Bombay High Court quashes Reassessment against Jetair [Read Order]

Bombay High Court - Reassessment - Jetair - Taxscan

The Division Bench of Bombay High Court has quashed the reassessment proceedings against Jetair.

 The petitioner Jetair Pvt. Ltd was the sole General Sales Agent ( GSA ) for Jet Airways India Limited (Jet Airways) as also sales agent for various other airline companies for which the petitioner receives commission on domestic and international ticket sales for passengers and cargo transport.

Filed its return of income for AY 2013-14 and the commission charged by the petitioner from Jet Airways was reported as a related party transaction in its audited statement. The commission earned from Jet Airways was ₹ 76.85% of the total commission earned in respect of passenger turnover, the petitioner was subjected to scrutiny assessment. The AO made a ₹ disallowance with respect to interest expense on the ground that the petitioner had given interest free loan and advances to subsidiaries and other companies which was deleted in the appeal.

Pardiwalla,who appeared on behalf of the petitioner submitted that the pre-requisite conditions for reassessment were not satisfied.He also submitted that merely on the basis that the petitioner was charging less commission for rendering services as sales agent from Jet Airways (related party) than from others could not be a basis for a belief that income chargeable to tax had escaped assessment.

Suresh Kumar on behalf of the revenue, submitted that under the garb of tax planning, related parties had managed and arranged to pay a lesser rate of commission to suit finance/revenues of the group companies. This was a colourable device, with the aim to evade tax.

The Division Bench of Justice Kamal Khata and Justice Dhiraj Singh Thakur found that AO had not mentioned what was the new tangible material to justify the reopening and what was the material fact which was not truly and fully disclosed.

The impugned order was set aside observing that “ we have no hesitation in holding that the reassessment proceedings were nothing but a case of ‘change of opinion’, which does not comply with the jurisdictional foundation u/s. 147 of the Act.”

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