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TMI Blog2024 (1) TMI 1232X X X X Extracts X X X X X X X X Extracts X X X X ..... ontinental Consultants and Technocrats Private Limited." 2. Heard Smt.I.Mytri, learned counsel for the petitioner, Smt.K.Mamata, learned Standing Counsel for respondent No.1 and Sri Gadi Praveen Kumar, learned Deputy Solicitor General of India, for respondent No.2. 3. The brief facts leading to filing the present Writ Petition are that the petitioner is a Professional Consulting Firm with headquarter at Rockville, Maryland, USA, and registered under the laws of the United States of America [U.S.A]. The petitioner company is a tax resident of U.S.A, as per the petitioner's Tax Residence Certificate [TRC] from the department of Treasury, dated 01.12.2022. The petitioner is engaged in comprehensive consultancy services including but not limited to Independent Consultancy Services, Independent Engineer Services, Pre-Tender Services and Traffic Engineering, Tendering Assistance, Environmental Engineering, Architectural and Rural Development and etc., 4. The petitioner and M/s. Intercontinental Consultants & Technocrats Private Limited (hereinafter referred to as 'ICT), a company incorporated in India, entered into a joint venture agreement dated 28.06.2021, for the purpose of eng ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 1961. 7. It is further contended that on 22.06.2023, the petitioner company received an email from the Income Tax Department, intimating passing of the impugned order rejecting the petitioner application filed under Section 197 of the Act. The petitioner contended that said impugned order was passed without taking into consideration the submissions made by the petitioner company. Challenging the said impugned order, present writ petition is filed on various grounds. 8. It is contended that ICT, tax resident in India, seeks to deduct TDS and it is made with respect to the petitioner company, which is tax resident of the United States of America. The TDS sought to be deducted is for work that is carried out in Bangladesh and thus no income received/accrued/arising in India to the petitioner Company, as per Sections 5 and 9 of the Act. It is also contended that ICT exclusively utilized consultancy services of the petitioner Company in Bangladesh for the purpose of earning income in the very same country and amount paid is for source with respect to the Dhaka By-pass Road project and therefore, it falls under exception carved out in Section 9(i)(vii)(b) of the Act. As per which, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asons and also following the principles of natural justice. It is also contended that the petitioner is seeking to mischievously set up the lack of involvement of its Indian PE in its Bangladesh project to circumvent its liability and avoid deduction of tax on expenditure being booked and payments being made by an Indian entity from India. If the expenditure is being incurred from India, then the corresponding income ought also be liable to tax in India. 14. It is also contended that Schedule - 1 of joint venture agreement makes it clear that the Indian entity ICT is the lead partner in-charge of overall administration of the project and that the project is being managed from India. Thus, the petitioner is rendering services to the Indian lead Partner and hence, the Assessing Officer has come to the conclusion that the payments in foreign currency by the Indian entity i.e., ICT to the petitioner is the fees for technical services received in India as contemplated under Section 5(2) of the Act, 1961 and that such amounts would be deemed to be income accruing in India under Section 9(1) of the Act. 15. It is further contended that in the event of the payment/expenditure as well as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the Act. The certificate has been issued as an interim measure on the request of the petitioner and it cannot be compared with the final determination of tax liability by making an assessment under Section 143(3) of the Act. Further, at paragraph No.28, it has been held as follows: "28. Explanation 2(a) of the aforesaid section clearly takes care of the situation where no return has been filed. On a conjoint reading of sections 195 and 197 of the Act, we are of the view that if any opinion is expressed at the time of grant of certificate it is tentative or provisional or interim in nature and the same would not debar the Assessing Officer from initiating a proceeding under Section 147 of the Act on the ground that there has been a change of opinion." 20. Further, in Ansaldo Engergia SpA (supra), the issue before the Madras High Court was a challenge to the cancellation of certificate issued the Deputy Commissioner of Income-tax under Section 197 of the Act and wherein, it is further contended that such cancellation is illegal and contrary to the provisions contained in Section 197(1) and (2) r/w Section 44BBB of the Act and is vitiated by non-application of mind and violative o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n accordance with Schedule 3 and the financial policy of the Joint Venture (including payment of interest on any amounts which a Member may become liable to pay the other Member pursuant to this Agreement) is as set out in that Schedule. ... 14.4. As between the Members, each Member shall have full and sole responsibility for the payment of any taxes, duties, fees or assessments of a similar nature whatsoever levied in connection with its services under this Agreement, including subcontracts and including but not limited to, any personal income taxed, levied or imposed on any of its employees or personnel or any of its subcontractor's employees or personnel. The responsibility on payments by a Member to non-residents lies with the said Member, especially with regard to any specific local tax. .... 17.1. This agreement has been entered and shall in all respects be construed and interpreted in accordance with laws of 'India'. ... Schedule 1, clause 1.2:- The Project is: Independent Engineering (IE) Services for Upgrading of Joydevpur - Debogram - Bhulta - Madanpur (Dhaka By-Pass) Road (N-105) into 4 lanes through Public Private Partnership, Bangladesh. ... Sched ..... X X X X Extracts X X X X X X X X Extracts X X X X
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