Relief for Huawei: Delhi HC Sets Aside S.148A(3) Order and S.148 Notice, Directs AO to Pass Fresh Reasoned Order [Read Order]
The Court noted that the petitioner, a non-resident entity with no business operations in India, had only received interest from loans given to its subsidiary, on which tax was already deducted under Section 194LC at the concessional rate prescribed under Section 115A.
The High Court of Delhi, granted relief to Huawei by setting aside the order dated 28.06.2025 under Section 148A(3) and the notice dated 28.06.2025 under Section 148 of the Income Tax Act, 1961, and directed the Assessing Officer(AO) to pass a fresh and reasoned order within four weeks.
Huawei Technologies Cooperatief U.A,petitioner-assessee, through counsel submitted that the notice dated 27.03.2025 issued under Section 148A(1) of the Income Tax Act, the order dated 28.06.2025 under Section 148A(3), and the subsequent notice under Section 148 were issued without any material suggesting escapement of income.
It was stated that the petitioner was a non-resident entity with no business operations in India and had only advanced External Commercial Borrowings to its subsidiary, Huawei Telecommunications (India) Company Private Limited, under a Loan Facility Agreement dated 15.12.2014.
The petitioner had received annual interest on which Huawei India had duly deducted tax under Section 194LC. Apart from this, there was no other income for the Assessment Year 2019-20.
The counsel contended that the reassessment proceedings were initiated solely on the basis that the petitioner had not filed its income tax return, even though the entire interest income had already been subjected to tax deduction at source. He relied on the Delhi High Court ruling in Nvent International Holding S.A.R.L. vs. Union of India & Ors. (W.P.(C) 7385/2024), where on identical facts, the Court had quashed similar notices under Sections 148A(1), 148A(3), and 148, observing that a fresh notice could be issued only if new information indicating income escapement was obtained.
It was further submitted that the petitioner, in its response dated 27.04.2025, had explained that the loan transaction was fully covered under Section 194LC and that tax had been deducted at the concessional rate of 5% as prescribed under Section 115A. Hence, the impugned notices and order were without basis and liable to be quashed.
Read More:GST Portal Glitch Generates Personal Hearing Notice after Appeal Decision: Delhi HC Sets Aside Order-in-Appeal
The respondent counsel, submitted that since the petitioner had relied on the Loan Facility Agreement dated 15.12.2014 and Section 194LC of the Act, it was necessary for the Assessing Officer to re-examine all issues raised in the reply and the writ petition before reaching a conclusion on the validity of the earlier order and notice.
He further stated that the order dated 28.06.2025 under Section 148A(3) and the notice issued on the same date under Section 148 could be set aside to allow the Assessing Officer to pass a fresh and reasoned order after considering all relevant documents within four weeks.
Justice V.Kameshwar Rao and Justice Vinod Kumar set aside the order dated 28.06.2025 under Section 148A(3) and the notice dated 28.06.2025 under Section 148. It directed the AO to pass a fresh and reasoned order within four weeks and proceed according to law. The Court clarified that the petitioner-assessee could challenge the fresh order through available legal remedies.
Any pending applications were disposed of as infructuous.
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
