Delhi High Court rejects IT department's order against Vodafone

Delhi High Court rejects IT department's order against Vodafone

The case had come up for reassessment on the ground of doubts

The Delhi High Court has quashed the re-assessment proceedings against Vodafone Procurement Company, Luxembourg, noting that there was a contradiction in the reasons stated by the Income Tax department in the reassessment notice and the proceedings.

The assessee contended that the impugned order and notices were issued contrary to the legal position. It mentioned that a foreign assessee had earned interest income on rupee-denominated bonds issued by an Indian company as specified under the Income Tax Act. As per the rule, the income would be chargeable to tax at a concessional rate of 5 percent and the foreign entity was not required to file the Income Tax Return in India under the IT Act.

But the IT department contended that the petitioner's case had come up for reassessment only on the ground of doubts. The respondent was not clear whether the interest was received by the petitioner-assessee on the rupee-denominated bond issued by an Indian company or a dollar-denominated bonds issued by an Indian company.

The division bench of the high court comprising Justice Manmohan and Justice Dinesh Kumar Sharma observed that the petitioner's case was selected for re-assessment as it was flagged in the Non-Filers Monitoring System.

The court cleared, "There is a contradiction between the reason given by the respondent in the reassessment notice and the defence taken by the respondent in the proceedings."

"Keeping this in view, we quash the impugned order and notices and permit the respondent-revenue to issue a fresh re-assessment notice in accordance with the law. The rights and contentions of all the parties are left open," the bench added.