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Judgment
B.S. Verma, J.—Heard learned Counsel for the parties.
By means of this writ petition, the Petitioner has sought writ in the nature of certiorari quashing the notice u/s 148 of Income Tax Act, 1961, dated 31.03.2010 (Annexure No. 4 to the writ petition) and order dated 09.12.2010 (Annexure No. 8 to the writ petition). It is further prayed to issue a writ in the nature of mandamus directing the Respondents to stay the proceedings initiated u/s 148 of the Act and to stay the notice u/s 143(2) and 142(1) of the Act till the decision of the writ petition.
While passing the assessment order, Assessing Officer has dealt with all seven sub-contracts and VMGL-VML Consortium (Ref No. 010-2004-MHN&H) was given notice u/s 148 of the Act, which is covered under Sub-clause 5(2) (i) of Indo Mauritius Tax Treaty. Assessing Officer in the assessment order has held that unambiguous language used by the DTAA leaves no room for doubt regarding the fact that the taxpayer must himself be actively involved in the installation activity. In reply thereto, Standing Counsel for Income Tax, contended that as per law laid down in Fugro EngineersB.V. v. Assistant Commissioner of Income Tax (OSD), Range-I, Dehradun (2008) 26 SOT 78 (DELHI), these contracts are not covered under Clause 5 (2)(i) of the Treaty but covered under Clause 5(1) and the Assessing Officer has rejected objections, filed u/s 148 of the Act, in view of judgment of Fugro Engineers (Supra) and found reasons to believe that income in respect of the revenues earned from these contracts have escaped assessment. It is pertinent to mention here that in subsequent year, on the basis of the aforesaid judgment, it was held that Petitioner has Permanent Establishment (for short PE) in India and that appeal against order is lying pending with CIT under challenge before the first appellate authority. Issue which is to be decided by the appellate authority is whether the Petitioner has the PE in India.
Since the appeal is lying pending and the notice was issued on the basis of the judgment of M/s Fugro Engineers (Supra), therefore, as an interim measure, it is directed that till the next date of listing, the assessment proceedings may go on but no final order shall be passed in the assessment proceedings.
Learned Counsel for the Respondent prays for and is allowed three weeks'' time to file counter affidavit. Two weeks'' thereafter is allowed to the Petitioner to file rejoinder affidavit.
List on 22.02.2011, for admission/orders.