Delhi High Court - Orders
M/S Huawei Telecommunications (India) ... vs The Deputy Director Of Income Tax ... on 9 February, 2024
Author: Yashwant Varma
Bench: Yashwant Varma, Purushaindra Kumar Kaurav
$~42
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 6352/2022
M/S HUAWEI TELECOMMUNICATIONS (INDIA)
COMPANY PVT. LTD. ..... Petitioner
Through: Mr. Arvind Datar, Sr. Adv., Mr.
Tarun Gulati, Sr. Adv. with Mr.
Kishore Kunal, Ms. Ankita
Prakash, Mr. Mahesh Singh,
Advs.
versus
THE DEPUTY DIRECTOR OF INCOME TAX (INV.)-4(3),
NEW DELHI & ORS. ..... Respondents
Through: Mr. Zoheb Hossain, SC with
Mr. Sanjeev Menon, Adv.
CORAM:
HON'BLE MR. JUSTICE YASHWANT VARMA
HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR
KAURAV
ORDER
% 09.02.2024 CM APPL. 46949/2023
1. This application has been moved for modification of Clause 7(iv) of our order dated 30 August 2022 and which restrains the applicant from repatriating royalty or dividend abroad during the pendency of the search assessment proceedings.
2. The genesis of the dispute and the facts which constrained the petitioner to approach this Court were succinctly noticed in our orders of 21 April 2022 and 30 August 2022. While disposing of the writ petition by our order of 30 August 2022, we had, apart from the stipulation referred to above, framed the following directions:-
This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 13/02/2024 at 21:47:23 "7. Having heard the learned senior counsel for the Petitioner and the senior standing counsel for the Revenue, in view of the fact that the Petitioner has agreed to secure the Respondents, we do not wish to go into the merits of the allegations and contentions raised.
Consequently, to balance the equities, without going into the merits of the contentions raised by the respective parties, the present writ petition is being disposed of and accordingly the previous orders dated 21st April, 2022 stands modified to the following extent: -
(i) In addition to the Fixed Deposit Receipt of Rs. 100 crores which was directed to be made by order dated 21st April, 2022, the Petitioner shall prepare another Fixed Deposit Receipt of Rs.100 crores in Axis Bank Account No. 919020017328222, which shall be renewed automatically from time to time. A photocopy of the said FDR shall be filed with the Assessing Officer within a week. The Banker is also directed to ensure that the Petitioner and/or any of its officials/nominees/authorized representatives do not deal with the FDR in any manner. There shall be a lien in favour of the Department with respect to both the FDRs till conclusion of the assessment proceedings and thereafter the amount will be dealt in accordance with law. The Bankers will issue a letter to the AO acknowledging the lien in favour of the Department
(ii) The Respondents are directed not to release any refund [which is stated to be to the tune of Rs.30 crores (approx.)] to the Petitioner till the assessment proceedings are completed and thereafter the refund shall be dealt with in accordance with law.
(iii) The Respondents are directed to complete the assessment as expeditiously as possible. The parties will be at liberty to apply to this Court to seek a variation of this order.
(iv) The Petitioner shall not repatriate any royalty or dividend abroad. The Petitioner will be at liberty to approach this Court, in case the need so arises.
(v) The Petitioner shall continue to file its monthly statement with the assessing officer of „Payments Received as well as Made‟."
3. Undisputedly, the respondents have failed to conclude the search assessments till date. It is also admitted before us that presently an amount of Rs. 230 crores approximately is held by the respondents This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 13/02/2024 at 21:47:23 pending finalization of those proceedings.
4. Mr. Hossain has referred to the multiplicity of issues which arise for scrutiny, the complex nature of the transactions and the sheer size of the data which is to be analysed as having contributed to the respondent having been unable to conclude the search assessments till date. He, however, on instructions, submits that all endeavour shall be made to conclude the same with due expedition.
5. We note that while restraining the petitioner-applicant from repatriating royalty and dividend abroad, we had reserved liberty to it to approach the Court in case the need so arise. It is in the aforesaid backdrop that both Mr. Datar and Mr. Gulati, learned senior counsels, submit that since more than two years have elapsed and the search assessment is yet to be completed, there exists no justification for the continuation of that condition. It was submitted by learned senior counsels that repatriation of royalty is a contractual obligation and in the absence of any crystallized demand, the conditions as imposed by Clause 7 (iv) are liable to be lifted.
6. Presently and for the purposes of considering the grant of relief to the applicant, we are of the considered opinion that the facts and circumstances warrant the applicant being permitted to repatriate Rs. 97 crores which represents the royalty subject to deduction of tax. The applicant is thus permitted to repatriate moneys payable towards royalty less TDS in the interim and till the matter is taken up for consideration again. We further direct the applicant to provide full and complete details in respect of the royalty repatriation which is proposed to be undertaken to the respondents.
7. This we so provide since substantial deposits have already been made by the applicant and a demand is yet to be formulated. We also This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 13/02/2024 at 21:47:23 take into consideration the fact that Clause 7(iv) was clearly intended to be a temporary measure liable to hold the field till such time as the search assessment is completed. We had at that time proceeded on the premise that the assessment would conclude shortly or at least within a reasonable period of time. However, almost two years have passed since then. The assessee, thus, cannot be compelled to default on its contractual obligations.
8. We consequently request the respondents to make all endeavours to ensure that the search assessment is completed with due expedition and preferably by 31 December 2024. The applicant petitioner shall render full cooperation towards that end.
9. Insofar as the declaration of dividend and its pay-out is concerned, we defer consideration of that issue at this stage.
10. Let the matter be called again to review progress on 14.02.2025.
YASHWANT VARMA, J.
PURUSHAINDRA KUMAR KAURAV, J.
FEBRUARY 9, 2024/neha This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 13/02/2024 at 21:47:24