OPG Power Generation Private Limited Vs ACIT (Madras High Court)
In this writ petition, OPG Power Generation Private Limited challenged a penalty order dated 29 August 2025 passed under Section 271(1)(c) of the Income Tax Act, 1961 for the Assessment Year (AY) 2016–17. The petitioner had earlier faced adverse orders from the assessing authority, the first appellate authority, and the Income Tax Appellate Tribunal (ITAT). The matter was now before the Madras High Court as part of Tax Case Appeals (T.C.A.) Nos. 117 and 118 of 2025.
The Division Bench of the High Court had already admitted these appeals on 28 July 2025 and framed six substantial questions of law for adjudication. These questions concern the chargeability of freight charges received abroad by non-residents for goods shipped outside India but delivered in India, the applicability of Section 195 relating to tax deduction at source (TDS) on payments to non-resident shipowners, and whether Section 44B—being a special provision with a non-obstante clause—overrides other sections such as Sections 40(a)(i), 195, and 9 in relation to non-resident shipping income.
The other issues framed include whether the Income Tax Appellate Tribunal (ITAT) erred in not applying CBDT Instruction No. 1934, which exempts payments for ocean freight on imported cargo from TDS, and whether the Tribunal incorrectly limited the scope of the Instruction only to public sector undertakings or to time-charter arrangements instead of applying it to all cases involving ocean freight for imports. These questions cover the Assessment Years 2014–15 and 2016–17, and the impugned penalty order under Section 271(1)(c) relates to AY 2016–17.
