Facts of the Case

The petitioner, BT (India) Private Limited, filed multiple writ petitions challenging a common order dated 26.08.2021 and the show cause notices issued under Sections 201(1) and 201(1A) of the Income Tax Act, 1961.

The dispute arose following a survey conducted under Section 133A on 06.03.2019, wherein it was alleged that the petitioner had made payments to non-residents without deducting Tax Deducted at Source (TDS).

The petitioner had entered into agreements with BT Plc (UK) for telecommunication support services and had made payments without deducting TDS under Section 195, claiming that such payments were not taxable in India.

Earlier, the High Court (order dated 19.03.2021) directed the tax authorities to first determine whether the payments were chargeable to tax (jurisdictional fact) before proceeding under Section 201.

 Issues Involved

  1. Whether the payments made to a non-resident (BT Plc) were chargeable to tax in India.
  2. Whether proceedings under Sections 201(1) and 201(1A) can be initiated without determining jurisdictional facts.
  3. Whether the impugned order complied with the High Court’s earlier directions dated 19.03.2021.
  4. Whether writ jurisdiction is maintainable when alternative appellate remedies are available.

Petitioner’s Arguments

  • The impugned order failed to comply with the Court’s direction to first determine taxability of remittances.
  • Payments made to BT Plc were not taxable in India, hence no obligation to deduct TDS under Section 195.
  • An application for advance ruling under Section 245Q was already pending before the Authority for Advance Rulings (AAR), and the authority should have awaited its decision.
  • Proceedings were barred by limitation.
  • The respondent wrongly assumed that only quantification was pending before AAR, whereas taxability itself was under consideration.

Respondent’s Arguments

  • The impugned order was passed in compliance with the High Court’s earlier directions.
  • The petitioner has an effective alternative remedy by way of appeal, hence writ petitions should not be entertained.
  • For earlier Assessment Years (2012–13 and 2013–14), similar issues had already resulted in tax demands, which are under appeal before CIT(A).
  • The petitioner cannot pursue parallel remedies in different fora.

Court’s Findings

  • The Court observed that similar issues are already under appeal before the Commissioner of Income Tax (Appeals).
  • The impugned order recorded that jurisdictional conditions for invoking Section 201 were satisfied.
  • Since the petitioner had already availed statutory appellate remedies, the Court declined to interfere at this stage.
  • The Court emphasized that writ jurisdiction should not be exercised where alternate efficacious remedies exist.

Court Order

  • The writ petitions were dismissed.
  • Liberty was granted to the petitioner to challenge the final order through appropriate appellate remedies under the Income Tax Act.
  • The Court clarified that it had not expressed any opinion on merits, leaving all issues open.

Important Clarifications

  • Determination of “chargeability to tax” is a jurisdictional prerequisite before invoking Section 201.
  • Pendency of proceedings before AAR does not automatically bar tax proceedings, but may be relevant.
  • The case reinforces the principle that writ jurisdiction is not a substitute for statutory appeal.

Sections Involved

  • Section 201(1) – Assessee in default
  • Section 201(1A) – Interest on default
  • Section 195 – TDS on payments to non-residents
  • Section 133A – Survey
  • Section 245Q – Application to Authority for Advance Rulings

 Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2021:DHC:3128-DB/NAC30092021CW109672021_135657.pdf

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