MCI INTERNATIONAL INC. V. DEPUTY COMMISSIONER OF INCOME TAX

WP/38059/2019

AI Insights

The case involves multiple writ petitions filed by MCI International Inc. and Communications Global Network Services Limited against various Deputy Commissioners of Income Tax concerning international taxation. The petitions challenged the assessment orders and notices issued for the assessment year 2009-10, alleging they were unjustly taxed in India for receipts from Indian entities. The core legal issue revolved around the applicability of the Division Bench's order dated 14.07.2023, which potentially exempted the petitioners from such tax liabilities. The court's decision to quash the orders was influenced by the precedent set in the Division Bench's order and similar cases, with a provision for revival depending on the Supreme Court's decision on the matter.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 751204 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 13-10-2023
• Assessment Year: misc
• Other Referred Cases: ITA No.160/2015 and connected matters, WP No.51999/2019 connected with WP No.53137/2008, WP No.5867/2022 and connected matters
• Laws Referred To: Article 226, Article 227, Section 147, Section 144, Section 148, Section 271(1)(c), Section 274
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: K V ARAVIND; DILIP
• Assessee Lawyers: AJAY VOHRA; SANDEEP HUILGOL; PRASHANTH D
• Keywords: Assessment Order; International Taxation; Notice; Penalty order; Writ petition
• Section: 147; 148; 144; 271(1)(c); 274

