Whether communication by department was in the nature of determination of the liability?

Last updated: 31 March 2023

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The Supreme Court considered whether the Income Tax Department's communication regarding a company's share buy-back scheme constituted a determination of tax liability. The company had approached the High Court for a scheme to buy back its shares, which was sanctioned. Subsequently, the department communicated that the payments made to shareholders were considered a dividend under the Income Tax Act, requiring tax remittance. The court agreed to treat the department's communication as a show cause notice, allowing the department to conclude the matter while the company undertook to withdraw related proceedings before the Authority for Advance Ruling.

Court :
Supreme Court of India

Brief :
The course suggested by the Counsel for the Department was acceptable to the Counsel for the Appellant. It was, therefore, suggested that the Appellant may file an affidavit of undertaking to withdraw the proceedings initiated by it before the AAR and the Department may also file an appropriate affidavit stating that it was willing to treat the communication as a show cause notice.

Citation :
COGNIZANT TECHNOLOGY SOLUTIONS INDIA PVT. LIMITED (APPELLANT) VS. DY COMMISSIONER OF INCOME TAX, LARGE TAXPAYER UNIT-1 (RESPONDENTS)

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Judgement posted by

FCS Deepak Pratap Singh

Associate Vice President - Secretarial & Compliance (SBI General Insurance Co. Ltd.)

Dear Friends, MyselfFCSDeepak P. Singh ( B.Sc.. LLB, FCS. FIII, CIAFP, CRMP, ID) , A Fellow Member of ICSI, Law Graduate ,Fellow Member of Insurance Institute of India, Certified Independent Director ,Certified Insurance Anti Fraud Professional , Certified Risk Governance Professional ( ICSI-III) and cleared Limited I ... Read more

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