Petitioner Allowed to Repatriate Rs. 97 Crores as Royalty with Tax Deduction Amid Search Assessment Proceedings.

The HC permitted the petitioner to repatriate Rs. 97 crores as royalty, subject to tax deduction, modifying Clause 7(iv) of a prior order that restricted such repatriation during ongoing search assessment proceedings. The court emphasized the petitioner's contractual compliance and urged the respondents to expedite assessment completion by 31 December 2024. The issue of dividend repatriation was deferred, with a review set for 14 February 2025 to assess case progress. The petitioner must provide repatriation details to the respondents and cooperate fully in the assessment process.

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Issues:
1. Modification of Clause 7(iv) restraining repatriation of royalty or dividend abroad during search assessment proceedings.

Analysis:
The petitioner sought modification of Clause 7(iv) of the court's previous order, which prohibited repatriation of royalty or dividend abroad during the pendency of search assessment proceedings. The court had earlier directed the petitioner to secure the respondents with fixed deposit receipts and had imposed various conditions, including the restriction on repatriation. The respondents had failed to conclude the search assessments, and a significant amount was held pending finalization. The complexity of issues, transaction nature, and data size were cited as reasons for the delay in assessment completion. The petitioner's counsels argued that over two years had passed without completion, justifying the lifting of the repatriation restriction due to contractual obligations and absence of a crystallized demand.

The court, considering the circumstances, allowed the petitioner to repatriate Rs. 97 crores representing royalty subject to tax deduction, until further review. The petitioner was directed to provide full details of the proposed repatriation to the respondents. The court acknowledged the temporary nature of Clause 7(iv) and the expectation of prompt assessment completion, which had not materialized. Emphasizing the petitioner's compliance with contractual obligations and the need for the assessment to be finalized, the court urged the respondents to expedite the process, setting a target completion date of 31 December 2024. The petitioner was required to cooperate fully in this regard. The issue of declaring and paying out dividends was deferred for future consideration, with a review scheduled for 14.02.2025 to monitor progress in the case.

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