Allowed

Mr. Mohammed Aktar Hussain alias Jun aid v. The State of Telangana

Telangana HC11 Jul 2025CRLP/6503/2025

Case brief

AI extract

What is this about?

Assessee challenged a Section 263 notice seeking to disallow MAT credit of its amalgamating entity. Holding that a modified return filed under the Advance Pricing Agreement supersedes prior assessment and rectification orders, the High Court quashed the show-cause notice.

What did the court decide?

Impugned notice dated 14.10.2024 set aside/quashed; both writ petitions allowed; no order as to costs.

Mr. Mohammed Aktar Hussain alias Jun aid Vs The State of… — Income Tax | Telangana HC (2025)

¶1

13447 1

¶2

HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD

¶3

(Special Original Jurisdiction)

¶4

THURSDAY ,THE NINETEENTH DAY OF JUNE TWO THOUSAND AND TWENTY FIVE

¶5

PRESENT

¶6

THE HONOURABLE SRI JUSTICE P.SAM KOSHY AND

¶7

THE HONOURABLE SRI JUSTICE NARSING RAO NANDIKONDA

¶8

WRIT PETITION NO: 32633 AND 32578 OF 2024

¶9

WRIT PETITION NO: 32633 OF 2024

¶10

Between:

¶11

M/s. Optum Global Solutions lndia Private Limited., sth, 6th and 7th floor, Office Level Building No. 14, Sundew Properties, SEZ (lVindspace), APIIC Layout, Survey No. 64, Hi-Tech City, [Vadhapur, Hyderabad 500081, Telangana Through its Authorized Signatory, IMr. Anuj Jain S/o Shri Anil Kumar Jain, Occ. Director, Taxation, aged about 42 years, Rl/o Gurugram

¶12

...PETITIONER

¶13

AND

¶14

Principal Commissioner of lncome Tax, Circle 4, A-Block, 2nd Floor, I T Tower, AC Guards, ft/lasab Tank, Hyderabad, TG, 500004

¶15

Assistant Commissioner of lncome Tax, Circle 5(1), Hyderabad, B-Block, 2nd Floor, I T Tower, AC Guards, [/lasab Tank, Hyderabad, TG, 500004

¶16

...RESPONDENTS

¶17

Petition under Article 226 of the Constitution of lndia'praying that in the circumstances stated in the affidavit filed therewith, the High Court may be^pleased ----- to-(a)-lssue a Writ of mandamus;or aWrit in the nature of mandamus quashinglhe---lmpugned Notice dated 14.10.2A24. (b) lssue a Writ of mandamus, or a Writ in the nature of mandamus declaring that the Petitioner is entitled to the MAT credit of the amalgamating entity. (c) For such further and other reliefs, including costs of this Petition, as this Hon'ble Court may deem fit and proper in the nature and circumstances of the case. (d) Award the costs of this Writ Petition in favour of the Petitioner and against Respondents

¶18

lA NO: 1 OF 2024

¶19

Petition underSection 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to grant

¶20

stay of operation of the^{lmpugnedNoticedated14.10.2024 as well as consequent} proceedings/actions

¶21

Counsel for the Fetitioner:^{SRI KAMAL SAWHNEY REPRESENTING FOR SRl.} MAMILLA ASHWIN REDDY

¶22

counsel for the Respondents:^{sRt K. suDHAKARREDDY (Sr. SC FOR INCOME} rAx)

¶23

Between:

¶24

M/s. Optum Global Solutions^{lndia Private Limited, Sth 6th and 7th floor,} Offic.-level Building No. 14,^{Sundew Properties,SEZ.(tVlindspace)'-APllC} Layout, Survey Noi. 64,^Hi-Tech -City,^{tt/adhapg1, Hyderabad 500081,} feirngbnu Through its Authorized^{Sigriatory,N/lr. Prateek Gqqta S/o Shri} nrvin<i'Gupta, Oc6. Associate^{Directorl Taxation,aged about 42 years, Rl/o} Gurugram

¶25

...PETITIONER

¶26

AND

¶27

Principal Cornmissioner of^{lncome Tax, Circle4,A-Block,2nd Floor, I T} Towei, AC Guards, fVlasab^{Tank. Hyderabad, Telangana, 500004}

