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Without going into the merits of the allegations, the Supreme Court held that NDTV had fully and truly disclosed all material facts necessary for the assessment.
The Supreme Court today quashed an income tax notice issued to New Delhi Television Limited (NDTV) for allegedly not disclosing its complete income for the assessment year 2008-09 .
The revenue had accused NDTV of indulging in round-tripping its funds to its foreign entities in order to avoid taxation.
The order was passed today by a Division Bench of Justice L Nageswara Rao and Deepak Gutpa.
Th assessee, NDTV Network PLC (NNPLC), a foreign subsidiary of New Delhi Television Limited, had in July 2007 issued stepup coupon bonds worth USD 100 million through the Bank of New York for a period of 5 years.
The Assessing Officer held that since NNPLC had virtually no financial worth or business, it could not have issued convertible bonds of US$ 100 million without having any assurance from the assessee.
Without doubting the validity of the transaction, the Assessing Officer imposed a guarantee fee at the rate of 4.68% by treating it as a business transaction and added Rs. 18.72 crore to the income of the assessee with respect to the financial year 2007-08 i.e. assessment year 2008-09.
In March 2015, the revenue sent a notice to the assessee stating that it had reason to believe that net the income chargeable to tax for the assessment year 2008-09 had escaped assessment.This notice did not give any reasons.
When asked for reasons, the revenue stated that in the following assessment year of 2009-10, the Assessing Officer had proposed a substantial addition of Rs. 642 crore to the account of the assessee on account of monies raised by it through its subsidiaries NDTV BV, The Netherlands; NDTV Networks BV, The Netherlands (NNBV); NDTV Networks International Holdings BV, The Netherlands (NNIH); and NNPLC.
The assessee raised its objection before the Dispute Resolution Panel (DRP) which concluded that these transactions with the subsidiary companies in Netherlands were sham and bogus. It was also opined that the same were done with a view to getting the undisclosed income, for which tax had not been paid, back to India by a circuitous round tripping.
NDTV then filed reply to the notice , and claimed that there had been no failure on its part to disclose all material facts necessary to make an assessment. However, the Assessing Officer did not accept these objections.
This prompted NDTV to approach the Delhi High Court, which dismissed its plea in 2017. Thus, the channel approached the Supreme Court in appeal.