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Issues involved: Provisional attachment of bank accounts and assets, liability to deduct tax at source on royalty payments, repatriation of funds, financial position of the company, future/projected demand based on tax proceedings.
Provisional Attachment of Bank Accounts and Assets: The petitioner's bank accounts and assets, including trade receivables, loans, and advances, were provisionally attached in an order dated 25.9.2013, causing concern about the company's operations and reputation. The petitioner argued that the attachment would halt operations and damage goodwill, highlighting investments in India and the value of fixed assets. The issue of liability to deduct tax at source on royalty payments was pending before the Income Tax Appellate Tribunal for financial years 2006-07 to 2011-12. Financial Position and Repatriation of Funds: The petitioner contended that the calculations in the impugned order did not reflect the true financial position, emphasizing the company's operations and manufacturing activities in India. The respondent noted a change post an order dated 21.6.2013, mentioning repatriation of funds to the parent company as dividend. Concerns were raised about the agreement between Nokia Corporation and Microsoft Corporation, with uncertainties regarding liabilities and approvals. Future/Projected Demand and Tax Deduction: The future/projected demand in the impugned order was based on disallowance under Section 40(a)(i) for failure to deduct TDS on royalty payments. The petitioner argued that the issue was subjudiced before the Tribunal, indicating potential duplication and penal consequences. An interim order was passed to safeguard the petitioner's assets and operations until the next hearing, restricting certain transfers and requiring compliance with banking procedures. Conclusion: The Court granted time to the revenue to file a reply and imposed interim measures to protect the petitioner's interests. Instructions were sought regarding declarations to safeguard revenue interests in case of tax arrears. The petitioner was directed to continue depositing instalments as per the previous order, clarifying the distinction between instalments and future demands based on pending assessments.
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