Delhi High Court Rejects Writ Petition of Income Tax Demand Against BT India

Delhi High Court Rejects Writ Petition of Income Tax Demand Against BT India

The Delhi High Court (HC) dismissed the writ petition regarding the Income Tax Demand against BT India. The issue, in this case, was regarding- Whether the proceedings under Sections 201(1) and 201(1a) of the Income Tax Act, 1961 (IT Act) could have been initiated without the concerned officer determining the jurisdictional issue as to whether the remittances made were chargeable to tax?

The HC division bench comprising of Justices Rajiv Shakdher and Talwant Singh stated that the record shows that the application of Advanced Authority Ruling (AAR) was admitted on 7 August 2015.

On behalf of the petitioners, it was contended that the said issue should be decided by the concerned officer at the very threshold.

On behalf of the revenue, it was submitted that there are several recipients in relation whose deductions had to be made by the petitioners apart from BT Plc. It was further submitted that in two assessment years i.e., 2012-2013 and 2013-2014, the petitioners have taken recourse to the remedies available under the Act.

It was contended by the revenue that only a show-cause notice has been issued and therefore, this Court ought not to interfere at this stage in exercise of powers under Article 226 of the Constitution.

Hence, in the instant matter, a large part of the issue was regarding the genesis in the AAR not acting with due alacrity.

The HC heard the submissions of the parties at length and it was of the view that, for the moment, the captioned writ petitions can be disposed of.

The Court gave following directions that are to be followed while disposing of the petition-

- The concerned authority will adjudicate the impugned show cause notices qua which we are told that the petitioners have filed their replies;

- While carrying out the adjudication, the concerned authority will in the first instance determine as to whether or not the jurisdictional facts obtain in the matter i.e. whether the remittances in issue are chargeable to tax;

- The concerned authority will, therefore, in the first instance pass an order on this aspect of the matter;

- The concerned authority on this behalf will give personal hearing to the authorized representative of the petitioner, which will include the advocate engaged by the petitioner;

- Speaking order will be passed and a copy of the same will be furnished to the petitioner;

- The petitioner will have the liberty to assail the same as per law by taking recourse to an appropriate remedy;

- In case, the order passed is adverse to the interests of the petitioner, the same will not be given effect for four weeks, commencing from the date the said order is served on the petitioner;

- In case, the concerned authority feels it is necessary to await the decision of the AAR in the matter concerning BT Plc. it will be free to take this aspect into account as well.