New Delhi: The Delhi high court on Monday (January 19) has set aside income tax reassessment notices issued to NDTV founders Prannoy Roy and Radhika Roy in March 2016 in connection with interest-free loans extended by RRPR Holding Pvt Ltd, the media company’s promoter entity. The court also imposed costs of Rs 2 lakh on the Income Tax Department for what it termed an unwarranted exercise of reassessment powers.

A division bench comprising Justices Dinesh Mehta and Vinod Kumar held that the tax department’s action was legally unsustainable and directed it to pay Rs 1 lakh each to Prannoy Roy and Radhika Roy as token costs.

As per Bar and Bench, delivering its verdict, the bench stated: “As a conclusion to the foregoing discussion, both the writ petitions are allowed. Notices dated March 31, 2016, issued to the petitioners and any consequent order or proceedings thereto are quashed. No amount of cost can be treated as enough for these cases. However, we cannot leave these cases without imposing any. Hence, we impose a token cost of Rs 1 lakh to be paid by the respondents to each ft he petitioners."

The court further ruled that all the proceedings flowing from the impugned notices stood nullified.

The dispute traces back to interest-free loans provided by RRPR Holding Pvt Ltd, in which the Roys held directorship positions and owned 50% shares. The Income Tax Department had first reopened the couple’s assessment for 2009–10 in July 2011 to scrutinise transactions related to NDTV’s share dealings and funds received from RRPR. After examining the material on record, the assessing officer concluded in March 2013 that no taxable addition was warranted on account of the loans.

Despite this, the department issued fresh reassessment notices in 2016, alleging that the notional interest on the loans constituted “deemed income” under Section 2(24)(iv) of the Income Tax Act. The move followed complaints and documents obtained after RRPR’s tax jurisdiction was transferred.

Challenging the renewed proceedings, Prannoy and Radhika Roy approached the high court in November 2017. The Roys argued that the reassessment amounted to a prohibited second reopening of the same assessment year. They pointed out that once an assessment is reopened, the tax authority is empowered to examine all aspects of under-assessed income, and therefore the department could not later claim that its earlier scrutiny was limited.

Their legal team also maintained that the fresh notice represented a “change of opinion”, which is barred under established tax jurisprudence, Bar and Bench reported.

The court was informed that separate reassessment proceedings against RRPR Holding are already sub judice before the high court, with a stay on final orders in place. A different bench had earlier quashed the notice issued to RRPR in September 2024.

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