Case Law Details
M/s. WABCO India Limited Vs DCIT (Madras High Court)
On a perusal of the aforesaid show cause notice, it is patently clear that it was accepted that there was transaction between Clayton Dewandre and WABCO, Singapore. In the show cause notice, it was alleged that scrutiny assessment of Clayton Dewandre established that the place of effective management was the United Kingdom, but Clayton Dewandre had deliberately made a paper transaction to obtain undue benefit of the Indo Netherlands treaty. Based on such finding, a draft assessment order had been issued giving rise to possibility of tax liability of Rs.429,39,66,833/- arising in the hands of Clayton Dewandre subject to Clayton Dewandre availing the option to challenge the draft assessment order before the Dispute Resolution Panel.
In the show cause notice, it was alleged that capital gains had directly arisen as a result of the consideration received from the appellant. The respondent, therefore, proposed to treat the appellant as agent of Clayton Dewandre in respect of tax liability that might arise for the Assessment Year 2014-15, on account of capital gain tax. The appellant was called upon to show cause why for the purpose of Sections 160 to 163 of the IT Act, the appellant should not be treated as agent in terms of the provisions of Section 163 (1)(c) of the IT Act. The appellant challenged the aforesaid notice in this Court under Article 226 of the Constitution of India.
Before the learned Single Bench, it was contended that the impugned show cause notice was without jurisdiction as the conditions precedent for issuance of notice under Section 163 (1)(c) of the IT Act were absent. It was also submitted that to treat a person in India as representative assessee/agent of a non-resident, the non-resident must be in India. Clayton Dewandre was not in receipt of any income from the appellant. As such, the show cause notice was not sustainable in law. The learned Single Bench, however, dismissed the writ petition on the ground that the appellant had only challenged the show cause notice and no orders had, till then, been passed by the respondent. It was open to the appellant to give a reply to the show cause notice, which would not prejudice the appellant in any manner whatsoever.
From the order of the learned Single Bench, it is patently clear that the writ petition was dismissed on the sole ground that the appellant had a right to give a reply to the impugned show cause notice and as such, there was no merit in the writ petition. The appellant was directed to reply to the show cause within six weeks from the date of receipt of a copy of the order under appeal. Being aggrieved, the appellant has filed this intra-court appeal.
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