Supreme Court Upholds Quashing Of Income Tax Reassessment Against BPCL Over ₹37.10 Crore Dividend Income
Kirit Singhania
16 March 2026 3:00 PM IST
The Supreme Court on Monday refused to interfere with the Bombay High Court's order quashing income tax reassessment proceedings initiated against Bharat Petroleum Corporation Ltd. (BPCL) for AY 2013-14 in relation to Rs 37.10 crore dividend income received through a trust structure.
A bench of Justices Pamidighantam Sri Narasimha and Alok Aradhe dismissed the Special Leave Petition, after being informed by the counsels that a previous matter on the same subject was dismissed by the supreme court.
Bharat Petroleum Corporation Ltd (BPCL), a public sector oil marketing company had claimed exemption on certain dividend income received through the Bharat Petroleum Corporation Ltd. Trust for Investment in Shares (BPCL Trust), which was created following the amalgamation of Kochi Refineries Limited with BPCL in 2006. The trust held BPCL shares issued under the merger scheme and BPCL remained its sole beneficiary.
For the assessment year 2013 to 2014, BPCL filed its return of income on November 22, 2013 declaring total income of about Rs. 3,533 crores. The company disclosed dividend income of Rs. 179.44 crore, including Rs. 37.10 crore received from the BPCL Trust. It claimed exemption under the Income Tax Act.
After scrutiny, the Assessing Officer passed an assessment order on January 30, 2017, examining the claim of exempt income and making certain disallowances.
On March 23, 2021, the Income Tax Department issued a notice under Section 148 seeking to reopen the assessment on the ground that income received from the BPCL Trust did not qualify as an exempt dividend since the trust was not a company covered under Section 115-O of the Act.
BPCL filed objections on June 18, 2021, contending that all material facts relating to the trust and the dividend income had already been disclosed during the original assessment. The objections were rejected on February 17, 2022, following which BPCL approached the Bombay high court.
The Bombay High Court on July 3, 2025, held that the reopening was unsustainable as there was no failure on BPCL's part to disclose “material facts” during the original assessment and that the reassessment was based merely on a change of opinion. The court quashed the reopening notice.
The Supreme Court dismissed the Income Tax Department's appeal thereby upholding the Bombay high court's decision.