¶28

Assistant^{rlommissioner} of^{lncome Tax, Circle 5(1), Hyderabad, B-Block, 2nd} Floor, I T Tower, AC Guards,^{fMasab Tank, Hyderabad, Telangana, 500004}

¶29

...RESPONDENTS

¶30

Petition under Article 226^{of the Constitutionof lndia praying that in the} circumstances statedⁱⁿ the^{affidavitfiled therewith, the High Court may be pleased} to(a) To lssue a Writ of^{mandamus,or a Writ in the nature of mandamus quashing} the impugned Notice^{dated 14.10.2024.(c) lssuea Writ of mandamus,or a Writ in} the nature of mandamus^{declaringthat the Petitioner is entitled to the MAT credit of} the amalgamating entity.^{(e) For such further and other reliefs, including costsof} this Petition, as this Honble^{Court may deemfit and proper in the natureand} circumstances of the^case.

¶31

lA NO: 1 OF 2024

¶32

Petition under Section 151 CPC^{praying that in the circumstancesstatedin} the affidavit filed in^{supportof the petition, the High Courtmay be pleasedto grant} stay of operation of the^{lmpugned Notice dated 14.10.2024 as well as consequent} proceedings/actions

¶33

Counsel for the Petitioner: SRI KAMAL^{SAWHNEY REPRESENTINGFORSRl.} MAMILLA ASHWIN REDDY

¶34

Counsel for the Respondents:^{SRI K. SUDHAKAR REDDY (Sr. SC FOR INCOME} rAx)

¶35

The Court made the following: COMMON^ORDER

¶36

THE N' SRI CE AM

¶37

AND

¶38

THE H BLE STT NARS G RAO I{AND OND

¶39

WRTT PETITION^{Nos.32633and 32578of2024}

¶40

COMMON ORDER² her^{rhelton'bteSri Justice t'samKosh;')}

¶41

Heard Mr. Karnal^{Sar,r'hney, learned counsel, representing Mr' Mamilta} Ashwin Reddy,^{learned counselfor [he petitioner,and Mr. K' SudhakarReddy'} learned Standilg^{Counselfor the lncome Tax Departtnent ftrr the respondents'}

¶42

These are two matters^{dealing with the same issue in respectof the sanle} petitioner / assessee,^{exceptfor the assessment years' Since the grounds of} chatlenge of^{the impugned orders beingsame,we proceed to decidethe two u'rit} petitiols by this common^{order. Writ Petitiop No.32633 of 2024 is ir"r respectof} tlre assessment^{year 2018-19and writ Petition No.32578o{ 2024is in tespect} of the assessment Year^2017-18.

¶43

For convenience,^{the facts in Writ Petition No'32578of 2024at€} discussed hereunder.

¶44

The instant writ^{petitionhas been filed by the petitioner seeking for} issuance of^{a writ of mandamus for quashmentof the impugnednotice dated} 14.10.2024,^{issued by respondentNo.l. It was also sought for by the petitioner}

¶45

¶46

Page2ofll

¶47

for issuance of a writ of mandamus declaring^{that the petitioner is entitled for} Minimum Alternate Tax (MAT) Credit of^{the amalgamtrted entity}

¶48

The facts of the case are that the petitioner is a cornpany incorporated under the Companies Act and is engaged in the^husiness of^infbrmation technology and information technology enabled^{services-'fhe tnatter involved} in the present c:rse is the r-rotice issued by respondent No.l,^{dated 14.10.2024,} under Section 263 of the [ncome Tax Act, 1961 (brieflv,'the Act'hereinatter) for the assessmentyear 2017-18. The petitioner enjovs an interim^protection of this Court granted on22.11.2024 till date. The notice under challenge is^one seeking for explanation from the petitioner as to why the MAT Credit amounting to Rs;.21 ,28,50,6701- pertaining to another entity namely M/s. United Health Group Information Services Pvt. Ltd., which is the arnalgarnating entity, be not disallowed and the same amount be recovered rvith interest tl'om the petrtroner.

