9911796707
TMI Blog2025 (5) TMI 1333X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 3. The petitioner has filed the present petition, inter alia, impugning a notice dated 21.03.2024 [impugned notice] issued under Section 148 of the Income Tax Act, 1961 [the Act] as well as the consequential proceedings under Section 147 of the Act in respect of Assessment Year [AY] 2018-19. 4. It is the petitioner's case that the impugned notice was issued beyond the period of limitation as prescribed under Section 149 (1) (a) of the Act. Therefore, the impugned notice and further proceedings pursuant thereto are liable to be set aside. 5. The impugned notice was issued pursuant to a search conducted on 21.03.2023 in the premises of the petitioner and other connected entities. 6. The petitioner had filed its return for the relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AES during the period FY 2016-17 to 2022-23. The management and IT services availed were primarily in context of management support services (executive management, strategic development, finance control, accounting, purchasing etc.) and Information Technology services (maintenance of IT infrastructure etc.). The quantum of management fees paid by IISPL are tabulated below: (In Rs. Cr.) FY/Name 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 Grand Total Idemia France SAS 0.09 0.13 0.15 0.32 0.21 0.89 Idemia Identity & Security France SAS 1.00 0.42 0.06 1.49 Grand Total 1.00 0.42 0.09 0.13 0.21 0.32 0.21 2.38 On perusal of the above it can be noted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alculation. Some of the instances of incriminating emails found which shows that management fee was merely used as conduit to shift profits outside India are discussed as under: Email dated 02.12.2021 sent by Cecile Daburon Duong (Director of Idemia India) to Mr. Akhil Bansal (Tax-Head) and Mr. Rajeev Kachhal (CFO) having 'subject: True up on management fees'. In the said email, it was discussed that management fees charged on previous year estimate and not on actual basis; parent entity was expecting to repatriate the TDS withheld in form of credit note or mitigating the cost through tax evading means; ****** On perusal of the above, it can be noted that management fees in 2021 had been charged on the basis of previous year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeling is that we should be able to reach 15% and remove 150M of management fees in the first year'). Hence, it can be inferred that margin on purchases were mere tools to shift profits outside India and limit payment of taxes in India. In the case of IISPL also, no management services have actually been received by IISPL. No actual benefit qua the management services was being provided by Idemia France. The payment of management fees was merely used as a conduit to transfer money. Further, even the basis of allocation and keys/parameters used were not known to the Indian entity. Further, it was also not evident that whether the allocated cost actually corroborates to the services received by IISPL or the cost have merely been allocat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gement, IT and other intra-group expenses amounting to Rs. 0.42 Crores during the period FY 2017-18 relevant to AY 2018-19 were merely used as a manipulative tool to shift profits outside India and no actual services were being received by Idemia India." 8. There is no cavil that the amount alleged to have escaped assessment during the relevant assessment year is less than Rs. 50,00,000/- (Rupees fifty lacs) and therefore, the conditions, as stipulated under Section 149 (1) (b) of the Act, are not satisfied. Notwithstanding the same, the AO is of the view that the case fell within the exception of Sub-section (1A) of Section 149 of the Act as the income alleged to have escaped assessment during the FYs 2016-17 to 2022-23 relevant to AYs 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessments during various previous assessment years and reference for determining the ALP had also been made to the Transfer Pricing Officer [TPO].
11. In view of the above, the present case does not fall within the exception to Sub-section (1A) of Section 149 of the Act. The issue involved is squarely covered by the decision of this court in M/s. L-1 Identity Solutions Operating Company Private Limited v. Assistant Commissioner of Income Tax, Central Circle-25: Neutral Citation No.: 2025:DHC:2690-DB.
12. The petition is, accordingly, allowed. The impugned notice as well as all the proceedings pursuant thereto, including an assessment order, that may have been passed, are set aside. The pending applications are also disposed of. X X X X Extracts X X X X X X X X Extracts X X X X
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