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2012 Supreme(Del) 211
IN THE HIGH COURT OF DELHI AT NEW DELHI
SANJIV KHANNA, R.V. EASWAR
ALPINE ELECTRONICS ASIA PTE LTD. ...Petitioner
VERSUS
DIRECTOR GENERAL OF INCOME TAX & OTHERS ...Respondent
WRIT PETITON (CIVIL) NO. 7932/2010
Decided On : 24th January, 2012
Mr. Yogesh K. Jagia, Ms. Sandhya Kohli & Mr. Akshay Singh, Advocates.
Mr. Abhishek Maratha, Sr. Standing Counsel & Ms. Anshul Sharma, Advocate.
The principle of estoppel under Section 292BB does not apply when the final assessment order has not been passed, and only a draft assessment order has been issued.
Headnote:
Income Tax Act - Reassessment Proceedings - Section 147/148 - Summary of Acts and Sections: Income Tax Act, 1961 - Section 139(1), Section 147/148, Section 143(2), Section 144C, Section 292BB - The court quashed the assessment proceedings pursuant to the notices under Section 148 of the Act and issued a Writ of Mandamus to the respondents to issue a 'no objection certificate' to the petitioner as per the needs and requirements of the Reserve Bank of India.
Fact of the Case:
The petitioner, a company incorporated in Singapore, sought to close its liaison office in India. The respondent, the Deputy Director of International Tax, initiated reassessment proceedings under Section 147/148 of the Income Tax Act, 1961, alleging that the liaison office was a permanent establishment and had income that escaped assessment. The petitioner challenged the reassessment proceedings and sought a 'no objection certificate' from the Reserve Bank of India.
Finding of the Court:
The court quashed the reassessment proceedings and directed the respondents to issue a 'no objection certificate' to the petitioner as per the needs and requirements of the Reserve Bank of India.
Issues: 1. Validity of reassessment proceedings under Section 147/148 of the Income Tax Act. 2. Requirement of 'no objection certificate' from the Reserve Bank of India.
Ratio Decidendi: The court held that the reassessment proceedings should not continue as no notice under Section 143(2) of the Act was served on the assessee within the stipulated time. The principle of estoppel under Section 292BB was not applicable as the final assessment order had not been passed, and only a draft assessment order had been issued.
Final Decision: The court allowed the writ petition, quashed the assessment proceedings pursuant to the notices under Section 148 of the Act, and issued a Writ of Mandamus to the respondents to issue a 'no objection certificate' to the petitioner as per the needs and requirements of the Reserve Bank of India.
SANJIV KHANNA, J.:
1. The petitioner Alpine Electronics Asia Private Limited is a company incorporated in Singapore and was allowed to open a liaison office in India vide permission granted by the Reserve Bank of India dated 15th July, 1997. The petitioner thereafter obtained registration with the office of the Registrar of Companies vide registration order dated 21st November, 1997. The permission granted by the Reserve Bank of India on 15th July, 1997 was extended from time to time upto 14th July, 2009.
2. On 23rd October, 2008, the petitioner had filed an application with the Reserve Bank of India for closing their liaison office. The Reserve Bank of India vide letter dated 12th February, 2009 asked the petitioner to obtain ITCC or “no objection certificate” from the Income Tax Department in terms of their Master Circular No. 2/2008-09 dated 1st July, 2008.
3. On 27th February, 2009, the petitioner filed an application with the Deputy Director of International Tax for issue of no objection certificate/ITCC. The said application was transferred and assigned to Assistant Director of Income Tax, Circle 1(1), Directorate of International Taxation, the respondent No. 1 herein. In response to the said application, the respondent No. 1 issued letters/questionnaire dated 2nd March, 2009 asking for various details and information, including document and business activities overall and in India, specific financial details, i.e., receipt, income and expenses and year wise details of all purchases and details of services from India or of head office or any group company etc. Details of purchases or sales by the head office or group company to any Indian party, commission income earned by the liaison office in India or the head office or group company in relation to the purchases/sales to Indian parties, copy of ledger account of liaison office in India and account of the head office in the books of the liaison office, details of salary, incentives, bonus etc. paid to the employees, details of distributors, dealers of head office or other group companies in India, copy of self-appraisal of the top three employees and copy of e-mails of the top three employees of the liaison office for the month of October, 2008 to December, 2008 and a sample and details of all products sold in India during the financial year 2006-07 to the current financial year along with details of customers.
4. The petitioner vide letter dated 25th March, 2009 stated that the petitioner was only maintaining a liaison office and was receiving money from abroad for meeting the administrative expenses and it was not authorised to carry on any business activity. The liaison office was doing coordination work and getting market information on behalf of its principal. It was further pointed out that the company in Singapore was a 100% subsidiary of the parent company Alpine Electronics, Japan. The company in Singapore was being liquidated in terms of restructuring plan. The existing business of the Singapore company, i.e., the petitioner had been taken over by another company Alpine Electronics of Asia Pacific company Ltd., Bangkok, which is 100% subsidiary of Alpine Electronics, Japan. The Alpine Electronics of Asia Pacific Company Limited, Bangkok had opened a liaison office in India. Further a new company Alpine Asia Pacific India Limited had also been incorporated in India.
5. It was stated that the Alpine Electronics, Japan had an exclusive distributor agreement with Supreme Hi-Fidelity (P) Limited, who are conducting business activities, including sale etc of the products manufactured by Alpine Electronics, Japan. The sales turnover of the distributor was disclosed and it was stated that none of the sales/purchases had been from India either by head office or by any group company. The sale in India have been made to the distributors Supreme Hi-Fidelity (P) Limited, who continued to be in operation till a recent date under a separate agre