¶49

It is pertinent to mention that the aforesaid MAl' Credit was allowed to the petitioner by way of a rectification order dated 03.09.2022, which was passed after due verification. It is this rectified order which is now sought to be revised and for rvhich the impugned notice has been issued

+:II

Page3ofll

Learned counsel for^{the petitioner has challenged the impugned notice}

¶55

primarily on the following^{two grounds:-}

¶56

I T'hat the impugned^{notice is without any jurisdiction,as the very} basis of the impugned^{notice i.e. the rectificationorder dated} 03.09.2022 has^{becol11e non-est in vierv of the newly inserted} provision under Section^{gzCD (3) of the Act as a resultof the} Advance Pricing^{Agreement(APA) dated 28.03.2023;and}

¶57

That the impugned^{noticeeven otherwise is ip contravention of the} settled legal^{position so far as an amalgamatedcompany being} entitled to MAT^{Credit pertainingto the transfereecompany after} the amalgamation^{having been takenplace'}

¶58

g. It was the contention^{of the learned counsel for the petitioner that in terms} of the provisions^{of Section92CD (3) of the Act, if the assessee has enteredinto} an Advance Pricing^{Agreetnent with the Central Board of DirectTaxesafter an} assessment^{proceedings has beencompleted, the requirementof law is that the} Assessing Officer^{is required to pass a fresh assessmentorder in accordance} with the Advance^{Pricing Agreement'}

¶59

g. According to^{the learnedcounsel for the petitioner, the original} assessment^{orderwas passedon 26.03.2022, the rectificationorder was passed} \ \

¶60

Page4ofll

¶61

on 03.09.2022 and the Advance Pricing Agreement was entered upon on 28.03.2023. Thus, in view of the said developments, the Assessing Officer is required to pass a fiesh assessment order computing the total incorne in the light of the Advance Pricing Agreement.

¶62

It was al:so contended by the learned counsel for the petitioner that pursuant to the Advance Pricing Agreement, dated 28.03.2022, the petitioner had filed rnodified return on 16.06.2023. According to him, since they have frled the rnodified return in terms of the Advance Pricing Agreernent, the original assessrnent order dated 26.03.2022 and the rectification order dated 03.09.2022 stands completely sub-planted and the Assessing Officer is required to pass a fi'esh assessment order in terms of the Advance l'}ricing Agreement as well as the rnodified return.

¶63

I l. l.earned Standing Counsel for the Income Tax Departrnent, however, opposed the writ petition and contended that since the petitioner had wrongly availed the MAT Credit, the authorities have decided to revise the said order and it was for this reason the impugned notice was issued. According to the leamed Standing Counsel for the Income Tax Department. there is an apparent etror in the rect.ification order granting MAT Credit so far as the transferee entity M/s. United Health Group Information Services Pvt. [,td., there was a

¶64

,,7 }

¶65

Page5ofll

¶66

case of loss of revenue,^{and becauseit was a case of loss of revenue,the order} granting MAT Credit firstly is^{emoneousand secondly is prejudicialto the} interest of the Revenue.^{Hence,the impugnednotice under Section 263 of the} Act issued by respondent^{No.1 cannotbe found lault with.}

¶67

t2. It was also the contention^{of the learned StandingCounsel for the Income} Tax Depaftment that it^{is only a case of noticc rvhichhas been issued. The} petitioner can still submit^{his response and basedon his response, appropriate} order shatt be^{passed by the RevisionalAuthorityi.e. respondent No' l '}

¶68

Lastly, it^{was contended by the leamed StandingCounsel for the lncome} Tax Department that^{the authorities had issuedthe show-causenotice on the} basis of an audit report^{and the objections raised in the auditreporl in respect of} granting of MAT Credit^{to the petitioner. On this count also the impugned} notice does not^{warrant interferenceand thus prayed for dismissalof the writ} petition.

¶69

From^{the factual matrixnarratedin the preceding paragraphs, admittedly} the petitioner^{is a transferee entity from amalgamation proceedings, wherein} I\zus. united Health^{Group InformationServices Pvt. Ltd. got amalgamated with} the petitioner company.^{The originalassessment order for the assesslnentyear} Z0l7-18^{was passed on26.03.2022, which furtherstood rectified on 03 .09-2A22'} /

t /

Page6ofll

Subsequently, under Section 92CD⁽³⁾ of^{the Act, a bilateral Advance Pricing} Agreement was entered on 28.03.2A8 and, based on the said Advance Pricing Agreement, a revised return was filed on 16.06.2023.

