Hindustan Lever Ltd. Vs R.B. Wadkar (Bombay High Court)
Bombay High Court has quashed a notice of reassessment issued to Hindustan Lever Ltd. under Section 148 of the Income-tax Act, 1961, for the assessment year 1997-98. The court determined that the notice was issued without jurisdiction, as the Assessing Officer failed to establish that the assessee had not fully and truly disclosed all material facts necessary for the assessment.
The case centered on the treatment of stamp duty paid by Hindustan Lever Ltd. following the amalgamation of Brooke Bond Lipton India Ltd. The company had apportioned the stamp duty, treating a portion related to current assets as revenue expenditure, and the balance related to fixed assets as capital expenditure. This apportionment was clearly disclosed in the company’s income tax return and related documentation.
The Assessing Officer had initially accepted the company’s treatment of the stamp duty. However, a later reassessment notice was issued, citing reasons based on judicial precedents that suggested the entire stamp duty should have been treated as capital expenditure. The court, however, found that the reasons provided by the Assessing Officer did not demonstrate any failure on the part of Hindustan Lever Ltd. to fully and truly disclose all material facts.
