Escientia Advanced Sciences Private Limited Vs ACIT (Telangana High Court)
Summary: The Telangana High Court allowed the writ petition filed by Escientia Advanced Sciences Private Limited and set aside/quashed the action of the Income Tax Department dated 12.04.2023 levying tax of Rs.44,07,04,380/- for assessment year 2019-20 in respect of share premium received by the petitioner on issue of shares to Escientia Life Science (ELS), a company registered in Mauritius.
The petitioner, a private limited company engaged in research, development and manufacturing partnership activities for pharmaceutical and biotechnology innovators, had issued 6,38,702 fresh equity shares to ELS during AY 2019-20. It filed the requisite Form PAS-3 returns with the Registrar of Companies under Sections 39 and 42 of the Companies Act, 2013 and disclosed the share allotment in its financial statements. For the relevant assessment year, it filed its return of income under Section 139(1) of the Income-tax Act, 1961, declaring a total loss of Rs.25,09,88,052/- under the normal provisions and a book loss of Rs.26,51,85,087/- under Section 115JB.
The proceedings originated from a notice dated 07.03.2023 issued under Section 148A(a) of the Income-tax Act. The authority proceeded on the premise that ELS had purchased shares from the petitioner and sought a share purchase agreement and other details. The petitioner clarified that there had been a fresh issue of shares to its shareholder and no transfer of shares. It supplied Form PAS-3, bank statements, audited financial statements and the valuation report.