¶76

[t would be relevant at this^juncture to take note of the provisions of Section 92CD (3) of the Act, which for ready ref'erence is reproduced

¶77

hereunder:

¶78

"Effect^{to ctdvancepricingagreement.}

¶79

92CD.⁽ l1 *otwithstancling unything to the conlrary utnluinecl in scc:tion 139, v,ht:re un.t,pcrson has entered into anagreement arul prior tct the dote o.f'entertng into the agreement, any return of income hu.s been .t'itrnishetl ttncler the provisions of section l39for any assessment ),ear relevant to a previous year to u,hich such agreement applies, such per.\on .rhall./urni.sh. within a period of three months .from the end of the mctnth in vvhich the .tuid agrr:enxent^y,as entered inlo, a modified relurn in accordance u'ilh und limited lo the agreement.

¶80

{'2) Save^{as rtlhenuiseprovidedin this} section, all other^{prot,isions o-f this} Act shall uppty accordingly as if the modified return is'a return-furnishctl under section 139.

¶81

(3) U tht: a,sse:;sment or reossessment proceedings for an assessment yeor relevant to u previous year to vthich the agreement applies have heen completed be.fore the expiry of period allowed for .fitrnishing o.f ntot{ifietl relurn unc{er sub-,section (l), the Assessing Officer shall. in a cuse u,here modified return is filed in accordance with the provisions of sub-section (l), pass an order modifying the total income of the relevant assessment ),ear^{determinedin such assessment or reassessment, us ihe ca.se mayhe,} huving regurcl to and in accordance with the agreement. "

\ t

,/1

PageTofll

A plain reading of the aforesaid statutory provision clearly^givesan indication ol the fact that once a modified return as per the Advance Pricing Agreement is filed, the said modified return has to be treated as the return^filed under Section 139 of the Act. Sub-Section (3) of Section 92CD also^provides fbr the steps to be taken by the Assessing Officer in the event of^{a modified} return having been filed. The reading of the aforesaid^{provisionof law also} gives a clear indication of the fact that once the modif-red return is filed,^the earlier return filed, the earlier assessment order^passed if^{any, will not be of} much relevance any further and it would lose its^{efficacy for all practical} purposes and a fresh assessment order is what is required to be^{passedand the} Assessing Officer would be at liberty to scrutinize^{the rnodifiedreturn} submitted and pass appropriate orders, which^{thereafterwould be, either} appealable or revisable.

¶86

Whether the amalgamation^{proceedingsand the orderpassedthereon} r.r,ould have a binding effect or not, stands already settled,^{and the fact that it has} binding effect has been recently dealt^with by^{the MadrasHigh Court in the case}

PageSofll

i ! :1 ,i i1ii

of Ponni Sugars (Erode) Ltd.^{vs. Assistant Commissioner of Income-taxr}

¶92

wherein in para6lraph Nos.l2, 15, 17^{and 18, it has beenireid as under}

¶93

" 12.^'l-hc cttra issne invrtlvad in the present writ petitiol.t l.r ns lrt v'hethar tha statcmtnt Ltnder Sec'tion 393 of the Companies Ait,^{1956v'ttttld.fbrntct} part o.f the Sc:hente oj ilrrangement and if so, whether^{the proceedings} .fbr .sanctioning ol' tha Schente ttnder Sections 391 to -'i91^v'ould be^a proceeding in rem?

¶94

The Cult:utta tligh Court in Maan concast Pvl. Lld. &^{anr.Vs LV'ast} []angul lndu.s'tt'iul Devclopntent Corporcttion Ltd. & Ors. lleportedⁱⁿ (201i1 ti()(; Online Cal 19426 also took a similar view' in thc.follov'ing iltannet';-

