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2018 (3) TMI 1355 - HC - Income TaxReassessment u/s 147 - validity of reasons for initiation of the proceedings - FTS u/s 9(1)(vii) - non-filing of return of payment of taxes - AO observed that the payments made by ML to the AEs for on- site services and marketing services (a.k.a. “Selling Commission’) were covered by the definition of Fees for technical services (“FTS”) as defined in Explanation 2 to Section 9(1)(vii) of the Income Tax Act, 1961 (“Act”). Held that:- the reasons for initiation of the proceedings as assigned by the Respondent-Assessing Authority and quoted above, prima facie , indicates that the Assessing Authority had sufficient and reasonable reasons to initiate such proceedings, as certain payments were made to the Associate Enterprises (A.Es.) of the parent Company of U.S.A. without making suitable Tax Deduction at Source (TDS) rendering such expenses as non-admissible in the hands of the assessee. The said reasons cannot be said to be irrelevant or non-germane for the formation o f a reasonable belief about escapement of income as required under Section 147/148 of the Act or initiation of such proceedings for bringing to the tax the income which has escaped assessment. Therefore, this Court cannot pre-judge as to how the objections of the assessee in this regard will be met by the Respondent-Assessing Authority. Since, admittedly, the proceedings are pending as of now, no pronouncement with regard to merit of such objections can be made at this stage. - petition dismissed as premature - Decided against the assessee.
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