Global Publishing Solutions Limited Vs DCIT (Madras High Court)
The Madras High Court disposed of a writ petition challenging a draft assessment order and its corrigendum relating to the petitioner’s assessment for Assessment Year 2018-19. The petitioner, a subsidiary of an Indian company, had received payments from its parent company for services rendered. Tax had not been deducted at source under Section 195 of the Income-tax Act on those payments, resulting in separate proceedings against the Indian company, which were pending before the appellate authority. Meanwhile, the Income-tax Department initiated reassessment proceedings against the petitioner by issuing notices under Sections 148A and 148. After receiving the notice under Section 148, the petitioner filed its return of income. However, the Assessing Officer initially passed a draft assessment order on a best judgment basis, stating that no return had been filed. A corrigendum was issued the following day acknowledging the return of income but otherwise retaining the original conclusions.
The petitioner challenged the proceedings on two principal grounds. First, it argued that proceedings against the Indian company for failure to deduct tax at source under Section 195 were already pending and that, depending on their outcome, the Indian company would discharge the petitioner’s tax liability. Consequently, simultaneous proceedings against the petitioner could result in double taxation. Secondly, the petitioner contended that once its return of income had been filed, proceedings under Section 144, which applies where no return is filed, were no longer appropriate. It argued that the Department ought to have proceeded under Section 143(2) after taking the return into consideration.