¶95

";| trans.f'at' v'hich takes place by opercttton oJ !uv'. thercfore, need rutt mect the requirement of the^provisions o.f the Transfer of l'ropert.y Act, 1882 or the Indian Registration Act,^1908. ./.1(.^(Llombay.) Private Ltd.^(supra) has held thar, a scheme undcr ,\ections 391 and 392 of the Companies Act, 1956 fi'umcd^{b7, the Court tn respect of a company. tct pay qf its} cre(litors. v,ould be binding upon the creditor'.s and^the shtrcfutlcler.s o.l'such company. It ha,s held thal. ct^schcme sct'ttlioncd h), the Court does not operate as a mere agreernent betv'een the parties. It becomes binding on the company, c r eLl it o t's ancl the s hareholde rs and has s tatutorl' .for^{ce. "}

¶96

",1 sclrcnte tl'arnalgamation or arrangement documents lhe compromise arrived at between the parties to the scheme^in[er t t,it,os. A scheme may be belween two or more companies.{l

¶97

'1zozo1^{16 rrR-oL} s46

¶98

:,?-'\

¶99

Page9ofll

¶100

may also be between a company and its shareholders or creditors. A proceeding for sanction oJ'a scheme relating lo^a company under the Companies Act, 1956 is a proceeding in ram.

¶101

ln Dalmia Power Ltd. Vs Assislant Comrnissioner of'Income'l-nx. Circle-1, Trichy reported in (2019) 418 ITR 221^(\v[ad), the^Hon'ble Suprerne Court had referred to one oJ'its own decisions und^{held lhut.such} Schemes sanctioned under the Compcrnies Act htts a sttttutory .forcc^und the order is a^judgment in rem. The relevant^portton of^{the ohservolion} reads us hereunder:-

¶102

4.6 Pursuant thereto, the Schemes v,ere sanctioned hy^the (:L7', Chennai vide Ordcrs I 6. I 0. 20 I 7, 20. I 0. 20 I 7, ^ 26.10.2017, 28.12.2017, 10.01.2018, 20.04.20t8^ancl 0i.05.2018; and, vide Orders dated 18.05.2017^emd 30.08.2017 by the NCLT, Guwahati. Accordingly, the^Schemes attaines statutory force J.K.^{(Bom.) (P.)} Ltd. v.^{Nev' Kaiser-} IIIind Spg. & Wvg. Co. Lrd. [1970J 40 Comp. Cas.^{689 not} only inter se the Transferor and Trans-feree Companies.^but also in rem, since there was no objection raised either^{by the} statutory authorities, the Department, or other^{reg,ulutorsor} authorities, ltkely to be affected by the^Schemes.

¶103

On a comprehensive enunteration of the^aJbresaid iudicial^precetlents, it can he summarised and held that the order^{sancttoninga Schemeof} Arrangement pursuant to Sections³⁹¹ to^{394of the CompaniesAct will} have a statutory force, binding on all concerned^{and the sanctittn o/ the} Cottrl would operate as^{a judgmentin rem. "}

¶104

The fact that the scheme of amalgamation^{having a bindingef- ct and} upon reading the provisions of Section 92CD, we are of the^{consideredopinion} that the impugned notice dated 14.10.2024, at this^{juncture was un-calledfor.}

'1 iiii.:

Page l0 of I I

It is also rlecessary to visualize at this^juncture that if the impugned showcause notice is permitted to be proceeded and the rectified order dated 03.09.2022 is ltrund to be en'oneous, it rvould not be o1-much consequence for the reason ol'the subsequent developrnents that have tianspired i.e. the Advance Pricing Agreernent l-reing entered orl 28.03.2023 and the modified retum subrnitted on 16.06.2023.If we permit the show-cause notice to continue, as of no\ /, then the Aclvance Pricing Agreement and the subsequent submission of moditled rcturn u'ould becorne inconsequential. On the other hand, now that the Advance Pricin.q Agreernent has been entered into and the modified return having been submitted, nothing prevents the Assessing Officer from rescrutinizing the modified return treating it to be the returrr filed under Section 139 of the Act ernd pass appropriate fresh assessment order which may also be inclusive of the r.:ontents of the show-cause notice which is now under challenge in the instant wnt petition.

¶109

For the given fbcts and circumstances of the case, we are of the considered opiniorr that the irnpugned show-cause notice is not sustainable and the same deserves to be and is accordingly set aside / quashed. The instant Writ Petition accordingly stands allowed. Consequently, Writ Petition No.32633 of 2024 also stands allowed.

¶110

¶111

Pagellofll

¶112