Asianet Star Communications Private Limited Vs ACIT (Madras High Court)
The Madras High Court has invalidated a reassessment notice issued by the Income Tax Department to Asianet Star Communications Private Limited (formerly Asianet Communications Private Limited) for the Assessment Year 2012-13. The court found that the notice was issued to a non-existent entity and that the department failed to demonstrate any new material justifying the reopening of the assessment.
The case originated from a challenge by Asianet Star Communications Private Limited (ASCPL) against a notice under Section 148 of the Income Tax Act, 1961, dated February 21, 2019, and the subsequent reasons for reassessment provided on March 22, 2019.
Background of the Case: ASCPL had filed its original return of income for AY 2012-13 on November 29, 2012, which included a tax audit report and financial statements. A revised return was also filed. An intimation under Section 143(1) on January 30, 2014, denied the foreign tax credit claimed by the company. Subsequently, a notice under Section 143(2) was issued, leading to an exchange of communications between the company and the department. The company supplied hard copies of its return, financial statements, and tax audit report. A rectification petition regarding the foreign tax credit is reportedly still pending. Notably, the initial assessment proceedings did not culminate in an order under Section 143(3).
On December 19, 2018, the company informed the assessing authority about the amalgamation of Asianet Communication Private Limited (ACPL) with Vijay Television Private Limited (VTPL), with the appointed date of October 1, 2017, as per a National Company Law Tribunal order dated July 30, 2020. Consequently, the company’s name changed to Asianet Star Communication Private Limited (ASCPL), and its business address was updated. This information was reiterated to the department on January 10, 2019.
Despite these intimations, the impugned Section 148 notice was issued on February 21, 2019, in the name of ACPL and sent to its old address. On that date, ACPL, as an independent entity, no longer existed.
Reassessment Grounds and Objections: In response to the Section 148 notice, ASCPL, following the procedure laid out by the Supreme Court in GKN Driveshafts (India) V. Income Tax Officer (259 ITR 19), filed a revised return and requested the reasons for reopening the assessment. The company once again informed the department about its merger and name change.
The reasons for reopening, provided on March 22, 2019, focused on two main issues:
1. Depreciation Claim: The department contended that the company had claimed excess depreciation on “Computers” at 60%, arguing that computers fall under “Plant and Machinery” eligible for only 15% depreciation. This allegedly resulted in an excess depreciation claim of ,32,837/−.
2. Foreign Tax Credit: The department also cited an alleged excess relief claimed under Section 90/91, stating that the tax credit in the income tax return was less than the tax credit reflected in Form 26AS.
ASCPL filed objections on May 6, 2019, asserting that no new or tangible material had emerged to justify the reassessment. The company argued that the issues raised were already disclosed in its original return and annexures provided during the initial assessment.
Judicial Precedents and Arguments: The petitioner relied on several judicial precedents to support its objections:
