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TMI Blog2024 (9) TMI 1128X X X X Extracts X X X X X X X X Extracts X X X X ..... to an end since the liability of the petitioner for the period in question would have to be adjudged lest it be put to prejudice and be compelled to pay the differential tax @ 2.5%. One of the primary grounds of challenge which was noticed by the Court while entertaining the writ petition was of the respondents having accepted the profit attribution rate to be 26%. It was in the aforesaid backdrop that the petitioners appear to have contended that the withholding rate of tax would not exceed 1.04%. However, and since they had been adhering to a withholding tax rate of 1.5%, and which was the rate that was admittedly followed for the period spanning FYs‟ 2018-19 to 2020-21, the Court had in the interim stipulated that the withholding tax rate would be 1.5%. We note that the profit attribution rate of 26% does not appear to be disputed. Notwithstanding the authority having noticed the profit attribution rate, it proceeded to frame a with holding tax rate of 4%. Since the factum of the with holding tax rate not exceeding 1.04%, when computed alongside the profit attribution rate of 26%, was not seriously questioned, we find ourselves unable to sustain the order impugned. The wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that the petitioner had a PE in India but reduced the rate of profit attribution to 26%. The aforesaid judgment rendered by the ITAT came to be affirmed by this Court in terms of its judgment dated 21 December 2018 passed on ITA No. 621/2018. 5. Although the judgment rendered by this Court was challenged before the Supreme Court by way of a Special Leave Petition, the same came to be subsequently withdrawn since the petitioner opted for settlement under the Direct Tax Vivad se Vishwas Act, 2020. However, and relying upon the assessment orders which had been framed for AYs 2001-02 to 2008-09, similar orders came to be passed for subsequent AYs 2009-10 to 2015-16 and AY 2017-18. 6. For FY 2021-22, the respondents issued a with holding tax certificate dated 23 September 2021 taking the same at 4% of the gross receipts. The aforesaid certificate came to be assailed by way of W.P.(C) 13188/2021 and which was disposed of by an order dated 25 March 2022 in the following terms:- 1. The above-captioned writ petitions are directed against the order(s) dated 23.09.2021, passed by the Assessing Officer (AO) in respect of the application(s) preferred by the petitioners under Section 197 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26%. If that figure is taken into account, then surely the withholding rate of tax cannot exceed 1.04% [26% x 10% x 40%]. 3.2. However, Mr Jolly says that since the FY is coming to an end, at this juncture, he does not wish to press the above-captioned writ petitions, but would file a fresh application before the AO for F.Y. 2022-23 . 3.3. Mr Jolly says that, if such an application is filed, the petitioners would like the AO to deal with the contentions raised in the writ petitions. 4. Therefore, while closing the present writ petitions, we wish to observe that in case the petitioners were to move an application under Section 197 of the Act for FY 2022-2023, and if the contentions raised in the writ petitions form part of the said application, including what is noted here in above by us with regard to the attribution of profits to the PE, the same will be dealt with by the AO, as per law. 5. At this stage, Mr Jolly says that the petitioners will move an application for the F.Y.2022-2023, within four weeks of receipt of a copy of this order. In case, such an application is moved, the AO will dispose of the same within four weeks of the receipt of the application. 6. Needless to add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This order of the Tribunal concerned the period spanning between Assessment Years (AYs) 2001-02 and 2008-09. 8.2. Mr Jolly informs us, that pursuant to the Tribunal s order, the Dispute Resolution Panel (DRP), via the order dated 05.05.2022, has accepted that profits could be attributed to the petitioner at the rate of 26%. 8.3. Therefore, what is evident is that if the profit attribution rate applicable to the petitioner is kept at 26%, clearly the withholding rate of tax would get pegged at 1.04% [26% x 10% x 40%.] 9. Mr Jolly, correctly points out, that via the impugned order, the profit attributed to the petitioner is 100%. 10. Messrs Sunil Agarwal and Puneet Rai, who appear on behalf of the respondents/revenue, on the other hand, say that the impugned order alludes to the fact that the petitioner has artificially split the subject contracts into offshore and onshore supplies. 11. It is also Messrs Agarwal and Rai s submission, that a rectification application under Section 154 of the Act has been filed with the DRP, vis- -vis the order dated 05.05.2022. 11.1. We have queried Messrs Agarwal and Rai, as to how the DRP would revise its findings based on the rectification applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 022 and which had provided that in case the petition were to fail, the balance amount calculated at a differential rate of 2.5% would be deposited. It was on the aforesaid basis that the writ petitioners prayed for the matters being heard and disposed of finally on merits and notwithstanding the FY having come to an end. 10. In our considered opinion, para 18 of our interim order clearly requires a finding on merits being rendered irrespective of the FY having come to an end since the liability of the petitioner for the period in question would have to be adjudged lest it be put to prejudice and be compelled to pay the differential tax @ 2.5%. 11. One of the primary grounds of challenge which was noticed by the Court while entertaining the writ petition was of the respondents having accepted the profit attribution rate to be 26%. It was in the aforesaid backdrop that the petitioners appear to have contended that the withholding rate of tax would not exceed 1.04%. However, and since they had been adhering to a withholding tax rate of 1.5%, and which was the rate that was admittedly followed for the period spanning FYs‟ 2018-19 to 2020-21, the Court had in the interim stipulate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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