Assessee-company is engaged in business of manufacturing and selling of cars in India. It filed its return of income which was accepted and an assessment order was passed. Subsequently, a survey was conducted upon assessee and on basis of same, reassessment proceedings were initiated against assessee on ground that non-resident parent company and its affiliates had a business connection and a PE in India and, thus, assessee was liable to deduct tax under section 195 on payments made by it to them and since assessee had failed to do so, provisions of section 40(a)(i) were attracted and amount claimed as expenditure was liable to be disallowed under section 40(a)(i). On writ the Assessee submitted that subsequent order dated 10-12-2018 passed under section 201(1) found that except for one, all other affiliates did not have a PE in India. On writ reassessment proceedings initiated against assessee were quashed and set aside. (AY. 2006-07, 2007-08)
Honda Cars India Ltd. v. DCIT (2024) 301 Taxman 653 (Delhi)(HC)
S.147: Reassessment-After the expiry of four years-Business connection-Survey-Failure to deduct tax at source-Except for one, all other affiliates did not have a Permanent Establishment in India-Reassessment notice and order disposing the objection is quashed OECD Model Convention-Art. 5. [S.9(1)(i)),40(a(i), 133A, 148 195,201(1), Art. 226]