TaxTMI 
TaxTMI 
TaxTMI 
2014 (4) TMI 976
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....gaged in the manufacture and trading of electronic items in India under the brand name "Samsung". The raw materials and spares were imported from the holding company. The sales were "high-seas sales", completed outside the territory of India. The petitioner's stand was that it was not liable to deduct tax from the payments made to the SEC for the goods, the contention being that since the property in the goods was transferred outside the territory of India no income accrued or arose to SEC in India; correspondingly, there was no liability on the petitioner's part to deduct tax from the payments as required by section 195(2). It was also its stand in the return of income filed for the assessment year 2006-07 that since no tax was deductible from the payments, the payments could not be disallowed in the assessment by invoking section 40(a)(i) of the Act. 3. The return of income for the assessment year 2006-07, relevant for the financial year ended 31-3-2006, was filed on 29-11-2006 along with Form No. 3 CEB, declaring a total income of Rs. 36,26,44,434/-. The details of the transactions with the associated enterprises were furnished, including the transactions with SEC. A reference ....
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....d to it under section 148 on 28-3-2011. A draft assessment order was passed by the assessing officer on 30-12-2011, holding that SEC had a fixed place PE in India as its employees who were deputed to the petitioner had a fixed place allotted to them in the office of the petitioner. In the draft assessment order, the view taken was that 10% of the salary paid (by the petitioner) to the expat-employees was attributable to the fixed place PE and was taxable in India. It needs to be mentioned that no part of the sales made by the SEC to the petitioner (high-seas sales) was held attributable to the PE (permanent establishment) and chargeable to tax on that basis. SEC filed its objections to the draft assessment order to the DRP under section 144C of the Act. The DRP called for a remand report from the assessing officer on the submissions made by SEC. In the remand report dated 7-9-2012 by the assessing officer (of SEC), he reiterated that SEC had a fixed place PE in India and submitted that (a) there was such a continuity of dealings between the petitioner and SEC as would amount to a "business connection" between them; (b) SEC was carrying on business in India through its employees sec....
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....and (b) If so, the date of filing the said return No 9 If the answer to item 8 is in the negative please state:- (a) The income originally assessed (b) Whether it is a case of under assessment as to low a rate, assessment which has been made the subject of excessive relief or allowing of excessive loss or depreciation. Rs. 1,62,24,03,720/ u/s 143(3) Yes 10 Whether the provisions of section 150(1) are applicable. If the reply is in affirmative, the relevant facts may be stated against item No. And it may be brought out that the provisions of sections 150 (2) would not stand in the way of initiating proceedings under section 148 of the Income tax Act. No 11 Reasons for the belief that income has escaped assessment: "That information has been received from DDIT, International Taxation, Circle2(2), New Delhi that a TDS survey was conducted on Samsung Electronics India Pvt. Ltd and liaison office of M/s Samsung Electronics Co. Ltd., Korea on 24.06.2010. After that notices u/s 148 were issued for AYrs. 2004-05 to 2009-10 in the case of Samsung Electronics Co. Ltd. Korea and Draft assessment order u/s 148 read with section 144c were passed on 30.12.2011 wherein, 10% mark up was ....
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.... Delhi. i) Whether the Addl. CIT is satisfied on the reasons recorded by the DICT that it is a fit case for issue of a notice under section 148 Recommended accordingly Sd/- (Sukhveer Chaudhary) Add.Commissioner of Income tax, Range-7, New Delhi Whether the CIT is satisfied on the reasons recorded by the ACIT/Addl.CIT, that it is a fit case for issue of a notice under section 148. I have perused the reasons to believe recorded by the Assessing Officer. I am satisfied that it is a fit case for issue of notice under section 148 of the Act. Sd/- 30.3.2013 (Rajnish Kumar) Commissioner of Income tax, Delhi-III, New Delhi Deputy Commissioner of Income tax, Room No.313, C.R. Building, I.P.Estate, New Delhi-110002." In response to the notice, the petitioner filed a letter dated 8-4-2013 stating that the return of income originally filed by it may be treated as the return filed in response to the notice of reopening. Thereafter, on 22.11.2013 the petitioner filed its objections with the assessing officer. These objections were rejected and disposed of by the assessing officer by order dated 20.1.2014, which is impugned herein. RIVAL CONTENTIONS: 7. The common contention take....
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....sis was filed. In this, the aforesaid contentions have been elaborated with reference to the case-law. 8. The further contentions against the notice under section 201(1) and (1A) are that: (i) it is contrary to the directions of the DRP in the case of SEC; (ii) there is no application of mind on the part of the respondent No.1 and (iii) it is barred by limitation. 9. The contention of the revenue is based on a judgment of this court in CIT V. Amadeus India Pvt. Ltd. (2013) 351 ITR 92. The learned standing counsel has also filed an additional affidavit on 12-12-2013. He has further relied on a judgment of a Full Bench of this court in CIT v. Sardari Lal & Co. (2001) 251 ITR 864. Besides, he has strongly contended that the disclosure made by the petitioner in the course of the original assessment proceedings vis-a-vis payments made to SEC was not full and true; the petitioner did not disclose that it did not deduct the tax on such payments. The order of the DRP in the reassessment proceedings of SEC, in his submission, is irrelevant as it is passed in proceedings relating to the recipient of the money and those findings should not be projected into the petitioner's case. DECISION:....