SAUDI TELECOM COMPANY V. COMMISSIONER OF INCOME TAX

WP/14624/2021

AI Insights

The case involves Saudi Telecom Company, which challenged the rejection of its applications for a stay on demands raised for the assessment years 2009-10, 2010-11, and 2011-12 by the Income Tax authorities. The core issue was whether the amounts received from Vodafone Idea Limited were chargeable to tax, a question previously addressed by a Division Bench in ITA No.160/2015, which found such receipts non-chargeable. The High Court of Karnataka, considering the submissions and the precedent set by the Division Bench, decided to not precipitate the recovery of the demand and allowed the petitioner to seek an expedited hearing on the appeals.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 751170 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 02-11-2023
• Assessment Year: misc
• Other Referred Cases: ITA No.160/2015
• Laws Referred To: Article 226, Article 227
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: DILIP
• Assessee Lawyers: T SURYANARAYANA; TANMAYEE RAJAKUMAR
• Keywords: Assessment orders; Income Tax; International Taxation; Stay of demand
• Section: 160/2015

Judgement Text

" - 1 - NC: 2023:KHC:39005 WP No. 14624 of 2021 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 2ND DAY OF NOVEMBER, 2023 BEFORE THE HON'BLE MR JUSTICE B M SHYAM PRASAD WRIT PETITION NO. 14624 OF 2021 (T-IT) BETWEEN: SAUDI TELECOM COMPANY A COMPANY INCORPORATED UNDER THE LAWS OF SAUDI ARABIA P O BOC -89712 RIYADH-11652 SAUDI ARABIA REPRESENTED BY HEREIN BY ITS AUTHORIZED REPRESENTATIVE MR WALEED ABDULRAHMAN M ALMASFER. …PETITIONER (BY SRI.T. SURYANARYAN., ADVOCATE Smt. TANMAYEE RAJAKUMAR.,ADVOCATE) AND: 1. COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION) ROOM NO.741 BMTC BUILDING 7TH FLOOR 80 FT ROAD KORAMANGALA BENGALURU-560095. 2. DEPUTY COMMISSIONER OF INCOME TAX INTERNATIONAL TAXATION CIR 2(2) 6TH BLOCK 80 FEET ROAD 4TH FLOOR, B M T C BUILDING KORMANAGALA Digitally signed by NARASIMHA MURTHY VANAMALA Location: HIGH COURT OF KARNATAKA - 2 - NC: 2023:KHC:39005 WP No. 14624 of 2021 BENGALURU-560095. 3. PRL. COMMISSIONER OF INCOME TAX 6TH BLOCK 80 FEET ROAD 4TH FLOOR B M T C BUILDING KORAMANGALA BENGALURU-560095. 4. VODAFONE IDEA LIMITED (FORMERLY KNOWN AS VODAFONE SOUTH LIMITED) MARUTHI INFO TECH CENTRE NO.11/1 12/1 KORAMANGALA AMAR JYOTHI LAYOUT BENGALURU-560071. …RESPONDENTS (BY SRI. DILIP M, ADVOCATE) THIS W.P. IS FILED UNDER ARTICLE 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER DATED 27.7.2021 UPLOADED ON THE ELECTRONIC PORTAL OF THE INCOME TAX DEPARTMENT VIDE INTIMATION DATED 22.7.2021 PASSED BY THE R-1 REJECTING THE APPLICATION FILED FOR STAY OF THE DEMANDS RAISED FOR THE ASSESSMENT YEAR 2009-2010 ANNXURE-A; QUASH THE ORDER DATED 20.7.2021 UPLOADED ON THE ELECTRONIC PORTAL OF THE INCOME TAX DEPARTMENT VIDE INTIMATION DATED 22.7.2021 PASSED BY THE R-1 REJECTING THE APPLICATION FILED FOR STAY OF THE DEMANDS RAISED FOR THE ASSESSMENT YEAR 2010-11 ANNXURE-B. THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, THE COURT MADE THE FOLLOWING: - 3 - NC: 2023:KHC:39005 WP No. 14624 of 2021 ORDER The petitioner has called in question the orders dated 20.07.2021 [Annexures-A, B and C] and these orders relate to rejection of the petitioner’s application for stay during the pendency of the appeals filed by the petitioner calling in question the relevant assessment orders [2009-10, 2010-11 and 2011-12]. This Court has granted interim order staying the enforcement of the demand pursuant to the respective demand notices in the light of the submission that 20% of the demand has been deposited. 