| Case ID |
f9cdec81-e850-49bc-b6da-99905aa2f528 |
| Body |
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| Case Number |
Writ Petition No. 11911 of 2013 |
| Decision Date |
Mar 25, 2014 |
| Hearing Date |
|
| Decision |
The court granted the petitioner's application for a stay of recovery on certain conditions, noting the potential for irreparable harm to the petitioner if the recovery was not stayed. The petitioner successfully argued that they had a strong prima-facie case supported by a previous Tribunal ruling. The court emphasized that the balance of convenience favored the petitioner while safeguarding the interests of the revenue. The stay was granted pending the appeal, subject to the petitioner making a deposit of 25% of the demand and other conditions. |
| Summary |
In the case of Nerka Chemicals (P.) Ltd v. Union of India, the Bombay High Court addressed significant issues related to the taxation of share transfers among group companies. The petitioner, a wholly owned subsidiary of Demuric Holdings, contested an assessment order that imposed taxes on the market value of shares transferred as a gift from the Shroff group. The court emphasized the importance of recognizing transactions as gifts despite their characterization in legal documents. The judgment highlighted the need for a careful examination of the facts, particularly the lack of monetary consideration in the share transfers. Furthermore, the court balanced the potential harm to the petitioner against the revenue's interests, ultimately granting a stay on the tax recovery pending the resolution of the appeal. This case underscores the complexities of tax law regarding intra-group transfers and the judicial approach to protecting corporate entities from undue financial distress. |
| Court |
Bombay High Court
|
| Entities Involved |
Demuric Holdings Private Limited,
United Phosphorous Ltd.,
Uniforce Enterprises Ltd.,
Shroff Group
|
| Judges |
S.J. Vazifdar,
B.P. Colabawalla
|
| Lawyers |
Percy Pardiwalla,
Jas Sanghavi,
Vimal Gupta,
Ms. Padma Divakar
|
| Petitioners |
Nerka Chemicals (P.) Ltd
|
| Respondents |
Commissioner of Income Tax,
Union of India,
Assistant Commissioner of Income Tax,
Chief Commissioner of Income Tax,
Additional Commissioner of Income Tax,
Commissioner of Income Tax (Appeals)
|
| Citations |
2015 SLD 1769 = (2015) 371 ITR 280
|
| Other Citations |
Not available
|
| Laws Involved |
Income Tax Act, 1961
|
| Sections |
56(1),
28(iv)
|