Global Hospitality Licensing SARL Vs Assistant/DCIT (International Taxation) (Bombay High Court)
The Bombay High Court allowed the writ petition challenging a penalty order dated 30 March 2023 passed under Section 271(1)(c) of the Income-tax Act, 1961, along with the consequential demand notice. The petitioner contended that the penalty proceedings could not survive because the Assessing Officer failed to pass an order giving effect (OGE) to the Commissioner of Income Tax (Appeals) [CIT(A)] order within the limitation period prescribed under Section 153 of the Act, resulting in abatement of the assessment proceedings.
The petitioner, a tax resident of Luxembourg, had filed its return of income for Assessment Year 2009-10 declaring nil income and claimed that receipts under the International Marketing Program Participation Agreement (IMPPA) were not taxable in India. During scrutiny assessment, the Assessing Officer treated the receipts as business profits, computed tax liability, and simultaneously initiated penalty proceedings under Section 271(1)(c). On appeal, the CIT(A), by order dated 31 December 2018, held that the IMPPA receipts were in the nature of royalty, directed the Assessing Officer to apply the beneficial tax rate, verify and allow TDS credit, and provide the petitioner an opportunity of being heard before passing the consequential order.
