New Delhi: The Supreme Court on Monday quashed Reliance Communication’s contingent tax liability of Rs.4,800 crore.
The liability had accrued on account of the Income Tax department’s notice to the company to pay tax on proceeds from FCCB (foreign currency convertible bonds) issued by the company in 2006-07.
The apex court dismissed the special leave petition filed by the Income Tax department treating the proceeds as “unexplained cash credits”.
“The Supreme Court order has quashed contingent tax liability of R-Com for about Rs4,800 crore. A Supreme Court bench of Hon’ble Mr Justice Kurian Joseph and Hon’ble Mr Justice Rohinton Fali Nariman passed the order dismissing the I-T Department’s Special Leave Petition, in relation to taxing of the FCCB proceeds, interest and derivatives income / loss thereon,” R-Com said in a statement.
In 2006-07, R-Com raised around $1.5 billion (approx Rs.6,585 crore) by issuing FCCB as per the extant guidelines of the Reserve bank Of India. Even as proceeds from loans are not taxed, income tax treated the transaction as taxable and raised demand.
The company had earlier appealed to the Income Tax Appellate Tribunal and the Bombay high court and R-Com’s appeal against the tax demand was upheld.
FCCB is a convertible corporate bond issued by a company to raise money in foreign markets and is an equity-debt instrument.
Reliance Group companies have sued HT Media Ltd, Mint’s publisher, and nine others in the Bombay high court over a 2 October 2014 front-page story that they have disputed. HT Media is contesting the case.