Judgement Text

" - 1 - NC: 2023:KHC:37552 WP No. 38059 of 2019 C/W WP No. 5738 of 2017 WP No. 38060 of 2019 WP No. 38061 of 2019 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 13TH DAY OF OCTOBER, 2023 BEFORE THE HON'BLE MR JUSTICE B M SHYAM PRASAD WRIT PETITION NO. 38059 OF 2019 (T-IT) C/W WRIT PETITION NO. 5738 OF 2017 (T-IT) WRIT PETITION NO. 38060 OF 2019 (T-IT) WRIT PETITION NO. 38061 OF 2019 (T-IT) IN WP NO. 38059/2019 BETWEEN: MCI INTERNATIONAL INC. ONE VERIZON WAY BASKING RIDGE NEW JERSEY-07920 U.S.A. REPRESENTED HEREIN BY ITS AUTHORISED REPRESENTATIVE MR MANOJ KUMAR RAHEJA …PETITIONER (BY SRI. AJAY VOHRA, SENIOR ADVOCATE FOR SRI. SANDEEP HUILGOL.,ADVOCATE) AND: 1. DEPUTY COMMISSIONER OF INCOME TAX INTERNATIONAL TAXATION, CIRCLE-2(1), BENGALURU BMTC DEPOT BUILDING, 80 FEET ROAD, Digitally signed by NARASIMHA MURTHY VANAMALA Location: HIGH COURT OF KARNATAKA - 2 - NC: 2023:KHC:37552 WP No. 38059 of 2019 C/W WP No. 5738 of 2017 WP No. 38060 of 2019 WP No. 38061 of 2019 KORAMANGALA BENGALURU-560095. 2. DEPUTY COMMISSIOENR OF INCOME TAX INTERNATIONAL TAXATION, CIRCLE-1(1), BENGALURU, ROOM NO.441 4TH FLOOR, BMTC BUILDING, 80 FEET ROAD, KORAMANGALA BENGALURU-560095. 3. DEPUTY COMMISSONER OF INCOMET AX INTERNATIONAL TAXATION CIRCLE-2(2)(1) NEW DELHI, ROOM NO.411, 4TH FLOOR BLOCK E-2, CIVIC CENTRE NEW DELHI-110002. …RESPONDENTS (BY SRI. K V ARAVIND.,ADVOCATE A/W SRI. DILIP M, ADVOCATE) THIS WP IS FILED UNDER ARTICLE 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED ASSESSMENT ORDER DATED 19.12.2017 PASSED BY THE R.1 U.S 147 R.W SECTION 144 OF THE ACT ANNEXURE-B, A.Y 2009-10; QUASH THE IMPUGNED NOTICE DATED 29.03.2016 ISSUED BY THE R-2 U.S 148 OF THE ACT ANNEXURE-A, A.Y. 2009- 10. - 3 - NC: 2023:KHC:37552 WP No. 38059 of 2019 C/W WP No. 5738 of 2017 WP No. 38060 of 2019 WP No. 38061 of 2019 IN WP NO.5738/2017 BETWEEN: COMMUNICATIONS GLOBAL NETWORK SERVICES LIMITED CENTURY HOUSE, 16-PAR-LA-VILLE ROAD, HAMILTON HM 08 BERMUDA REPRESENTED BY ITS ATTORNEY MR.VAIBHAV KULKARNI …PETITIONER (BY SRI.AJAY VOHRA, SENIOR ADVOCATE FOR SRI. PRASHANTH KUMAR D.,ADVOCATE) AND: 1. COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION) ROOM NO.710, BMTC BUILDING, 80FT ROAD, KORAMANGALA BENGALURU-560095. 2. DEPUTY COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION) CIRCLE 1(1), ROOM NO.441, 4TH FLOR, BMTC BUILDING, KORAMANGALA 6TH BLOCK BENGALURU-560 095. …RESPONDENTS (BY SRI. K V ARAVIND.,ADVOCATE A/W SRI. DILIP M, ADVOCATE) - 4 - NC: 2023:KHC:37552 WP No. 38059 of 2019 C/W WP No. 5738 of 2017 WP No. 38060 of 2019 WP No. 38061 of 2019 THIS WP IS FILED UNDER ARTICLE 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH ORDER DATED 22.12.2016 PASSED BY R-2 AT ANNEX- A; ISSUE A WRIT OF AND / OR ORDER AND / OR DIRECTION THAT PAYMENTS RECEIVED BY THE PETITIONER FROM VSL ARE NOT LIABLE TO TAX IN INDIA. IN WP NO. 38060/2019 BETWEEN: MCI INTERNATIONAL INC. ONE VERIZON WAY, BASKING RIDGE NEW JERSEY-07920 U.S.A REP HEREIN BY ITS AUTHORISED REPRESENTATIVE MR.MANOJ KUMAR RAHEJA. …PETITIONER (BY SRI. AJAY VOHRA, SENIOR ADVOCATE FOR SRI. SANDEEP HUILGOL.,ADVOCATE) AND: 1. DEPUTY COMMISSIONER OF INCOME TAX INTERNATIONAL TAXATION, CIRCLE-2 (1) BENGALURU BMTC DEPOT BUILDING, 80 FEET ROAD, KORAMANGALA BENGALURU-560 095. - 5 - NC: 2023:KHC:37552 WP No. 38059 of 2019 C/W WP No. 5738 of 2017 WP No. 38060 of 2019 WP No. 38061 of 2019 2. DEPUTY COMMISSIONER OF INCOME TAX INTERNATIONAL TAXATION, CIRCLE-2 (2) (1), NEW DELHI ROOM NO.411, 4TH FLOOR BLOCK E-2, CIVIC CENTRE NEW DELHI-110002. …RESPONDENTS (BY SRI. K V ARAVIND.,ADVOCATE A/W SRI. DILIP M, ADVOCATE ) THIS WP IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED PENALTY ORDER DATED 27.06.2018 PASSED BYA THE R-1 U/S 271(1)(c) R/W SEC. 274 OF THE ACT ANNX-A. IN WP NO. 38061/2019 BETWEEN: MCI INTERNATIONAL INC. ONE VERIZON WAY,BASING RIDGE, NEW JERSEY 07920. USA. REP BY HEREIN BY ITS AUTHORISED REPRESENTATIE, MR. MANOJ KUMAR RAHEJA. …PETITIONER (BY SRI. SANDEEP HUILGOL.,ADVOCATE) - 6 - NC: 2023:KHC:37552 WP No. 38059 of 2019 C/W WP No. 5738 of 2017 WP No. 38060 of 2019 WP No. 38061 of 2019 AND: 1. DEPUTY COMMISSIONER OF INCOME TAX INTERNATIONAL TAXATION, CIRCLE-2(1), BENGALURU, BMTC BUILDING, 80 FEET ROAD, KORAMANGALA, BENGALURU 560095. 2. DEPUTY COMMISSIONER OF INCOME TAX INTERNATIONAL TAXATION, CIRCLE-1(1), BENGALURU, ROOM NO. 441, 4TH FLOOR, BMTC BUILDING, 80 FEET ROAD, KORAMANGALA, BENGALURU 560095. 3. DEPUTY COMMISSIONER OF INCOME TAX INTERNATIONAL TAXATION, CIRCLE-2(2) (1), NEW DELHI, ROOM NO 411, 4TH FLOOR, BLOCK E-2, CIVIC CENTER, NEW DELHI 110002. …RESPONDENTS (BY SRI.K.V. ARAVIND., ADVOCATE A/W SRI. DILIP M, ADVOCATE) THIS W.P. IS FILED UNDER ARTICE 226 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED PENALTY ORDER DATED.27.6.2018 PASSED BY THE R.1 UNDER SECTION 271(1)(b) READ WITH SECTION 274 OF THE ACT (ANNEXURE.A). - 7 - NC: 2023:KHC:37552 WP No. 38059 of 2019 C/W WP No. 5738 of 2017 WP No. 38060 of 2019 WP No. 38061 of 2019 THESE PETITIONS, COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, THE COURT MADE THE FOLLOWING: ORDER The question for consideration in these writ petitions would be whether they must stand disposed of in the light of the Division Bench’s order dated 14.07.2023 in *ITA No.160/2015 and connected matters and the disposal of similar writ petitions in WP No.51999/2019 connected with WP No.53137/2008 and in WP No.5867/2022 and connected matters in the light of such decision. Sri Ajay Vohra, the learned Senior Counsel for the petitioners, and Sri M.Dilip, the learned counsel for the respondents, are heard for final disposal. It remains undisputed that the petitioners, who are the recipients of certain amounts from Indian entities, cannot be subject to assessment if *Corrected vide Court order dated 02.11.2023 - 8 - NC: 2023:KHC:37552 WP No. 38059 of 2019 C/W WP No. 5738 of 2017 WP No. 38060 of 2019 WP No. 38061 of 2019 the Division Bench’s order dated 14.07.2023 prevails. Sri M.Dilip submits that the order dated 14.07.2023 has been called in question by the Revenue before the Hon’ble Supreme Court, and therefore this Court, may not make any observation on the merits of the petitioners’ grounds as against the lack of opportunity or service of due notices. Sri Ajay Vohra, in rejoinder, submits that in the unlikely event of the Revenue succeeding in its challenge against the Division Bench’s order dated 14.07.2023, the petitioners must be reserved liberty to seek revival of these petitions if these petitions stand disposed of in the light of the Division Bench’s order dated 14.07.2023 and the later disposal of the other similar petitions. These submissions are considered, and this Court is of the considered view that the petitions must stand disposed of quashing the impugned assessment orders as also the penalty orders, but - 9 - NC: 2023:KHC:37552 WP No. 38059 of 2019 C/W WP No. 5738 of 2017 WP No. 38060 of 2019 WP No. 38061 of 2019 with liberty to the petitioners to seek revival of these petitions subject to the outcome of the challenge by the Revenue before the Hon’ble Supreme Court as against the Division Bench’s order dated 14.07.2023 in *ITA No.160/2015 and other matters. The petitions stand disposed of. Sd/- JUDGE NV *Corrected vide Court order dated 02.11.2023 "