Genpact Luxembourg S.A.R.L. Vs ACIT (Delhi High Court)
Delhi High Court held that Dividend Distribution Tax (DDT) is liable to be paid by the company which declares, distributes or pays the same. Petitioner, herein, has received interest income from Non-convertible debentures and accordingly cannot be subject to DDT.
Facts- On perusal of the information available with the Department, it appeared that interest income derived from Non-convertible Debentures floated by Genpact India Private Limited had not been appropriately offered to tax due to mischaracterization of income. The petitioner was consequently called upon to show cause why an amount of INR 5,06,00,00,000/- should not be treated as income having escaped assessment.
The writ petitioner impugns the initiation of reassessment pertaining to Assessment Year 2018-19 and which has been commenced in terms of the impugned order dated 29 March 2022 u/s. 148A(d) the Income Tax Act, 1961 read along with the consequential notice dated 30 March 2022 u/s. 148 thereof.
Conclusion- DDT is liable to be paid by the company which declares, distributes or pays the same. The petitioner herein was merely the recipient of the interest income and it was thus, clearly not the entity which had either declared or paid the dividend. Viewed in that context, even if the payment were to be assumed to be dividend, the liability to pay tax thereon could have only been foisted upon the company which had declared, distributed or paid the same. That in the facts of the present case and even if the allegation laid by the respondents were to be accepted would have been GIPL.
