Case Law Details
AL Amin Investments Limited Vs ACIT (Delhi High Court)
In a recent case, AL Amin Investments Limited challenged the reopening of its assessment by the Income Tax department regarding investments made in shares during the Assessment Year 2015-2016. The Delhi High Court addressed the legality of this action under Section 148 of the Income Tax Act, 1961. This article provides a detailed analysis of the judgment delivered by the court.
The crux of the case lies in whether the investment in shares should be considered as income liable for taxation or as a capital account transaction exempt from such taxation. The petitioner argued that the investment in shares falls under the latter category, citing a precedent set by the court in M/s Angelantoni Test Technologies SRL vs Assistant Commissioner of Income Tax case.
The court, in its judgment, affirmed the petitioner’s argument, emphasizing that the investment in shares indeed constitutes a capital account transaction. It referenced the precedent case, where it was unequivocally established that such investments do not constitute income under the Income Tax Act. This legal standpoint was not contested by the respondents, further solidifying the petitioner’s position.
Consequently, the court ruled in favor of AL Amin Investments Limited, quashing the impugned notice issued under Section 148 of the Act. This decision reaffirms the principle that investments in shares are to be treated as capital transactions and not as taxable income.
The judgment delivered by the Delhi High Court in the case of AL Amin Investments Limited Vs ACIT clarifies the taxation status of investments made in shares. By affirming that such investments are capital account transactions, the court provides clarity on their tax treatment, thereby benefiting taxpayers and ensuring consistency in tax law interpretation. This ruling sets a precedent for similar cases in the future, establishing a clear legal framework for assessing the tax implications of investment activities in the capital markets.
Advocates representing Petitioner: Ms. Fereshte Sethna, Mr. Mrunal Parekh & Mr. Mohit Tiwari
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. This writ petition has been preferred seeking the following reliefs:-
“a) that this Hon’ble Court be pleased to issue a writ of certiorari or writ of mandamus or any other appropriate writ, order or direction in the nature of certiorari/mandamus, under Article 226 of the Constitution of India, calling for all the papers and proceedings of Respondent No. I pertaining to the Impugned Order dated 30 January 2022, Impugned Notice dated 31 March 2021 and Impugned Sanction dated 30 March 2021 after examining the validity, legality and propriety thereof, to quash and set aside the Impugned Order, Impugned Notice and Impugned Sanction;
b) A Writ, Order or Direction in the nature of Certiorari quashing the Impugned Draft Assessment Order dated 25 May 2023 issued under section 144C(1) read with section 147 of the Act for AY 2015- 16;
c) Pending the hearing and final disposal of the writ petition, for an order restraining the Respondents, its officers, sub-ordinates, agents from relying upon and/or taking any steps in connection with escapement proceedings initiated against the Petitioner in pursuance of the Impugned Notice;
d) For ad-interim/interim reliefs m terms of prayer clause (b) above;
e) For the costs of this Petition; and
f) For such further and other reliefs, as this Hon’ble Court may deem fit, proper and appropriate, in the nature and circumstances of this case.”
2. The challenge in essence is to the reopening of assessment by invocation of Section 148 of the Income Tax Act, 1961 [“Act”] with it being alleged that the investment made in shares in Assessment Year [“AY”] 2015-2016 had escaped assessment.
3. Learned counsel appearing in support of the writ petition draws our attention to the decision rendered by the Court in M/s Angelantoni Test Technologies SRL vs Assistant Commissioner of Income Tax, Circle Int Tax 1(1)(1) & Ors. [2023 SCC OnLine Del 8488] and contends that it has been categorically found by the Court that the investment in shares would be a capital account transaction and would thus not constitute income. It is in view of the aforesaid, submitted that invocation of Section 148 of the Act would not sustain.
4. The legal position which stands enunciated in M/s Angelantoni Test Technologies could not be disputed by learned counsel representing the respondents.
5. We consequently allow the instant writ petition and quash the impugned notice referrable to Section 148 dated 31 March 2021 and order dated 30 January 2022.
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