PTI
Kolkata, Dec 31: Reliance Industries chairman Mukesh Ambani would contest the income tax notice requiring him to pay tax on deemed income of Rs 26.35 billion for the asessment year 2005 on the ground that 'no tax can be levied on notional income', according to a highly-placed RIL source.
The Mumbai circle of the IT department had issued a notice to Ambani asking him to explain why he should not pay tax on deemed income from the 500 million shares of Reliance Infocomm issued to him in March, 2004.
The valuation of the shares was Rs 26.85 bn from which the tax authorities had deducted Rs 5 million interest-free loan obtained by the company from Ambani.
The RIL source claimed the entire transaction mentioned in the IT notice was subsequently annulled and hence no inome accrued to Ambani, and therefore no tax can be levied on notional income.