HUAWEI INTERNATIONAL PTE LTD vs. ASSISTANT COMMISSIONER OF INCOME TAX & ANR.

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W.P.(C)/17561/2022HC DelhiDLHC01048682202226 March 2025Author: HON'BLE MR. JUSTICE VIBHU BAKHRU,HON'BLE MR. JUSTICE TEJAS KARIA3 pages
AI SummaryPartly Allowed

What did the High Court hold?

The Delhi High Court noted that a final assessment order under Section 143(3) read with Section 144C(13) of the Act had been passed. Given this development, the Court deemed it inappropriate to delve into the controversy of whether the amounts received by the petitioner were chargeable to tax as royalty. Consequently, the writ petition was disposed of. The Court clarified that all rights and contentions of the parties were reserved. It further directed that if the petitioner filed an appeal before the Income Tax Appellate Tribunal within four weeks, it would be considered on its merits without being influenced by any delay. Interim orders were extended for four weeks.

What were the facts?

The petitioner, Huawei International Pte Ltd, filed a writ petition before the Delhi High Court challenging notices issued under Section 148 and Section 148A of the Income Tax Act, 1961, and an order passed under Section 148A(d) for Assessment Year 2014-15. The petitioner's primary contention was that the order under Section 148A(d) was beyond the period of limitation. However, the petitioner's counsel conceded that this specific issue did not arise in the present case. The counsel then argued that the Revenue erroneously treated income received by the assessee as chargeable to tax in India as royalty, relying on the Supreme Court decision in Engineering Analysis Centre of Excellence Pvt. Ltd. A draft assessment order was passed, and objections were filed before the Dispute Resolution Panel, which were disposed of. A final assessment order under Section 143(3) read with Section 144C(13) was subsequently passed.

What were the issues?

1. Whether the order passed under Section 148A(d) of the Income Tax Act, 1961, was beyond the period of limitation, turning on the interpretation of the relevant time-bar provisions. (Assessee's initial contention, later withdrawn). 2. Whether the income received by the assessee is chargeable to tax in India as royalty under the Income Tax Act, 1961, in light of the Supreme Court decision in Engineering Analysis Centre of Excellence Pvt. Ltd. v. Commissioner of Income Tax & Anr. (2021) 432 ITR 471 SC. Assessee's Contentions: - The order passed under Section 148A(d) was beyond the period of limitation (later conceded not to arise). - The Revenue's premise that the income received is chargeable to tax in India as royalty is erroneous, relying on the Supreme Court decision in Engineering Analysis Centre of Excellence Pvt. Ltd. Revenue's Contentions: - The judgment records no specific contentions from the Revenue regarding the issues framed.

Which sections of the Income-tax Act were involved?

Section 148,Section 148A,Section 143(3),Section 144C(13)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
$~86 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 17561/2022 HUAWEI INTERNATIONAL PTE LTD .....Petitioner Through: Ms Kavita Jha, Sr. Advocate with Mr Himanshu Aggarwal, Advocate. versus ASSISTANT COMMISSIONER OF INCOME TAX & ANR. .....Respondents Through: Mr Vipul Agrawal with Ms Sakshi Semwal and Mr Akshat Singh, Advocates. CORAM: HON'BLE MR. JUSTICE VIBHU BAKHRU HON'BLE MR. JUSTICE TEJAS KARIA

O R D E R % 26.03.2025

1.

The petitioner has filed the present petition, inter alia, praying as under: “a) Issue a writ of certiorari or writ, order or direction in the nature of certiorari, or any other appropriate writ, order or direction under Article 226 / 227 of the Constitution of India quashing: (i) Notice dated 15.04.2021 issued under section 148 [as it existed prior to substitution vide Finance Act, 2021, w.e.f. 01.04.2021, and now deemed to be notice under section 148A(b)]; (ii) Letter/ notice dated 27.05.2022 providing so- called “information” forming the basis of the impugned proceedings under section 148/148A, pursuant to the judgment of the Hon’ble Apex Court [2022] 444 ITR 1 (SC); (iii) Impugned order dated 27.07.2022 passed under This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 01/07/2025 at 21:37:12

section 148A(d) and consequential notice of even date issued under section 148 of the Act; in the case of the Petitioner for assessment year 2014-15, and all actions/ proceedings consequential thereto.”

2.

The principal contention advanced by the petitioner is that the impugned order passed under Section 148A(d) of the Income Tax Act, 1961 [the Act] was beyond the period of limitation. However, the learned Senior Counsel appearing for the petitioner fairly states that the said issue does not arise in the present case. She, however, submits that the Revenue has proceeded on an erroneous premise that the income received by the assessee is chargeable to tax in India as royalty. She seeks leave to rely on the decision in the case of Engineering Analysis Centre of Excellence Pvt. Ltd. v. Commissioner of Income Tax & Anr. : (2021) 432 ITR 471 SC and on the strength of the said decision contends that the Revenue’s stand is erroneous.

3.

A draft assessment order has been passed treating the income of the petitioner as royalty and the petitioner had filed objections in this regard before the Dispute Resolution Panel, which have since been disposed of. The final assessment order dated 30.03.2024 has been passed under Section 143(3) read with Section 144C(13) of the Act. In the given circumstances, we do not consider it apposite to enter into the controversy whether the amounts received by the petitioner are chargeable to tax under the Act as royalty. Accordingly, the present petition is disposed of.

4.

We clarify that all rights and contentions of the parties are reserved. We further direct that in the event the petitioner files an appeal before the Income Tax Appellate Tribunal, within a period of four weeks from date, the same would be considered on merits uninfluenced by the question of delay. This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 01/07/2025 at 21:37:12

The interim orders passed by this court are also extended for a further period of four weeks. VIBHU BAKHRU, J TEJAS KARIA, J MARCH 26, 2025/tr Click here to check corrigendum, if any This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 01/07/2025 at 21:37:12

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