2014 (8) TMI 1109 - SC - Income Tax

Assessee in default - Non deduction of TDS u/s 192 - Payment of Salary - expatriate employees from Japan - Held that - HC order confirmed 2011 (5) TMI 362 - DELHI HIGH COURT stating even the issue of limitation had become academic as the assessee could not be declared as assessee in default under Section 192 read with Section 201 of the Act. There was a debate on the question as to whether TDS was deductible under the Income Tax Act, 1961, on foreign salary payment as a component of the total salary paid to an expatriate working in India? - This controversy came to an end vide judgment of this Court in the case of Commissioner of Income Tax Vs. Eli Lilly & Co. (India) Pvt. Ltd. (2009 (3) TMI 33 - SUPREME COURT ) - Assessee could not be declared as assessee in default under Section 192 read with Section 201 of the Act for the relevant period. - Decided in favour of assessee.

Summary

Issues Involved:
1. Interpretation of Supreme Court orders on the issue of assessee in default under Section 192 and Section 201 of the Act.
2. Impact of subsequent Supreme Court orders on the assessment years in question.
3. Academic nature of the issue due to Supreme Court rulings.
4. Dismissal of appeals based on the High Court's observation.

Analysis:

1. The Supreme Court analyzed the impugned order of the High Court, which highlighted that the assessee could not be declared as an assessee in default under Section 192 read with Section 201 of the Act. The High Court emphasized that the Supreme Court's direction and subsequent order had clarified the issue of limitation becoming academic. The consequence of the Supreme Court's order was that the assessee for the relevant assessment years could not be treated as an assessee in default, leading to the quashing of proceedings initiated by the Assessing Officer under Section 201(1) and 201(1A) of the Act.

2. The Court concurred with the Tribunal's view that the issue had acquired an academic nature due to the subsequent orders of the Supreme Court itself. The orders passed by the Supreme Court in the appeals of the same assessee for the assessment years in question had rendered the issue moot. Consequently, the Court found no merit in the appeals and dismissed them solely on this ground.

3. The academic nature of the issue arose as a direct result of the Supreme Court's rulings, specifically in the case of the same assessee concerning the appeals for the relevant assessment years. The Court acknowledged that there was no longer any valid reason to decide the issue in light of the Supreme Court's definitive orders, which had conclusively determined the assessee's status in relation to default under Section 201 of the Act.

4. Based on the High Court's observation and the impact of the Supreme Court's orders on the proceedings, the Supreme Court declined to interfere with the impugned order. Consequently, the special leave petition was disposed of in line with the conclusions drawn from the High Court's analysis and the subsequent Supreme Court rulings, ultimately leading to the dismissal of the appeals based on the academic nature of the issue.