The main legal point established in the judgment is the significance of jurisdictional facts, such as the existence of a permanent establishment, in determining the validity of reassessment proceedings under Section 148 of the Income Tax Act, 1961.

R.V. Easwar, J.

1. In this petition presented under Article 226 of the Constitution, the petitioner assails the jurisdiction of the respondent to continue reassessment proceedings initiated by notices dated 30.03.2011 issued by the Dy. Director (Intnl. Taxation), Noida under Section 148 of the Income Tax Act, 1961 (‘Act’, for short) and the order dated 08.03.2013 passed by the respondent herein, (hereinafter referred to as “the Delhi officer” or “respondent”) dismissing the petitioner’s objections to the reassessment notices.

2. The petition arises this way. The petitioner is a non-resident company, incorporated in Ireland. It functions in India from DLF Cybercity, Gurgaon, Haryana. It is engaged in the business of Adobe Products - shrink-wrapped/ off-the-shelf computer software. For the first time it filed a return of income for the assessment year 2008-09 on 31.03.2010 with the respondent declaring “nil” taxable income. A notice under Section 143(2) was served on the petitioner on 20.08.2010 in respect of the return. A draft assessment order under Section 144C was proposed by the respondent on 17.12.2010 and the proceedings were referred to the Disputes Resolution Panel (DRP). In the meantime i.e. after the issue of notice under section 143(2) by the respondent and before the preparation of the draft assessment order, a notice under Section 142(1) was issued on 14.09.2010 by the Deputy Director of Income Tax, International Taxation, Noida (hereinafter referred to as “the Noida officer”) calling for a return for the income for the assessment year 2009-10. The petitioner pointed out that the jurisdiction to assess a non-resident company is determined either on the basis of the location of the “permanent establishment” (PE) of the non-resident company or the location of a source of income accruing to the company in India and that the petitioner did not have any source of income in Noida as none of its clients in India were located there, nor did the petitioner have a PE in India. It was accordingly submitted that the notice issued by the Noida officer was without jurisdiction. It would appear that there was no reply to this notice.

3. However, on 30.03.2011 the Noida officer issued notices under Section 148 of the Act seeking to reopen the petitioner’s assessment for the assessment years 2004-05, 2005-06 and 2006-07. These notices were received by the petitioner on 07.04.2011 and on 26.04.2011 the petitioner wrote to the Noida officer informing him that the petitioner was already assessed in India by the respondent (Delhi officer) and, therefore, he had no jurisdiction to issue the notices. No reply appears to have been received for a period of 4 months from the Noida officer. However, on 26.09.2011 the Noida officer wrote a letter to the petitioner enclosing the reasons recorded for reopening the assessments for all the three years. The reasons are identical and they are as follows: -

“Reasons

The assessee is a company incorporated in Ireland. NO return of income has been filed by the assessee for the A.Y. 2006-07 During the year the assessee has received Rs.301731289 for marketing support services from Adobe India which is AE of the assessee.

Indian company is a dependent agent for non-resident company as it works wholly and exclusively for non-resident and completed contracts of non-residents with the distributors in India.

Without prejudice to the above, the assessee’s income is chargeable to tax in India as royalty received by him for licensing software to various customers in India. During the year, the assessee has received Rs.301731289 as fees for marketing and sales commission. Operating Global income of the company is $ 728434 on marketing receipt of $ 593323. Applying the same rate, profit of the assessee on marketing receipt of Rs.301731289 comes to Rs.368112172 for which no return has been filed.

IN the above circumstances, I have reason to believe that income amounting to Rs.368112172/- is chargeable to t