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Genpact Luxembourg S.A.R.L vs Assistant Commissioner Of Income Tax, ... on 20 May, 2022

Author: Manmohan

Bench: Manmohan, Manmeet Pritam Singh Arora

                          $~11
                          *      IN THE HIGH COURT OF DELHI AT NEW DELHI
                          +      W.P.(C) 7784/2022
                                 GENPACT LUXEMBOURG S.A.R.L.                           ..... Petitioner
                                                    Through:     Mr.Percy Pardiwala, Sr.Advocate
                                                                 with Mr.Sachit Jolly, Mr.Rohit Garg,
                                                                 Ms.Disha Jham, Ms.Mehak Sachdeva
                                                                 and Mr.Sonum Dua, Advocates.
                                                    versus

                                 ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE
                                 1(3)(1), INTERNATIONAL TAXATION, NEW DELHI AND ANR.
                                                                               ..... Respondents
                                                 Through: Mr.Puneet Rai, senior standing
                                                          counsel for the Revenue.

                          CORAM:
                          HON'BLE MR. JUSTICE MANMOHAN
                          HON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA
                                                    ORDER

% 20.05.2022 C.M.No.23844/2022 Exemption allowed, subject to all just exceptions. Accordingly, the application stands disposed of. W.P.(C) No.7784/2022 & C.M.No.23843/2022 Present writ petition has been filed challenging the notice dated 11th March, 2022 issued under Section 148A(b) of the Income Tax Act, 1961 ['the Act'], order dated 29th March, 2022 issued under Section 148A(d) of the Act as well as notice dated 30th March, 2022 issued under Section 148 of the Act for the Assessment Year 2018-19.

Learned counsel for the petitioner states that that the allegation in the show cause notice issued under Section 148A(b) of the Act was that the interest income derived from Non-Convertible Debentures ['NCDs'] floated by Genpact India Pvt. Ltd. ['GIPL'] had not been appropriately offered to tax due to mischaracterization of income. He, however states that the order dated 29th March, 2022 issued under Section 148A(d) of the Act states that the interest income earned by the petitioner in pursuance to the NCDs floated by GIPL was fictitious in nature and was, in fact, in the nature of dividend payment by GIPL, which is subject to dividend distribution tax and therefore, income of the petitioner has escaped assessment. He submits that the impugned show cause notice and order have been passed in violation of the principles of natural justice as the respondents did not clarify the nature of the alleged mischaracterization of income and it was only when the impugned order dated 29th March, 2022 was issued that the petitioner came to know that the income alleged to have escaped assessment as per the Assessing Officer was being characterised as dividend income.

Issue notice. Mr.Puneet Rai, learned standing counsel accepts notice on behalf of the respondents. He states that the petitioner knew the stand of the Respondents-Revenue as a draft assessment order u/s 144C of the Act has already been passed in petitioner's case for the Assessment year 2017- 18 on 30.09.2021, in which similar allegations had been made by the Revenue and the said income had been categorized as "Income from Other Sources" falling under Article 22 of the Double Taxation Avoidance Agreement between India and Luxembourg.

In rejoinder, learned senior counsel for the petitioner states that in the impugned order issued under Section 148A(d) of the Act, the income of the Signature Not Verified Digitally Signed By:KRISHNA BHOJ Signing Date:23.05.2022 18:44:51 petitioner in question seeks to be categorized as dividend income for the first time, which, in any event, would be exempt in the hand of the petitioner/assessee and the liability to pay the dividend distribution tax, if any, would be on the payer i.e. GIPL.

This Court is of the view that the matter requires to be examined. Let a counter affidavit be filed by learned counsel for the respondents-Revenue within six weeks. Rejoinder affidavit, if any, be filed before the next date of hearing.

List on 01st September, 2022.

Though the assessing officer is permitted to pass the reassessment/assessment order, yet it is directed that the same shall not be given effect to and shall be subject to further orders to be passed by this Court.

MANMOHAN, J MANMEET PRITAM SINGH ARORA, J MAY 20, 2022 KA Signature Not Verified Digitally Signed By:KRISHNA BHOJ Signing Date:23.05.2022 18:44:51