Dismissing the petition against single judge order the Court held that; appeal against AO’s Order holding that the transactions made pursuant to the buy back agreement in consequence to the approval of the scheme under section 391 to 393 of the Companies Act requires to be taxed under S. 115-O on the premise that it would constitute dividend and not capital gain is maintainable. Court also held that single Judge, though rightly dismissed the writ on the ground that alternate remedy is available, was not correct in going into the merits of the case, at this stage, while granting liberty to file an appeal. (WP. No. 2063 of 2019 dt. 06-09-2019)
Cognizant Technology Solutions India (P) Ltd. v. DCIT (2019) 418 ITR 576 / 310 CTR 515 / 181 DTR 371/( 2020) 269 Taxman 151 (Mad.)(HC) Editorial : Order of single judge in Cognizant Technology Solutions India (P) Ltd. v. DCIT (2019) 416 ITR 462 (Mad) (HC) is partly affirmed.
S. 115O : Domestic companies-Tax on distributed profits–Charging section –No need for issuance of notice before making a demand–Profits distributed to share holders is deemed to be dividend-Reduction on share capital can be effected by buying back shares–Advance Ruling cannot be given if an enquiry is pending against the assessee-Writ will not normally be issued if there is alternative remedy-Liberty is given to file an appeal. [S. 2(22), 245R, 246A, Art. 226 Companies Act,1956 S. 391, 393]