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Pioneer Overseas Corporation USA (India Branch) Versus Commissioner Of Income Tax (International Taxation) - 2 Delhi

Waiver of interest under Section 220 (2) seeked - rejection of claim on the ground that the Petitioner failed to show that it had suffered ‘genuine hardship’- Held that:- The fact that the Assessee is a part of ‘DuPont’, a global conglomerate which had in 2011 $37.96 billion in net sales and $6.253 billion as operating profit , cannot be said to be an irrelevant factor in considering whether any ‘genuine hardship’ was undergone by the Petitioner. Further, in comparison to the profitability of th .....

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tution. - W.P.(C) 5423/2016 - Dated:- 17-5-2016 - S. MURALIDHAR & CHANDER SHEKHAR JJ. Petitioner Through: Mr. Ajay Vohra, Senior Advocate with Ms. Kavita Jha and Ms. Mehak Gupta, Advocates. Respondent Through: Mr. Dileep Shivpuri, Senior standing counsel with Mr. Sanjay Kumar, Junior Standing counsel. O R D E R Dr. S. Muralidhar, J.: 1. This is a writ petition by M/s. Pioneer Overseas Corporation USA, seeking a direction to quash the impugned order dated 6th May 2016 passed by the Respondent .....

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United States of America ( POC US ). The Petitioner is engaged in Contract Research Activities and cultivation of parent seeds. Since the Petitioner has been regularly filing its returns of income. Since the Assessment Year ( AY ) 1993-94, it has been claiming exemption by treating its entire income as agricultural income in terms of Section 10 (1) read with Section 2 (1A) of the Act. It is stated that this claim was accepted by the Department for the said AY as well as for the succeeding AYs 1 .....

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ls) [CIT (A)] by deleting 50% of the addition made by the AO on account of estimated attribution of income holding inter alia that only that much profit could be attributed to the PE which was derived from the assets and activities of the PE in India. 5. In the further appeal filed by the Petitioner, the Income Tax Appellate Authority ( ITAT ) for the AYs 1997-98 to 2001-02 held by its orders dated 30th November 2009 and 24th December 2009 that only 10% of income was, therefore, to be treated as .....

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oner to POC US for the AYs 1997-98 to 2001-02. In the year 2005 POC US invoked the Mutual Agreement Procedure ( MAP ) under Article 27 of the India-US Double Taxation Avoidance Agreement ( DTAA ) and sought resolution of the tax matters pertaining to the Petitioner. Consequent upon negotiations between the Competent Authorities of the two countries , an agreement was concluded with respect to allocation of taxing rights qua the income taxable in India in the hands of the Petitioner branch (PE) a .....

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ted on double taxation in the US tax years corresponding to the Indian assessment years under consideration. 8. On 26th December 2011, the Petitioner filed an application before the CIT under Section 220 (2A) of the Act for waiver of interest levied under Section 220 (2) of the Act. This was followed by a letter dated 27th April 2012 wherein the Petitioner reiterated its request. 9. By the impugned order dated 6th May 2016, the CIT dismissed the aforementioned application on the ground that no g .....

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ns of dollars meant that it did not suffer any genuine hardship . Referring to the decision of the Supreme Court in B.M. Malani v. Commissioner of Income Tax (2008) 306 ITR 196 (SC), Mr. Vohra submitted that a genuine hardship would, inter alia, mean a genuine difficulty. That per se would not lead to a conclusion that a person having large assets would never be in difficulty as he can sell those assets and pay the amount of interest levied. Mr. Vohra has also relied on the decision of the High .....

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utory bodies, the conduct of the parties, the nature of the transaction, the financial position etc. 12. Mr. Vohra referred to Instruction No. 2 dated 28th April 2003 issued by the Director (FTD), which inter alia provided that in the context of the Memorandum of Understanding between India and USA regarding suspension of collection during the course of pendency of the MAP, the collection of outstanding taxes in case of taxpayers, who were residents of USA and whose request under the MAP was und .....

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ent of the amount on which interest was paid or payable was due to circumstances beyond the Petitioner s control; and (iii) the Petitioner cooperated in any inquiry relating to the assessment or any proceeding for recovery of the amount due from it. With the Petitioner having paid interest, there was no bar to the CIT considering application on its merits in accordance with law. 14. Mr Vohra referred to the decision in K.L. Jaiswal v. Wealth-Tax Officer (1996) 221 ITR 426 (MP), where is was expl .....

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under Section 220 (2) of the Act was exceptionally high as it constituted approximately 50% of the total taxable income for some of the relevant AYs. 15. Having considered the respective submissions, the Court is not persuaded to hold that any error was committed by the CIT in rejecting the Petitioner s request for waiver of interest under Section 220 (2) of the Act. Under Section 220 (2A) of the Act, the three conditions that are required to be satisfied are (i) payment of the amount towards i .....

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