The Delhi High Court in the case Sumitomo Mitsui Financial Group Inc. Versus CIT observed and has deleted the tax demand made against the Sumitomo Mitsui Financial Group on the grounds of lack of jurisdiction.
The bench comprising of Justice Rajiv Shakdher and Justice Girish Kathpalia in the case observed and has stated that the jurisdiction on the withholding tax liability on the transaction of share purchase by the Assessee was already being exercised by the tax authority based in Mumbai, thus the tax authority based in Delhi had no jurisdiction to pass in the said order.
In the present case, the petitioner or assessee has challenged the order passed by the tax authority based in Delhi, wherein the High Court stayed the subsequent demand notifications made under Section 156 that exceeded the Rs. 3,000 Cr. tax demand.
However, the court observed that the deal involved the Assessee purchasing a 74.9% ownership stake from two Singaporean businesses, the Fullerton Financial Holdings Pte. Ltd. and the Angelica Investment Pte. Ltd., in the Indian company Fullerton the India Credit Company Ltd.
It has also been contended by the assessee in the case that the Deputy Commissioner of Income Tax, International Tax Circle 4(2)(2), Mumbai, had previously exercised jurisdiction over the share purchase transaction. Thus, before and after the transaction was executed, RBI and CCI in the case provided necessary clearances for the transaction.
The court in the case observed and has set aside the order passed by the authority based in Delhi wherein the court noted that the Delhi-based tax authorities do not have jurisdiction on the transaction and hence, set aside the order passed under Section 124 as well as the notices and order issued under Section 201(1)/201(1A) and the consequential proceedings.
The counsel, Porus Kaka appeared for the Petitioner. The counsel, N. Venkataraman represented the respondent.
