Delhi HC Quashed Reassessment as AO’s 95%-5% Revenue Split Dispute Found Unjustified: Supreme Court Declines to Intervene [Read Order]
The Supreme Court refused to interfere with the Delhi High Court’s order quashing the reassessment, observing that the AO’s objection to the 95%-5% contractual revenue split was unjustified
Supreme Court, Delhi High Court, Reassessment
Supreme Court, Delhi High Court, Reassessment
In a recent ruling, the Supreme Court of India refused to interfere with the Delhi High Court’s decision quashing a reassessment initiated under Section 148 of the Income Tax Act, 1961, against Trans World International Ltd. LLC.
The appeal arose from a special leave petition filed by the Deputy Commissioner of Income Tax, Circle 3(1)(1), International Tax, New Delhi, challenging the High Court’s order dated 14 August 2024 in W.P.(C) No. 16672/2022.
The High Court had allowed the writ petition filed by the assessee and set aside the reassessment order passed under Section 148A(d) and the corresponding notice issued under Section 148 of the Income TaxAct.
Before the High Court, the assessee argued that the Assessing Officer’s reasoning for reopening the assessment was perverse, as the officer had disputed the 95%-5% revenue bifurcation stipulated in the agreement.
The court observed that the bifurcation was clearly provided in the contract, and the Assessing Officer’s view had no legal basis. Relying on the position in law explained in the Fox Network decision, the High Court ruled that the reassessment proceedings could not be sustained and quashed the impugned orders and notices.
When the matter reached the Supreme Court, the assessee’s counsel explained that the reassessment proceedings were quashed but the assessment itself had been completed pursuant to interim directions of the High Court. The counsel further stated that the assessee intended to file an appeal against the final assessment order in accordance with law, on merits.
Taking note of this submission, the Bench comprising Justice J.B. Pardiwala and Justice K.V. Viswanathan observed that the assessee would challenge the final assessment through the proper appellate channel, so there was no need to examine the Revenue’s appeal on the issue of reopening.
The court pointed out that no useful purpose would be served in continuing the present proceedings and disposed of the appeal accordingly. All pending applications were also disposed of, and the Revenue’s appeal was closed with liberty to the assessee to pursue statutory remedies against the final assessment order.
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