MPHASIS DEUTSCHLAND GMBH vs. THE ASSISTANT COMMISSIONER OF INCOME TAX

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WP/45710/2017HC KarnatakaKAHC01010803201715 December 2017Bench: B M SHYAM PRASAD7 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that it was premature to interfere with the reassessment proceedings at this stage. The court found that the reasons for reassessment existed and the administrative approval was in order, and the sufficiency of reasons cannot be challenged in writ jurisdiction.

What were the facts?

The petitioner, Mphasis Deutschland GMBH, challenged the initiation of reassessment proceedings under Section 148 of the Income Tax Act for AY 2008-09. The High Court had previously dismissed similar petitions from related companies.

What were the issues?

Whether the reassessment proceedings were validly initiated and whether the High Court should interfere in writ jurisdiction when the proceedings are pending before the assessing authority.

Which sections of the Income-tax Act were involved?

Section 148,Section 147

AI-generated summary — verify with the full judgment below

1/7 IN THE HIGH COURT OF KARNATAKA, BENGALURU

DATED THIS THE 15TH DAY OF DECEMBER 2017

BEFORE

THE HON'BLE Dr.JUSTICE VINEET KOTHARI

WRIT PETITION No.45710 OF 2017 (T-IT)

Between:

Mphasis Deutschland GMBH Rep. by its Authorised Representative Sri K.R.Girish Son of Sri Ratna Krishna Kalpathi Aged about 59 years Koblenzer Strass 34, Post Fsh 12-12, D-56130 Bad EMS Germany.

…Petitioner

(By: Mr.A.Shankar, Advocate)

And:

1.

The Assistant Commissioner of Income Tax

International Taxation, Circle 1(2), BMTC Building

80 feet Road, Koramangala VI Block

Bengaluru 560 095.

2.

The Additional Commissioner of Income Tax

Range-I, International Taxation

BMTC Building, 80 feet Road

Koramangala VI Block, Bengaluru 560 095.

3.

The Deputy Commissioner of Income Tax

(International Taxation), Circle 1(1), Bangalore

Room No.441, 4th floor, BMTC Building 80 feet Road, Koramangala

Bengaluru 560 095.

…Respondents

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This Writ Petition is filed under Articles 226 & 227 of the Constitution of India praying to quash the notice issued under the Provision of Section 148 of the Act issued by the R1 vide Annexure-A vide dated 16.3.2015 for the A.Y.2008- 09 as one without jurisdiction and etc.

This W.P. coming on for Preliminary Hearing this day, the Court made the following:-

ORDER

Mr.A.Shankar, Advocate for Petitioner.

This Writ Petition is filed challenging the initiation of reassessment proceedings against the petitioner – assessee.

2.

This Court has already dealt with similar contentions in the other related Companies of the same group and this Court has already dismissed such Writ Petitions on 21.11.2017 and one such petition, viz., Writ Petition No.45709/2017 (M/s.Mphasis Corporation Vs. The Assistant Commissioner of Income Tax International Taxation and Others) was disposed of with the following observations:- “4. Having heard learned counsel for the petitioner- assessee, this Court is satisfied that it

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is premature for this Court to interfere at this stage in the present reassessment proceedings. Firstly, not only the proceedings have been initiated way-back in the year 2015 and the proceedings are still pending before the said Assessing Authority, who is yet to decide all these objections raised by the assessee by an appropriate order, but also because the nature of objections raised before this Court do not render the proceedings as patently without jurisdiction. The question of approval by higher authority is an administrative job. Even if there is difference of dates in such approval, vide Annexure-E dated 13.3.2015 on the reasons recorded by the Assessing Authority on 16.3.2015, prima facie, it may reflect premature approval on the part of the Additional Commissioner but it need not render the very initiation of proceedings as non- est or void. These proceedings cannot be quashed merely on this ground, as no prejudice is caused to the petitioner by such an administrative approval.

5.

On the contrary, the reasons for initiation of the proceedings as assigned by the Respondent- Assessing Authority and quoted above, prima facie, indicates that the Assessing Authority had

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sufficient and reasonable reasons to initiate such proceedings, as certain payments were made to the Associate Enterprises (A.Es.) of the parent Company of U.S.A. without making suitable Tax Deduction at Source (TDS) rendering such expenses as non-admissible in the hands of the assessee. The said reasons cannot be said to be irrelevant or non-germane for the formation of a reasonable belief about escapement of income as required under Section 147/148 of the Act or initiation of such proceedings for bringing to the tax the income which has escaped assessment.

6.

Therefore, this Court cannot pre-judge as to how the objections of the assessee in this regard will be met by the Respondent-Assessing Authority. Since, admittedly, the proceedings are pending as of now, no pronouncement with regard to merit of such objections can be made at this stage.

7.

The other objections raised by learned counsel for the petitioner assessee are also peripheral in nature and do not want to go to the root of the matter to render such proceedings as being without jurisdiction. The question whether U.S.A. Company has a Permanent Establishment

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in India or not is certainly a mixed question of fact and law and that depends upon several facts to be established by the assessee upon being questioned by the Respondent – Assessing Authority. The process of adjudication of these facts is still underway to be established before the Respondent Assessing Authority. Therefore, this Court cannot render any findings in this regard.

8.

It is always safer and better to leave the determination of such questions of facts at the hands of the Authorities created under the Act upto the Appellate Forums, i.e. Income Tax Appellate Tribunal, which is the final fact-finding body under the provisions of the Income Tax Act, 1961. Cutting short of that procedure and process of assessment would amount to unnecessary interference with such proceedings, which prima facie, appear to have been validly initiated. Therefore, keeping it open for the petitioner-assessee to press the objections before the Assessing Authority and Appellate Authorities under the Act to decide these objections and adjudicate these questions of the assessee at their own level, the present petition is dismissed

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as premature and does not call for any interference by this Court.

This petition is accordingly dismissed. No order as to costs. Copy of the order be sent to the Respondents forthwith.”

3.

Mr.A.Shankar, the learned counsel for the petitioner sought to raise certain more additional points and also rely upon some judgments, however, this Court does not consider it necessary to deal with all contentions separately and in detail at this stage. This Court has found in other Writ Petitions that the reasons for reassessment exist and the approval of Additional Commissioner was in order and being administrative in nature, the impugned reassessment proceedings do not require any interference by this Court. This Court is of the considered opinion that sufficiency of the reasons cannot be the subject-matter of challenge in the Writ jurisdiction under Article 226 of the Constitution of India.

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4.

Therefore, this Court is of the view that the present Writ Petition is also liable to be dismissed in the same terms and is accordingly so dismissed in same terms.

5.

The petitioner–assessee has already approached the Division Bench in Writ Appeal No.6764/2017 (T-IT) [Mphasis Corporation Vs. The Assistant Commissioner of Income Tax International Taxation and Others) against the order passed by this Court on 21.11.2017 in W.P.No.45709/2017 (M/s.Mphasis Corporation Vs. The Assistant Commissioner of Income Tax International Taxation and Others), quoted above and the Division Bench has granted an interim order in the said Writ Appeal on 7.12.2017. The said submission of learned counsel for the petitioner, Mr.A.Shankar, is taken on record.

Sd/- JUDGE VGR

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