Bombay High Court grants interim stay on GAAR panel’s directive in Hinduja Global Solutions case

In an interesting development in the case of Hinduja Global Solutions Limited (“HGSL”), the Bombay High Court, by its interim order dated 19 December 2025, admitted the writ petition filed by HGSL and granted interim relief.

Background

The GAAR panel had passed a directive characterizing the treatment of tax losses under the demerger of NXT Digital’s business with Hinduja Global Solutions Limited (HGSL) as an “Impermissible avoidance arrangement” and directed the Deputy Commissioner of Income-tax (DCIT-AO) to disregard the brought forward losses of the demerged undertaking with the income of HGSL.

Aggrieved, HGSL filed Writ Petition No. 4867 of 2025, challenging the invocation of Chapter X-A (GAAR) by the Income-tax authorities in relation to the NCLT-approved demerger of NXTDigital’s Digital Communication Undertaking.

Bombay High Court’s Interim Order

• The Court noted that the petition raises arguable and substantial questions of law, particularly on whether GAAR can be invoked after a binding demerger scheme sanctioned by the NCLT, especially when the Income-tax Department was notified of the scheme and raised no objections at the sanction stage.
• The Court also took note of the petitioner’s contention that Section 72A(4) expressly permits the transfer of accumulated losses and unabsorbed depreciation in a demerger, and therefore the invocation of GAAR meant for anti-avoidance prima facie appears misplaced.
• Considering the absence of any statutory appellate remedy against a GAAR Approving Panel directions, and the existence of a strong prima facie case, the Court granted interim stay of:
  • the reference made under Section 144BA dated 31 March 2025,
  • the GAAR Approving Panel directions dated 30 October 2025, and
  • the assessment proceedings for AYs 2022-23 and 2023-24.
• The writ petition has been expedited and is listed for directions on 19 January 2026, with the possibility of final hearing thereafter.

Kretha Comments

The GAAR Panel’s directive against the Hinduja Group demerger remains in abeyance, providing immediate relief to the taxpayer. The direction raises pertinent questions on the application of GAAR to NCLT-sanctioned corporate restructurings, particularly where statutory conditions under the Income-tax Act are otherwise satisfied.