Informist, Tuesday, Nov. 12, 2024

NEW DELHI – The Supreme Court has stayed an order of the Calcutta High Court to treat an amount of INR 324.2 million received by ITC Ltd. from ELEL Hotels & Investment Ltd. in a settlement as revenue receipt and not long-term capital gains. It issued a notice to the principal commissioner of income tax and listed the case for hearing after four weeks.

ELEL Hotels had granted ITC a licence in 1986 to operate Hotel Sea Rock in Bandra, Mumbai, for a period of 25 years, with the option of renewing the licence for a further 25 years by giving ELEL Hotels notice of such intention not less than two years before the expiry of the original term.

In 2005, ITC entered into an agreement with ELEL Hotels under which civil litigations in certain suits and some other disputes were settled for INR 431 million. Of this, the settlement amount relating to the licence was determined to be INR 324.2 million, which was again reduced by an award in 2005.

In the assessment year 2006-07 (Apr-Mar), ITC had disclosed in its tax returns a total income of INR 30.41 billion, which was revised in 2008 to INR 30.40 billion. The company treated INR 324.2 million as a capital receipt and accordingly paid tax on capital gains. The assessing officer treated it as a revenue receipt and levied tax by an assessment order in 2009 under Section 143(3) of the Income Tax Act, 1961, relating to the assessment year 2006-07. The high court affirmed the view taken by the income tax department, after which the company moved the Supreme Court.

On Tuesday, shares of ITC Ltd. ended 0.9% lower at INR 472.85 rupees on the National Stock Exchange. End

Reported by Surya Tripathi

Edited by Rajeev Pai

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