MUMBAI: NDTV, in reply to an email from the NSE and the BSE, says there is no power vested with the Income Tax Department to issue advisories/letters under Section 281 or 281B of the Income Tax Act. If the Income Tax Department is of the view that provisions of Section 281 have been violated, then the recourse is to file a Civil Suit with the Civil Court and not to issue advisory or letters.
Accordingly, the letter dated 16.6.2017 issued by the Deputy Commissioner of Income Tax, Circle 18(1), New Delhi has no relevance or applicability in the proposed transaction.
NDTV refers to a letter dated 16.6.2017 issued by the Deputy Commissioner of Income Tax, Circle 18(1), New Delhi, to New Delhi Television Ltd. in respect of the proposed sale of equity interest by certain subsidiaries of M/s NDTV Ltd.,a copy of which was also marked to the BSE and NSE.
The NDTV reply signed by the company secretary Navneet Raghuvanshi, says it is pertinent to point out that an order under Section 281B of the Income-tax Act, 1961 (“Act”) was passed in the case of NDTV Ltd. (not the subsidiaries of NDTV Ltd. which are separate taxable entities) on 14.9.2015 whereby the following three genre of assets of NDTV Ltd. were provisionally attached by the Deputy Commissioner of Income Tax.
A. All rights in respect of all the immoveable properties including land and building as reflected in the Balance Sheet of NDTV Ltd. as on 31.03.2015 declared at Rs. 6.83 crore.
B. All non-current investments made by NDTV Ltd. as appearing in the Balance Sheet and reflected at Rs. 299.03 crore.
C. The refund of Rs. 19.88 crore determined after giving appeal effect for the assessment year 2008-09.
This order was challenged before the Delhi High Court wherein the Court, on 23.09.2015 passed, inter alia, the following Order: “In the meanwhile, there shall be stay of operation of the impugned order dated 14.09.2015 subject to the petitioner’s undertaking that the petitioner will not alienate any asset or create any third party rights without the leave of the court except in the ordinary course of business.”
The subject matter of the writ petition and the order passed by the Delhi High Court extends to only those assets which were provisionally attached by the Deputy Commissioner of Income Tax, Circle 18(1), New Delhi vide its order dated 14.09.2015 and nothing beyond that. Admittedly, the shares being transferred by the subsidiaries of the NDTV Ltd. do not fall in the aforesaid three genre of assets, which were subject matter of attachment by the Deputy Commissioner of Income Tax, Circle 18(1), New Delhi vide its order dated 14.09.2015. The assets held by the subsidiaries of NDTV Ltd., in the form of investment in downstream subsidiaries which are subject matter of the present sale are clearly not assets which were either part of provisional attachment order of 14.09.2015 or the High Court’s order of 23.09.2015. Therefore, there is no violation of any order by NDTV Ltd. in the present transaction.
That apart, the present transaction contemplated by the subsidiaries of NDTV Ltd. is being done at a price which represents the fair value of the shares which has been certified by M/s. Duff & Phelps, a SEBI Registered Category I Merchant Banker Therefore, , there is no loss to the revenue from the said transaction and hence, Section 281 of the Act has no application.