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TMI Blog2012 (12) TMI 609X X X X Extracts X X X X X X X X Extracts X X X X ..... - WP(C) NO. 6468 OF 2010 - - - Dated:- 12-12-2012 - S. RAVINDRA BHAT AND R.V. EASWAR, JJ. S. Ganesh, Anand Sukumar and Bhupesh Kumar Pathak for the Appellant. Sanjeev Sabharwal, Puneet, Gupta and Ms. Gayatri Verma for the Respondent. ORDER R.V. Easwar, J. - This petition under Article 226/227 has been filed in the following circumstances. The petitioner is a company incorporated in USA. It is engaged in the business of providing business process outsourcing services to its clients located worldwide. It has a subsidiary in India which is known as Convergys India Services Pvt. Ltd. (hereinafter referred to as "CISPL"). CISPL renders back office services exclusively to the petitioner-company. 2. In respect of the assessment years 2002-03 and 2004-05, notices for reopening the assessments were issued by the first respondent on 30.3.2007. There were three broad grounds upon which the assessments were sought to be reopened. The first was that the financial statements of CISPL, the subsidiary company of the petitioner, showed that the petitioner received certain payments which in substance represented "fees for technical services" within the meaning o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner had no obligation to file returns in India; (c) the transfer pricing officer, in the course of the assessment made on CISPL had examined the international transactions between the petitioner and CISPL and after due examination the arm's length price stood accepted, pursuant to the orders of the CIT(Appeals) for both the years. In any case, even if any addition is to be made, it can be made only in the hands of the CISPL and not in the hands of the petitioner; and (d) there was no reason to believe that income chargeable to tax had escaped assessment nor was there any tangible material on the basis of which the reopening notices could be issued. 5. The objections were considered and disposed of by the first respondent by order passed on 07.09.2010. In these orders the first respondent rejected all the objections of the petitioner and directed it to participate in the reassessment proceedings and submit the details/information called for by the notices issued by him. 6. It is against the notices issued under Section 148 of the Act on 30.03.2007 and the orders passed on 07.09.2010 disposing of the petitioner's objections that the petitioner has filed the present pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dy and thus there was failure on the part of the petitioner to disclose the source of income in India and all these constituted relevant material for reopening the assessments on the ground of escapement of income. Reliance was placed on the judgment of this Court in Reach Cable Networks Ltd. v. Deputy Director of Income Tax [2008] 299 ITR 316. It was accordingly contended that the notices issued under Section 148 were valid and the first respondent was justified in rejecting the objections of the petitioner. 9. On a careful consideration of the matter we are of the opinion that there is no merit in the petition. It is a well settled proposition that at the time of issuance of the notices under Section 148, the Assessing Officer is not expected to form any definite or conclusive opinion about the taxability of the disputed amounts and that he is only expected to form a tentative or prima facie belief regarding the escapement of income chargeable to tax. The mere failure to file the return of income (though liable to) would invite action to reopen the assessment on the ground of escapement of income and this has been provided in Explanation 2(a) below Section 147. It is also well- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Business connection may take several forms : it may include carrying on a part of the main business or activity incidental to the main business of the non-resident through an agent, or it may merely be a relation between the business of the non-resident and the activity in the taxable territories, which facilitates or assists the carrying on of that business. In each case the question whether there is a business connection from or through which income, profits or gains arise or accrue to a non-resident must be determined upon the facts and circumstances of the case. " In the light of the above observations, where the existence of a business connection was held to depend on the facts of each case, we are of the view that there was prima facie material in the possession of the Assessing Officer to form a tentative belief that Section 9(1)(i) was attracted. This reason by itself constituted a relevant ground to reopen the petitioner's assessments. 12. On the question of the existence of a permanent establishment, it was made clear on behalf of the petitioner in the course of the arguments that the argument against the notices would proceed on the basis that the petitioner had a PE ..... X X X X Extracts X X X X X X X X Extracts X X X X
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