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of <h1>Court Dismisses Writ Petition on Assessment Years 2002-03 and 2004-05</h1> <h3>Convergys Customer Management Versus Assistant Director of Income-tax</h3> Convergys Customer Management Versus Assistant Director of Income-tax - [2013] 357 ITR 177 Issues:1. Reopening of assessments for assessment years 2002-03 and 2004-05.2. Jurisdiction of the assessing officer to issue notices under Section 148.3. Taxability of payments received by the petitioner from its subsidiary.4. Arm's length pricing in international transactions.5. Existence of business connection and permanent establishment in India.6. Applicability of Section 9(1)(v) on interest income.7. Fees for technical services paid to employees seconded to subsidiary.8. Transfer pricing officer's decisions in assessments of subsidiary.Analysis:1. The assessing officer issued notices to reopen assessments for the years 2002-03 and 2004-05 based on various grounds, including payments received by the petitioner from its subsidiary, interest-free loan advanced to the subsidiary, and the existence of a business connection and permanent establishment in India.2. The petitioner challenged the jurisdiction of the assessing officer to issue the notices under Section 148, arguing that no income accrued in India and that the transfer pricing officer had already examined and accepted the arm's length pricing in international transactions.3. The assessing officer rejected the petitioner's objections and directed participation in reassessment proceedings, leading to the petition seeking to quash the notices and orders for both years.4. The court held that the assessing officer is not required to form a definite opinion at the time of issuing notices under Section 148 but must have a prima facie belief of income escapement. The reasons recorded must have a live link with the belief of escapement.5. The court found prima facie material supporting the belief of a business connection and permanent establishment in India, justifying the reopening of assessments under Section 9(1)(i) of the Act.6. Regarding the applicability of Section 9(1)(v) on interest income, the court noted that the section could be prima facie applicable, especially for the assessment year 2004-05 when interest was charged on the loan to the subsidiary.7. However, the court found no substantial material to support the assumption that the salary paid to employees seconded to the subsidiary represented fees for technical services, deeming the conclusion as conjecture.8. The court clarified that the assessments of the subsidiary were not relevant to the present petition and refrained from commenting on their impact on the reassessment of the petitioner.9. Ultimately, the court dismissed the writ petition, vacated interim orders, and imposed costs on the petitioner, emphasizing that no opinion was expressed on the merits of the objections raised by the petitioner.
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