Can proceed with reassessment of Tasmac’s returns, HC tells I-T Dept.
Corporation accused of routing its profits to State govt.
The Madras High Court has dismissed writ petitions filed by the Tamil Nadu State Marketing Corporation (Tasmac), which holds exclusive right to sell liquor in both wholesale and retail across the State, against reopening of its tax assessments for previous years on the ground of alleged evasion. The Income Tax Department had accused the corporation of routing its profit to the State government by way of frequent revision of special privilege fee instead of paying dividend from profits after taxation.
Justice S.M. Subramaniam refused to interfere with the decision to reopen the assessments after referring to an observation made by an Assistant Commissioner of Income Tax that Tasmac was adopting a colourable device to evade legitimate payment of tax to the coffers of the Central government.
It was brought to the notice of the court that the special privilege fee was increased every year by way of Government Orders, and accordingly tax exemption was claimed for the fee.
The court was also told that on many occasions that the special privilege fee was increased with retrospective effect after the end of the financial year and a substantial amount of income was taken away from the tax net by claiming it to be the fee paid to the government. Senior standing counsel for the I-T Department Hema Muralikrishnan claimed that Tasmac had falsely shown losses by claiming that all its profits were paid to the government with special privilege fee.