TMI Blog2018 (8) TMI 923X X X X Extracts X X X X X X X X Extracts X X X X ..... ua deemed capital gain purportedly earned by the foreign company. The writ petition was held to be maintainable and was allowed. We are in full agreement with the judgment of the Division Bench of Delhi High Court in General Electric Co. [2011 (8) TMI 344 - DELHI HIGH COURT ] and another, supra. May be, there is an appeal from the aforesaid judgment, as contended on behalf of the Revenue, but the fact remains that the judgment has not yet been interfered with. The issues in this writ appeal are covered by the aforesaid judgment of the Delhi High Court, with which we are in full agreement. The judgment and order under appeal is set aside and consequently, the impugned show cause notice is also set aside. - Decided in favor of assessee. - W. A. No. 884 of 2018 and C. M. P. Nos. 8825 and 7726 of 2018 - - - Dated:- 1-8-2018 - MS. INDIRA BANERJEE, CHIEF JUSTICE AND THE HON'BLE MS.JUSTICE P.T.ASHA For the Appellant : Mr.R.V.Easwar, Sr. Counsel for M/s.Rubal Bansal and Sandeep Bagmar For the Respondent : Mrs.Hema Muralikrishnan Stng. Counsel JUDGMENT ( Delivered by Ms. Indira Banerjee, Chief Justice ) This intra-court appeal is against an order dated 20. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, the Chief Financial Officer was questioned about transfer of shares of the appellant by Clayton Dewandre to WABCO, Singapore, even though the Chief Financial Officer was not employed with the appellant during the Financial Year 2013-14 and had no knowledge of the transaction. Be that as it may, Clayton Dewandre has apparently been subjected to tax in respect of the transaction and a draft assessment order dated 31.12.2017 has been issued to Clayton Dewandre. 9.On or about 09.01.2018, the impugned Show Cause Notice under Section 163 (1) (c) of the IT Act was issued to the appellant, the contents whereof are set out hereinbelow for convenience: M/s..Clayton Dewandre Holdings Ltd was holding 75% of shares i.e. 1,42,25,684 Shares in your company. On sale of 1,42,25,684 shares dated 27.6.2013 M/s.Clayton Dewandre Holdings Ltd (CDH) received capital gain for the relevant AY 2014-15. In lieu of sale of M/s.WABCO India Limited shares. CDH received 50,55,05,000 shares of M/s.WABCO Asia Private Limited, Singapore as a sale consideration. The sale consideration of 1,42,25,684 shares amounts to 29,84,97,852 Euros which is equivalent to ₹ 2347,23,78,600/-. After claiming deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsideration received from the appellant. The respondent, therefore, proposed to treat the appellant as agent of Clayton Dewandre in respect of tax liability that might arise for the Assessment Year 2014-15, on account of capital gain tax. The appellant was called upon to show cause why for the purpose of Sections 160 to 163 of the IT Act, the appellant should not be treated as agent in terms of the provisions of Section 163 (1)(c) of the IT Act. The appellant challenged the aforesaid notice in this Court under Article 226 of the Constitution of India. 12.Before the learned Single Bench, it was contended that the impugned show cause notice was without jurisdiction as the conditions precedent for issuance of notice under Section 163 (1)(c) of the IT Act were absent. It was also submitted that to treat a person in India as representative assessee/agent of a non-resident, the non-resident must be in India. Clayton Dewandre was not in receipt of any income from the appellant. As such, the show cause notice was not sustainable in law. The learned Single Bench, however, dismissed the writ petition on the ground that the appellant had only challenged the show cause notice and no orders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reafter proceed to impose a levy on a citizen . 17.It is well settled that the power to issue prerogative writs under Article 226 of the Constitution is plenary in nature and is not limited by any other provision of the Constitution. The High Court, having regard to the facts of the case, has the discretion to entertain or not to entertain a writ petition. However, the High Court has imposed upon itself certain restrictions one of which is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But, the alternative remedy has been consistently held by the Supreme Court not to operate as a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of a fundamental right; where there has been a violation of principle of natural justice; and where an order or alternatively proceedings are without jurisdiction or the constitutional vires of an Act is under challenge. Reference may be made to State of U.P. v. Mohd. Nooh, reported in AIR 1958 SC 86, A.V.Venkateswaran, Collector of Customs vs. Ramchand Sobhraj Wadhwani, reported in AIR 1961 SC 1506, Calcutta Discount Co. Ltd. vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dewandre was ₹ 2156,98,34,163/-. iii.Clayton Dewandre was assessed and a draft assessment order was served on Clayton Dewandre on 31.12.2017 in respect of tax liability of ₹ 429,39,66,823/-, subject to Clayton Dewandre availing the option to challenge the draft assessment order before the Dispute Resolution Panel. We are informed that the draft assessment order has been finalised and final assessment order issued under Section 143(3) read with Section 144C of the IT Act. iv.The show cause notice alleged that the capital gains had arisen directly as a result of consideration received by Clayton Dewandre from the appellant and the appellant was proposed to be held as agent under Section 163 (1)(c) of the IT Act, in the event of any demand against Clayton Dewandre in the assessment proceedings for the Assessment Year 2014-15. 21.It is true, as contended by the respondent, that quoting of a wrong provision in the impugned show cause notice does not invalidate the show cause notice. The question is whether the show cause notice was at all without jurisdiction; whether respondent wrongly assumed jurisdiction by erroneously deciding jurisdictional facts; whether in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of Sections 160 to 163 of the IT Act, would show that: i.in order to become liable as a representative assessee, a person must be situated such as to fall within the definition of a representative assessee; ii.the income must be such as is taxable under section 9; iii.the income must be such in respect of which such a person can be treated as a representative assessee; iv.the representative assessee has a statutory right to withhold sums towards a potential tax liability; v.since the liability of a representative assessee is limited to the profit, there can be multiple representative assessees in respect of a single non-resident entity-each being taxed on the profits or gain relatable to such representative assessee. The Division Bench held that no case was made out by the Department that in respect of transfer of share to a third party, that too outside India, the Indian company could be taxed when the Indian company had no role in the transfer. Merely because those shares related to the Indian company, that would not make the Indian company as agent qua deemed capital gain purportedly earned by the foreign company. The writ petition was held to be maintainabl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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