Supreme Court. The matter was decided on 2019-11-22 by the Supreme Court (Uday Umesh Lalit J and Indira Banerjee J). On those facts the Supreme Court held as follows. The appeal was dismissed with no costs. An appeal is maintainable against the determination of liability under s.115QA, the expression 'where the assessee denies his liability to be assessed under this Act' in s.246(1)(a) and s.246A(1)(a) being wide enough to cover both the question whether the company is liable at all and the extent and computation of that liability (paras 12 to 14). The High Court committed no error in refusing to entertain the writ petition given the availability of that remedy, and the fact that the writ had been admitted and an interim order made absolute did not preclude dismissal on the alternative-remedy ground (paras 15 to 17). Whether the appellant was liable under s.115QA at all, and whether a buy-back under a scheme of arrangement falls within the statutory contours of the section, were left to be gone into by the concerned authorities (para 18).
The Court reasoned from consequence. If the denial-of-liability expression were read as confined to liability to be assessed under s.143(3), there would be no appellate remedy at all against any determination under s.115QA, and every dispute — whether the company is liable, the extent of the liability, the computation — would have to be taken up under Article 226, which is not normally entertained where questions of fact are disputed; the assessee would lose both a factual forum and the regular hierarchy of appeals under the Act (para 13). There was no reason to confine the expression to issues arising out of assessment proceedings under s.143 or s.144 (para 12). On the writ, the Court applied the summary of the alternative-remedy rule in Commissioner of Income Tax v. Chhabil Dass Agarwal, reiterated in Authorised Officer, State Bank of Travancore v. Mathew K.C., and applied State of U.P. v. U.P. Rajya Khanij Vikas Nigam Sangharsh Samiti to reject the argument that a writ once admitted cannot be dismissed for alternative remedy; it also noted that the preliminary objection had never been disposed of, so the matter was still at large (para 16). Concessions recorded by the Revenue before the High Court took care of any prejudice, so the appellant would have a fuller, adequate and efficacious remedy by way of appeal (para 17). In the words reproduced by the source cited on this page: "We, therefore, reject the submissions advanced by the appellant and hold that an appeal would be maintainable against the determination of liability under Section 115QA of the Act." The decision followed or applied Commissioner of Income Tax v. Chhabil Dass Agarwal — applied on the alternative-remedy rule; Authorised Officer, State Bank of Travancore & Anr. v. Mathew K.C. — reiterated; State of U.P. v. U.P. Rajya Khanij Vikas Nigam Sangharsh Samiti — applied; Income Tax, U.P., Lucknow v. Kanpur Coal Syndicate — relied on for the width of 'denies his liability to be assessed'.
It was decided by the Supreme Court on 2019-11-22 and is reported as Civil Appeal No. 8945 of 2019 (arising out of Special Leave Petition (Civil) No. 20728 of 2019). Binding on every court and authority in India. A Supreme Court decision binds every assessing officer, every Commissioner (Appeals), every bench of the Income Tax Appellate Tribunal and every High Court in India. An officer who declines to follow it is acting contrary to law, and that refusal is itself a ground of appeal. On section 115QA, section 115QB, section 115QC, section 246A(1)(a), section 246(1)(a), section 143, section 144, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the department, and it appears in this library for that reason — you need to know what the Assessing Officer will cite against you. The appeal was dismissed with no costs. An appeal is maintainable against the determination of liability under s.115QA, the expression 'where the assessee denies his liability to be assessed under this Act' in s.246(1)(a) and s.246A(1)(a) being wide enough to cover both the question whether the company is liable at all and the extent and computation of that liability (paras 12 to 14). The High Court committed no error in refusing to entertain the writ petition given the availability of that remedy, and the fact that the writ had been admitted and an interim order made absolute did not preclude dismissal on the alternative-remedy ground (paras 15 to 17). Whether the appellant was liable under s.115QA at all, and whether a buy-back under a scheme of arrangement falls within the statutory contours of the section, were left to be gone into by the concerned authorities (para 18). It arises in Appeals and Assessment & Scrutiny matters, on section 115QA, section 115QB, section 115QC, section 246A(1)(a), section 246(1)(a), section 143, section 144 of the Income Tax Act 1961, and was decided by Uday Umesh Lalit J and Indira Banerjee J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Take the whole of the dispute into the appeal, including the factual questions of quantification of distributed income, because the Court's reasoning is that these are precisely what the appellate forum exists for. Do not build the case on a writ petition unless you can bring it within a recognised exception; the Court applied Chhabil Dass Agarwal and held that admission of a writ and grant of interim relief do not preclude later dismissal on the alternative-remedy ground. Keep the substantive argument alive — whether a buy-back under a scheme of arrangement is within s.115QA at all was left open and can be raised before the appellate authority. For any buy-back on or after 1 October 2024, check first whether s.115QA applies at all; the further proviso inserted by the Finance (No. 2) Act 2024 takes such buy-backs out of the section.
Validity check could not be completed. Validity check could not be completed — no citator search for later treatment of this decision was run on this pass. Two dating points must be carried on the face of any use of it. The buy-backs in question were in 2013 and the decision describes the s.115QA regime as it then stood; s.115QA does not apply to a buy-back taking place on or after 1 October 2024, a further proviso to s.115QA(1) having been inserted by the Finance (No. 2) Act 2024 from that date. And the Court expressly refrained from deciding whether s.115QA reaches a buy-back under a court-sanctioned scheme of arrangement, so nothing in this judgment settles that question either way. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The transcription of paragraph 3 came back in a condensed, list-like form for sub-paragraphs (f), (g) and (k), which read as summary rather than as the Court's prose; the facts stated here are confined to the sub-paragraphs that read as the judgment's own sentences and to what paragraph 16 records about the High Court's orders. Paragraph 15 as reproduced runs the quotation from Chhabil Dass Agarwal with the internal paragraph numbers of that judgment (11, 12, 15) inside it, and an ellipsis appears in the reproduced quotation between its paragraphs 12 and 15; the quoted passage from Chhabil Dass Agarwal has therefore not been used as a key quote. The key quote used is from paragraph 14 and was re-fetched by phrase and came back identical. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeal was dismissed with no costs. An appeal is maintainable against the determination of liability under s.115QA, the expression 'where the assessee denies his liability to be assessed under this Act' in s.246(1)(a) and s.246A(1)(a) being wide enough to cover both the question whether the company is liable at all and the extent and computation of that liability (paras 12 to 14). The High Court committed no error in refusing to entertain the writ petition given the availability of that remedy, and the fact that the writ had been admitted and an interim order made absolute did not preclude dismissal on the alternative-remedy ground (paras 15 to 17). Whether the appellant was liable under s.115QA at all, and whether a buy-back under a scheme of arrangement falls within the statutory contours of the section, were left to be gone into by the concerned authorities (para 18).
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