2. Sri T. Suryanarayana, the learned Senior Counsel for the petitioner, submits that the dispute relates to the assessment orders for the assessment years 2009-10, 2010-11 and 2011-12 and the resolution of the dispute would depend on whether the amounts received by the petitioner from M/s. Vodafone Idea Limited could be charged to tax. The - 4 - NC: 2023:KHC:39005 WP No. 14624 of 2021 learned Senior Counsel submits that this question is no longer res-integra with the Division Bench’s decision in ITA No.160/2015 and connected matters opining that such receipts would not be chargeable to tax, and the petitioner’s appeals against the assessment orders before the Commissioner of Income Tax [Appeals]-12 will have to be decided in the light of the aforesaid decision and as such the petitioner has filed applications for early hearing and those applications are yet to be taken up. 3. Insofar as the present grievance, Sri.T.Suryanarayana submits that because of the turn of events the petition could be disposed of observing that in view of the Division Bench’s order the authorities must not precipitate the demand consequent to the respective notices directing the Commissioner of Income Tax [Appeals] -12 to dispose of the appeals with liberty to the petitioner to seek - 5 - NC: 2023:KHC:39005 WP No. 14624 of 2021 refund of 20% of the tax deposited subject to the outcome of those appeals. 4. Sri M. Dilip, the learned standing Counsel for the respondents, cannot controvert that if the assessment orders are only because of the payments received by the petitioner from M/s. Vodafone Idea Private Limited, the merits of such assessment orders will have to be necessarily examined in the light of the Division Bench’s order in ITA No.160/2015 subject to the outcome in the proceedings that my be preferred by the Revenue against such order. Sri M. Dilip, as regards the disposal of this writ petition, submits that because 20% of the demand is deposited, the petition could be disposed of taking this fact on record with liberty to the petitioner to avail remedy to receive refund subject to the outcome of the pending appeals. 5. These submissions are considered. The net effect of these submissions is that the petitioner’s - 6 - NC: 2023:KHC:39005 WP No. 14624 of 2021 appeals as against the relevant assessment orders will have to be considered by the Commissioner of Income Tax [Appeals]-12 in the light of the Division Bench’s order in ITA No.160/2015 and there cannot be precipitation for recovery of the demand especially with the petitioner having deposited 20% thereof. 6. Further, it would not be out of place to record that where the assessment orders have been called in question by the assessees in the writ petitions on the ground of jurisdiction, those writ petitions are being disposed of in the light of the Division Bench’s order in ITA No.160/2015 but with liberty to the concerned assessees to seek revival of the petitions in the event the Revenue succeeds in the proceedings commenced before the Hon’ble Supreme Court as against the Division Bench’s order. This liberty is reserved wherever, apart from the ground of jurisdiction, the ground such as violation - 7 - NC: 2023:KHC:39005 WP No. 14624 of 2021 of principle of natural justice and other grounds are urged. 7. In view of the same, it would be just to reserve liberty to the petitioner to seek early disposal of the pending appeals before the Commissioner of Income Tax [Appeals]-12. If the reason for the assessment and the present petition is the demand notices for recovery of 100% demand based on the impugned assessment orders, and if 20% of the demand is already deposited, it cannot be gainsaid that with the Division Bench’s order in ITA No.160/2015, there cannot be further precipitation. In the light of this, the petition must be disposed of with certain liberty. Hence, the following: ORDER [a] The petition is disposed of. The petitioner is reserved liberty to request the Commissioner of Income Tax [Appeals] -12 to expeditiously consider the merits of the - 8 - NC: 2023:KHC:39005 WP No. 14624 of 2021 petitioner’s case as against the corresponding assessment orders in the light of the orders of the Division Bench’s order in ITA No.160/2015 and disposal of the writ petitions by the similar assessees in the other writ petitions. [b] The respondents until such consideration shall take any coercive measures to precipitate the subject demand under the respective notices. Sd/- JUDGE SA ct:sr "