Case Law Details
Ayodhya Rami Reddy Alla Vs PCIT (Telangana High Court)
The Telangana High Court’s judgment in the case of Ayodhya Rami Reddy Alla vs PCIT revolves around the challenge to proceedings initiated under Section 144BA of the Income Tax Act, 1961. Here are the key points from the judgment:
Background of the Case: The petitioner, Ayodhya Rami Reddy Alla, contested the initiation and continuation of income tax assessment proceedings for the assessment year 2019-2020. This was based on transactions involving the sale of shares of Ramky Estate and Farms Limited (REFL) and Ramky Enviro Engineers Limited (REEL).
Issue Raised: The primary contention was whether the transactions, including the issuance of bonus shares by REFL and subsequent sale of shares, were covered under Chapter X of the Income Tax Act (Specific Anti-Avoidance Rules – SAAR) or Chapter X-A (General Anti-Avoidance Rules – GAAR).
Petitioner’s Argument: The petitioner argued that the transactions fell under the provisions of SAAR, specifically Section 94(8), which deals with specific anti-avoidance rules related to bonus stripping. They contended that GAAR under Chapter X-A should not apply since SAAR was the appropriate framework.
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