2025 (10) TMI 1309

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....orders dated 24th March, 2025 passed under Section 201 of the Income-Tax Act, 1961 (for short "the Act") for the A.Y. 2018-19 and A.Y. 2019-20, holding the Petitioner to be an Assessee in default and raising demands of Rs. 79,22,30,683/- and Rs. 191,68,76,677/- respectively. 3. The Petitioner is engaged in the business of grading diamonds. It has entered into a Gem Grading Agreement with its parent, Gemological Institute of America, Inc. ("GIA-US") as per which it pays fees for diamond grading services to GIA US. Apart from grading fees, other payments are made by the Petitioner to GIA US, from which appropriate taxes are deducted. These other payments are not the subject matter of these Petitions. 4. Insofar as the grading fees are c....

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....g Writ Petition Nos. 1430 and 10778 of 2021. These Petitions were allowed, and this Court, vide its judgment and order dated 02.02.2022, quashed the orders passed under Section 201. Being dissatisfied, the Revenue carried the matter to the Hon'ble Supreme Court. The Apex Court vide its judgment and order dated 6th December 2022 passed in SLP (C) No.19873 of 2022 ordered as under: "Having heard Shri Rupesh Kumar, learned Counsel, appearing for the Revenue and Shri Jehangir D. Mistry, learned Senior Advocate, appearing on behalf of the assessee and in the facts and circumstances of the case and considering the fact that the liability of the recipient in the subject-matter of Appeal before the High Court and to avoid any further q....

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.... the present petitions have been filed challenging the orders dated 24th March 2025 passed under Section 201 of the Act, primarily on the ground that the entire basis of the impugned orders under Section 201, i.e. that the grading fees received by GIA US from the Petitioner are taxable in India in the hands of GIA US by virtue of the Petitioner being a PE of GIA US (and hence tax ought to have been deducted at source under Section 195 of the Act), is contrary to the Tribunal's rulings in the case of GIA US. The Petitioner has filed Appeals against the said orders out of abundant caution with a view to save limitation and, without prejudice to the rights and contentions raised in these petitions. 7. Mr. Mistri, the learned Sr. Counsel....

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....n 201 were quashed, then, the Department would not have any recourse against the Petitioner in the event the decisions of the Tribunal in 'GIA US' case were reversed by this Court. 9. Mr. Mistri, in rejoinder, pointed out that the provisions of Section 248 would not apply in the present case and there is no agreement or arrangement between GIA US and the Petitioner whereunder the tax deductible, if any, is to be borne by the Petitioner. He submitted that the if the impugned orders are quashed and set aside, then the Petitioner shall withdraw the Appeals filed by it before the CIT (A) for A.Y. 2018-19 and A.Y. 2019-20 as the same would not survive. 10. We have heard both the sides and have also perused the record with the assis....