Delhi High Court - Orders
Genpact Luxembourg S.A.R.L vs Assistant Commissioner Of Income Tax, ... on 19 July, 2024
Author: Yashwant Varma
Bench: Yashwant Varma
$~21
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 7784/2022
GENPACT LUXEMBOURG S.A.R.L ......Petitioner
Through: Mr. Percy Pardiwalla, Sr.
Advocate with Mr. Sachit Jolly,
Ms. Disha Jham, Ms. Soumya
Singh & Mr. Devansh Jain,
Advs.
versus
ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE
1(3)(1), INTERNATIONAL TAXATION, NEW DELHI AND
ANR. .....Respondent
Through: Mr. Puneet Rai, SSC with Mr.
Rishabh Nangia, Mr. Ashwini,
Mr. Nikhil Advs.
CORAM:
HON'BLE MR. JUSTICE YASHWANT VARMA
HON'BLE MR. JUSTICE RAVINDER DUDEJA
ORDER
% 19.07.2024
1. Having heard Mr. Pardiwala, learned senior counsel appearing in support of the writ petition, we note that the order under Section 148A(b) of the Income Tax Act, 1961 ["Act"] rested on the following allegations:-
".......On perusal of the information available with the Department, it appears that the alleged interest income derived from NCDs floated by Genpact India Pvt. Ltd, has not been appropriately offered to tax due to mischaracterization of income.
2. Moreover, on perusal of the records of the assessee it is seen that your case has not been picked up for scrutiny assessment u/s 143(3) of the Income-tax Act, 1961. Hence, the true character of these receipts could not be ascertained."
2. As is manifest from the above, the respondents, at that stage, had taken the position that interest income derived from non-
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 25/07/2024 at 20:51:26 convertible debentures floated by Genpact India Pvt. Ltd. had not been "appropriately offered to tax due to mischaracterization of income". However, the ultimate order framed in terms of Section 148A(d) records the following conclusions:-
"The interest claimed liability was fictitious in nature and was only a garb to takeaway funds without paying taxes. As both Headstrong Consulting Singapore Pte Ltd and Genpact Luxembourg have common holding companies and common ultimate holding company, funds were taken out in the form of interest payment on artificial liability instead of declaring dividend. This helped in re- characterizing, what should have been dividend payment, to principal payment, leading to evasion of taxes which should have been paid as dividend distribution tax. Thus, on amount of interest payment out of claimed interest expense, GIPL was needed to pay DDT before remitting it out of country. Headstrong Consulting Singapore Pte. Ltd. played a key role in this scheme and claimed exempt short term capital gain which was not genuine in nature. AO by accepting the claim of Headstrong Consulting Singapore Pte Ltd. without conducting any enquiry has passed an order which is erroneous and prejudicial to the interest of revenue. This interest expenses are claimed against a fictitious liability i.e., funds which were never utilized by the company, but it had to bear the liability. This has led to inflation of business expense and reduction of profitability leading evasion of taxes in India. No scrutiny assessment u/s 143(3) of the Income-tax Act, 1961 was conducted. The nature and source of these receipts have not been scrutinized. The income from the aforementioned receipts has not been offered to tax, and no satisfactory justification has been provided for the same. The information suggests that income earned by the assessee has not been appropriately declared to the tax authorities. Therefore, the aforementioned information suggests that the income chargeable to tax in the case of the assessee for the A.Y. 2018-19 has escaped assessment"
3. It is in the aforesaid context that Mr. Pardiwalla would contend that if the respondents be correct that it was the dividend payment which had escaped assessment, the same cannot possibly be taxed in the hands of the petitioner.
4. Mr. Rai, learned counsel representing the respondents, however, draws our attention to the order dated 29 March 2022 which in turn 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 25/07/2024 at 20:51:26 refers to an order passed by the Commissioner of Income Tax (International Taxation)-2, New Delhi under Section 263 of the Act and which ultimately, came to be set aside by the Income Tax Appellate Tribunal ["Tribunal"]. We are informed that the aforesaid order of the Tribunal forms subject matter of challenge in Commissioner of Income Tax (International Taxation)-2 Vs. Genpact Consulting Singapore PTE Ltd. [ITA 103/2023] which is pending before this Court and is posted for 08.08.2024.
5. Consequently, let this writ petition be also included on our Board of that date.
YASHWANT VARMA, J RAVINDER DUDEJA, J JULY 19, 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 25/07/2024 at 20:51:27