In Brief
The Supreme Court upheld an Income Tax Department attachment order under Section 281B 1961 targeting Standby Letters of Credit (LCs) opened by Axis Bank in favour of Formula One World Championship Limited (FOWC), worth USD 51.35 million. The Court found that FOWC had earned taxable income in India and was liable to pay tax, despite invoking the LCs immediately after a High Court judgment established this liability. While confirming banks are bound to honour LCs regardless of tax disputes, the Court directed FOWC to deposit USD 15.45 million with the Bombay High Court to secure revenue interests, with the amount to be released to the banks only after FOWC's deposit.
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