In Brief
The Supreme Court upheld the Income Tax Department's provisional attachment order under Section 281B of the Income Tax Act issued against Letters of Credit (LCs) opened in favour of Formula One World Championship Limited (FOWC). FOWC had received income in India for conducting Formula One races and, following a High Court judgment establishing its tax liability, invoked the LCs to receive funds despite being informed of the attachment order. The Court held the attachment valid and enforceable, but directed FOWC to deposit 15.45 million USD received under the LCs with the Bombay High Court, with the amount released to confirming banks only after FOWC's deposit, thereby balancing tax protection and banking obligations.
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