TMI Blog2022 (3) TMI 481X X X X Extracts X X X X X X X X Extracts X X X X ..... erson who is responsible for paying to deduct tax at the time of credit to the account of the payee or at the time of payment and petitioner did not make any payment to THL, there is no obligation on petitioner to deduct tax at source. Respondent s arguments that petitioner had made payment through IMAHI is also not acceptable because there is no evidence that petitioner made any payment through IMAHI. The Section is applicable to a person who is responsible for paying. Show cause notice dated 25th March 2010 as well as order dated 10th December 2013 have to be quashed and set aside. - Decided in favour of assessee. - WRIT PETITION NO.974 OF 2014 - - - Dated:- 26-2-2022 - K.R. SHRIRAM N.J. JAMADAR, JJ. Mr. J.D. Mistri, Senior Advocate a/w. Mr. Madhur Agrawal i/b. Mr. Atul K. Jasani for petitioner. Mr. Suresh Kumar for respondents. ORAL JUDGMENT : (PER K.R. SHRIRAM, J.) 1. By this petition, that came to be admitted on 28th July 2014, petitioner is challenging the jurisdiction of respondent no.1 to issue notice under Section 201 of the Income Tax Act, 1961 (the Act) purporting to treat petitioner as an assessee in default and the order dated 10th Decembe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ast, Africa, Latin America and Asia Pacific regions, which supported global operations through an extensive sales and distribution network. Ingram Micro Asia Holdings Inc. (IMAHI), a company incorporated in the United States of America, and a subsidiary of petitioner, held indirectly a fully owned subsidiary in India by the name Ingram Micro India Private Ltd. (IMIPL). 5. The Techpac Group was a technology distributor and a leading technology sales, marketing and logistics group in the Asia Pacific region and had an extensive spread over countries such as Australia, New Zealand, Singapore, Malaysia, Thailand, India and Hong Kong. Various non resident shareholders that included private equity funds, viz., CVC Capital Partners Asia Pacific LP, Asia Investors LLC, Hagemeyer Caribbean Holding NV, held shares in a company Techpac Holdings Ltd. (THL), registered in Bermudas. There were a few resident shareholders as well. THL, under its fold, held several operating and non operating companies in Australia, New Zealand and Thailand and a holding company named Tech Pacific Asia Ltd. (TPAL), a company incorporated in the British Virgin Islands. TPAL, in turn, held operating and non opera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, petitioner requested respondent no.1 to discharge the impugned notice. Subsequently, based on discussions with respondent no.1 in his office, where respondent no.1 raised certain further queries, petitioner submitted a further letter dated 29th July 2010 answering those queries. Thereafter, as there was not much heard from respondent no.1, petitioner fearing an adverse order from respondent no.1, filed a Writ Petition No.411 of 2011 in this Court challenging the impugned notice and the jurisdiction of respondent no.1 to initiate proceedings under Section 201(1) and 201(1A) of the Act. This Court by an order dated 30th November 2011 in Writ Petition No.411 of 2011, relying on the decision dated 23rd January 2009 of the Apex Court in the case of Vodafone International Holdings B.V. V/s. Union of India [petition for Special Leave to Appeal (Civil) 464 of 2009], directed respondent no.1 to determine the jurisdictional issue as a preliminary issue keeping all rights and contentions of parties open and disposed the petition. 11. Thereafter, petitioner received notices from respondent no.1 asking petitioner to show cause as to why an order should not be passed holding tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchased by IMAHI, a wholly owned subsidiary of petitioner and not by petitioner and, therefore, the question of Section 195 of the Act being applicable to petitioner would not arise. Respondent no.1 has proceeded on an erroneous basis that petitioner had acquired the shares of THL through its subsidiary IMAHI without even giving any reason for such a finding. Respondent no.1 has not appreciated or understood that a subsidiary company is an independent entity different from the parent company and actions and transactions of the subsidiary are not transactions of the holding company through the subsidiary. The fact is the shares have been acquired by IMAHI and not by petitioner through its subsidiary. The SPA has been entered into by IMAHI as the purchaser and not on behalf of petitioner. A copy of the SPA has been provided to respondent no.1 and also annexed to the petition. SPA shows petitioner is the guarantor of the payment to be made by IMAHI and not the purchaser. Respondent no.1 has failed to appreciate that purchaser himself cannot be a guarantor also and that itself indicates that petitioner is not the purchaser of the shares of THL. Respondent no.1 has also not produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and petitioner did not make any payment to THL, there is no obligation on petitioner to deduct tax at source. Respondent s arguments that petitioner had made payment through IMAHI is also not acceptable because there is no evidence that petitioner made any payment through IMAHI. The Section is applicable to a person who is responsible for paying. 16. In these facts and circumstances, show cause notice dated 25th March 2010 as well as order dated 10th December 2013 have to be quashed and set aside. 17. In view of this conclusion on the non-applicability of Section 195 of the Act to petitioner, we do not see any reason why we should deal with the other grounds. 18. Petition is allowed and accordingly disposed in terms of prayer clause (a), which reads as under: (a) that this Hon ble Court be pleased to issue a Writ of Certiorari or a writ in the nature of Certiorari or any other appropriate writ, order or direction under Article 226 of the Constitution of India calling for the records of petitioner s case and after examining the legality and validity thereof to quash and set aside the Impugned Notice dated 25th March 2010 being Exhibit C hereto and the Impugned Ord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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