The Commissioner of Income Tax - International Taxation -3 V. Toshiba Corporation

CW/20836/2025

AI Insights

The case involves an appeal by the Commissioner of Income Tax - International Taxation -3 against Toshiba Corporation, concerning the nature of a transaction involving the purchase of shares from non-resident sellers. The core issue was whether the Assessing Officer was justified in re-characterizing the transaction as a 'sale of assets' instead of 'sale of shares', which led to a different tax treatment. The Tribunal and the High Court found that the AO had overstepped his jurisdiction by changing the nature of the transaction without any substantive evidence, and upheld the assessee's method of tax deduction at source.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 833194 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 28-01-2026
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: ANKUL GOYAL
• Assessee Lawyers: RUCHIR BHATIA; ANANT MANN
• Keywords: Income Tax; International Taxation; Tax deduction at source; Purchase and Sale of Shares; Re-characterization of Transactions
• Section: 201(1); 201(1A)

Judgement Text

"$~63 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 60/2026 & CM APPL. 5764/2026, CM APPL. 5765/2026 THE COMMISSIONER OF INCOME TAX - INTERNATIONAL TAXATION -3 .....Appellant Through: Mr. Ruchir Bhatia, SSC with Mr. Anant Mann, JSC. versus TOSHIBA CORPORATION .....Respondent Through: Mr. Ankul Goyal, Advocate. CORAM: HON'BLE MR. JUSTICE DINESH MEHTA HON'BLE MR. JUSTICE VINOD KUMAR O R D E R % 28.01.2026 1. The instant appeal is directed against the order dated 26.07.2024 passed by the Income Tax Appellate Tribunal, Delhi Bench “D”, Delhi (hereinafter referred to as „the Tribunal‟) whereby, the appeal filed by the Department was rejected by the Tribunal on the ground that the Assessing Officer has assumed the transactions of purchase and sale of shares to be that of purchase and sale of assets, without there being any material on record. 2. While holding so, the Tribunal recorded its findings in paragraph 8 and 9 which are reproduced hereinbelow:- “8. We have heard the submissions made by rival sides and have examined the orders of authorities below. It is an undisputed fact that the assessee has deducted tax at This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 30/01/2026 at 13:04:06 Printed from counselvise.com source on the payments made for purchase of shares from the non-resident sellers namely; Sangista Kshetry, Hersh Kshetry & Nina Kshetry. 9. A perusal of order passed u/s. 201(1)/201(1A) of the Act shows that the Assessing Officer has passed an order purely on surmises and conjectures changing the nature of transaction of 'sale of shares' to 'sale of assets'. The AO in proceedings u/s 201 of the Act has gone beyond his jurisdiction in re-characterizing nature of transaction. Further it is an undisputed fact that the assessee has deducted tax at source @10% plus surcharge on consideration paid for purchase of shares and has deposited the TDS to the Government exchequer. Thus, in light of undisputed facts the assessee cannot be held an “assessee in default”. We find no infirmity in the impugned order; hence, the same is upheld.” 3. On going through the record, more particularly, the order of the Assessing Officer (AO) dated 12.11.2021, we find that the AO has raised a demand of interest under Section 201(1A) of the Income Tax Act, 1961 holding that the respondent-assessee has deducted tax at source with lower rate while considering the purchase to be that of shares, whereas the purchase, as a matter of fact was that of assets. 4. While holding that in matters relating to deduction of tax that too when the respondent-assessee had correctly considered the transaction to be purchase of shares, the AO could not have gone into the exercise of holding that the purchase as a matter of fact was that of assets. 5. We do not find any reason to interfere in the findings recorded by Commissioner of Income Tax (Appeals)-43 and the Tribunal, as no question of law arise out of concurrent findings recorded by two appellate authorities. The appeal, therefore fails. This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 30/01/2026 at 13:04:06 Printed from counselvise.com 6 The appeal with all pending applications stand disposed of. DINESH MEHTA, J. VINOD KUMAR, J. JANUARY 28, 2026/MR This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 30/01/2026 at 13:04:06 Printed from counselvise.com "