In Writ Petition before the Delhi High Court (HC) directs to re-adjudicate the proceedings against the Vodafone Mauritius for non-payment of Tax Deduction Source (TDS) on sale of shares of Bharti Airtel.
The bench of Justice Rajiv Shakhder and Justice Mini Pushkarna entertained the writ petition filed by Vodafone Mauritius, a company incorporated in Mauritius. The petitioner side prayed to issue writ of Mandamus / certiorari after examining the validity and legality of the impugned order issued by the Assessing Officer (AO).
Fereshte D. Sethna, counsel appearing on behalf of the petitioner, stated that the allegation against the petitioner is that the company sold shares worth Rs.1295 crores, of an Indian company going by the name Bharti Infotel Pvt. Ltd, against which TDS was not deducted.
Sethna goes on to state that the consideration was paid by another entity, namely, Bharti Enterprises (Holding) Pvt. Ltd. Also added that no TDS was deducted by the Bharti Infotel Pvt. Ltd.
Further the counsel stated that the petitioner has possession of a Tax Residency Certificate (TRC) issued under the laws of Mauritius, and therefore, is entitled to take benefit of the provisions of Article 13 of the Double Taxation Avoidance Agreement (DTAA) forged between India and Mauritius.
Additional to all the contentions, Sethna asserted that no return was filed by the petitioner, the concerned AO had no jurisdiction to trigger the impugned proceedings.
Conversely, Sunil Agarwal, appeared on behalf of the Revenue contended that based on the unamended provision of Section 147 of the Income Tax Act, 1961, since the return was not filed, the concerned AO was within his jurisdiction to commence proceedings under Section 147/148 of the Income Tax Act.
The bench taken notice of an assertion brought by the AO in its contested order, according to which the TRC is not conclusive evidence about whether the assessee is a Mauritius resident for purposes of the DTAA or whether the assessee is eligible to receive benefits under the DTAA.
Furthermore, it was noted that the counsel of the respondent stated that the observations extracted from the impugned order passed under Section 148A(d) of the Act are only tentative and not final.
The HC emphasized that the AO will determine whether or not this is a case that qualifies for the initiation of reassessment procedures.
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