The Supreme Court has dismissed the Income Tax Department‘s Special Leave Petition (SLP) against HCL Infosystems Ltd, bringing an end to a nearly three-decade-old tax dispute over the taxability of a ₹60.8 crore compensation received by the company following the termination of its joint venture with Hewlett-Packard (HP).
The ruling effectively quashes a tax demand of ₹14.9 crore raised against the company.
In a regulatory filing on Wednesday, HCL Infosystems said the apex court dismissed the SLP on July 13, 2026, and the company received the order on July 15. The litigation stemmed from compensation received in the financial year 1997-98 after the termination of a joint venture agreement with HP.
The company said it had entered into a joint venture agreement with Hewlett-Packard on April 2, 1991, granting it rights to use the HP brand, manufacture HP products using the company’s technology, and access HP’s patents, copyrights, marketing strategies and product support.
The agreement was terminated on April 1, 1997, following which HCL Infosystems received compensation of ₹60.80 crore from HP.
HCL Infosystems treated the compensation as a capital receipt not liable to tax while filing its income tax return for Assessment Year 1998-99. However, the Assessing Officer classified the amount as taxable capital gains and raised a demand of ₹14.90 crore, a view that was subsequently upheld by the Commissioner of Income Tax (Appeals).
The company subsequently secured favourable rulings from the Income Tax Appellate Tribunal (ITAT) and the Delhi High Court, both of which held that the compensation constituted a capital receipt and was therefore not taxable. Challenging the High Court’s decision, the Income Tax Department approached the Supreme Court by way of an SLP.
