Dismissing a special leave petition (SLP) filed by the Income Tax department to tax the proceeds accrued from FCCB (foreign currency convertible bonds) issued by Reliance Communication in 2006-07, the Supreme court on Monday quashed the contingent tax liability of Rs 4,800 crore.
“The Supreme Court order has quashed contingent tax liability of R-Com for about Rs 4,800 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, India’s fourth-largest telco said in a statement according to LiveMint.
“The Supreme Court order has quashed contingent tax liability of RCOM for about Rs 4,800 crore. Earlier, the Income-Tax Appellate Tribunal and the Bombay High Court had also upheld RCOM’s appeal against the order of the Income-Tax department,” it added.
FCCB is a convertible corporate bond issued by a company to raise money in foreign markets and is an equity-debt instrument.
In 2006-07, R-Com raised around $1.5 billion (approx Rs 6,585 crore) in accordance with Reserve Bank of India guidelines. But Income tax department questioned the the FCCB proceeds as unexplained cash credits.