TaxTMI 
TaxTMI 
2022 (3) TMI 481
X X X X Extracts X X X X
X X X X Extracts X X X X
....dated 10th December 2013 impugned in this petition have been challenged on various grounds, the primary ground (even for a moment other grounds are not pressed) is that petitioner was not liable to deduct any tax because petitioner did not make any payment to anybody and, therefore, petitioner cannot be considered to be in breach of the obligation under Section 195 of the Act and consequently, the notice under Section 201 and Section 201(1A) of the Act is not maintainable. 3. Section 195 of the Act says Other sums. 195. (1) Any person responsible for paying to a non-resident, not being a company, or to a foreign company, any interest (not being interest referred to in section 194LB or section 194LC) 92[or section 194LD] or any other sum chargeable under the provisions of this Act (not being income chargeable under the head "Salaries") shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force : ******** Therefore, Section 195 mandates "any person responsible for paying to a non-resident" any s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....which were about 20, spread over 13 countries, are collectively referred to as Techpac Group. 6. Circa 2004, IMAHI acquired the shares of THL, the company incorporated in Bermudas, from its existing shareholders. Petitioner's role in this transaction was that it guaranteed the payment of the sale consideration by IMAHI under the Share Purchase Agreement (SPA) to the sellers, i.e., the existing shareholders of THL. The guarantee never came to be invoked because IMAHI discharged its obligation under the SPA to the sellers and accordingly, petitioner stood discharged of its obligations as a guarantor under the said SPA. 7. Pursuant to the acquisition, the Indian entity of Ingram Group, i.e., IMIPL, was merged into the Indian entity of the Techpac Group, viz., TPIL. Subsequent to merger, the name of TPIL was changed to its present name, viz., Ingram Micro India Ltd. (IMIL). 8. Before we proceed further, it will be useful to scan and reproduce a diagrammatic representation of the transaction to understand the matter easily : 9. On or about 17th September 2007, during the course of search and seizure proceedings at the premises of IMIL, the annual report of petitioner for the year 20....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y respondent no.1 and explaining why provision of Section 201 is not attracted in the case of petitioner and why respondent no.1 had no jurisdiction to pass any order under Section 201 of the Act. Respondent no.1, by an order dated 10th December 2013, rejected the contention of petitioner and held that he had jurisdiction to initiate proceedings under Section 201 of the Act to treat petitioner as an assessee in default for alleged non-deduction of tax on the purchase of shares of THL. It is against this order that petitioner has approached this Court by way of this petition. 12. From the facts narrated above, there is nothing to indicate that petitioner made any payment to anyone. The entire approach in the impugned order is that petitioner made the payment through IMAHI. There is no evidence to that effect. The Assessing Officer is relying on the annual reports of petitioner group where there is a mention that the group has acquired Techpac Group. The Assessing Officer's reliance on the Ingram Group's annual report of 2005 to conclude that it was petitioner who acquired THL is misplaced. A copy of the annual report for 2005 has been placed before us during the hearing. It only in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on resident which is chargeable to tax under the Act and, therefore, there is no question of applicability of Section 195 of the Act to petitioner. 14. Respondent no.1 has gone on an erroneous presumption that petitioner was required to deduct tax at source while making payment under Section 195 of the Act and since petitioner has filed to deduct tax, it is deemed to be assessee in default as per Section 201(1) of the Act and liable to pay tax it had defaulted to deduct while making payment. The fact is petitioner has not made any payment. The obligation under Section 195 of the Act is on a person responsible for paying to a non-resident any sum chargeable under the provisions of this Act and the said person, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, shall deduct income tax thereon at the rates in force. When petitioner has not made any payment and it is not respondent's case that petitioner had directly made any payment, petitioner cannot be the person responsible for deduction of tax. Respondent's assumption that petitioner being the u....