9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (7) TMI 308 - HC - Income TaxReopening of assessment u/s 147 - Accrual of income in India - whether Appellant has permanent establishment in India? - HELD THAT - As decided in Honda Motor Co. Ltd. v Assistant Director of Income-tax, Noida 2018 (5) TMI 265 - SUPREME COURT the proceedings against the Assessee were quashed and the appeal was allowed. The Supreme Court held that the notice for reassessment was based only on the allegations that the Appellant has permanent establishment in India , and that the reopening could not be on such basis once the arm s length procedure had been followed. It must be mentioned at this stage that as far as the impugned order in the present appeal is concerned, the ITAT has gone entirely by the fact that the Supreme Court has allowed the appeal of the Assessee after finding that the arm s length procedure had been followed. Therefore, the orders of the Assessing Officer ( AO ) attributing income to the Assessee s permanent establishment in India could not be sustained in law. Revenue appeal dismissed.
Issues:
1. Reopening of assessment under Section 148 of the Income Tax Act, 1941 for AY 2006-07. 2. Validity of notice for reassessment based on the existence of a permanent establishment in India. 3. Interpretation of the Supreme Court's decision in Honda Motor Co. Ltd. v Assistant Director of Income-tax, Noida (2018) 301 CTR 601 (SC). 4. Consideration of commonality in the Supreme Court's decision for AYs 2004-05 to 2007-08. The judgment dealt with the issue of reopening the assessment under Section 148 of the Income Tax Act, 1941 for AY 2006-07. It was noted that the Allahabad High Court had initially declined to interfere with the matter. However, the Assessee appealed to the Supreme Court, resulting in the proceedings being quashed and the appeal being allowed. The Supreme Court emphasized that the notice for reassessment was solely based on the allegation of the Assessee having a permanent establishment in India, which was not a valid ground once the arm's length procedure had been followed. The Assessee's counsel highlighted that the Supreme Court's decision was applicable to AYs 2004-05 to 2007-08, including AY 2006-07. Additionally, a review petition filed by the Revenue for AY 2007-08 had been dismissed by the Supreme Court. The Revenue indicated a potential curative petition while clarifying that the review petition did not pertain to AY 2006-07, the subject of the present appeal. The High Court observed that the ITAT's decision was based on the Supreme Court's ruling that the arm's length procedure had been adhered to, rendering the AO's attribution of income to the Assessee's permanent establishment in India legally unsustainable. Given the commonality of the Supreme Court's order across AYs 2004-05 to 2007-08, including AY 2006-07, the High Court found no substantial question of law arising from the ITAT's decision and consequently dismissed the appeal.
|
