Taxpublishers.in - InterestingDecision/Flash_063.htm - Tax Publishers Your Tax Solution Hub

Share via Whatsapp 223 Views


Tax Publishers Mastercard Asia Pacific Pte. Ltd. v. UOI & Ors. [W.P. (C) No. 10944/2018, dt. 18-8-2020] : 2020 TaxPub(DT) 3217 (Del-HC) Levy of equalization levy on the PE of a non-resident -- Mutual exclusivity *Facts:* Assessee non-resident was held to have a PE in India vide AAR No. 1573 of 2014 dated 6-6-2018 (2018 TaxPub(DT) 3326 (AAR) : (2018) 406 ITR 0043 : (2018) 303 CTR 0305) which is under appeal in the high court. Pending adjudication of the PE existence they prayed in this writ that Equalization levy introduced vide Finance Act, 2016 with effect from 1-4-2020 be stayed for them until outcome of their appeal on PE existence which they expect to be in their favour. The plea was if pressed for paying Equalization levy would be a case of double taxation -- taxation on the PE and then Equalization levy as well. Held in favour of the assessee that they would not be compelled upon to pay Equalization levy under section 163 (Chapter-VIII) with an assurance by the revenue that if there is a PE existence then equalization levy would not apply and if PE were not to exist then Equalization would apply which is what is enshrined in section 165A(2). *Editorial Note:* The Writ emanates from the apprehension in cases of where PE exists and is being contested then Equalization levy would also be imposed on the assessee. Existence of a PE is a factual aspect which is normally decided only at the time of assessment especially in cases where the PE existence itself is contested. Thus if a PE were to be read and still if Equalization levy had been paid the same might have to be treated only like an advance tax nothing more as section 165A(2) confirms that if PE is in existence then Equalization levy cannot be sustained.

Tax Publishers

Mastercard Asia Pacific Pte. Ltd. v. UOI & Ors. [W.P. (C) No. 10944/2018, dt. 18-8-2020] : 2020 TaxPub(DT) 3217 (Del-HC)

Levy of equalization levy on the PE of a non-resident -- Mutual exclusivity

Facts:

Assessee non-resident was held to have a PE in India vide AAR No. 1573 of 2014 dated 6-6-2018 (2018 TaxPub(DT) 3326 (AAR) : (2018) 406 ITR 0043 : (2018) 303 CTR 0305) which is under appeal in the high court. Pending adjudication of the PE existence they prayed in this writ that Equalization levy introduced vide Finance Act, 2016 with effect from 1-4-2020 be stayed for them until outcome of their appeal on PE existence which they expect to be in their favour. The plea was if pressed for paying Equalization levy would be a case of double taxation -- taxation on the PE and then Equalization levy as well.

Held in favour of the assessee that they would not be compelled upon to pay Equalization levy under section 163 (Chapter-VIII) with an assurance by the revenue that if there is a PE existence then equalization levy would not apply and if PE were not to exist then Equalization would apply which is what is enshrined in section 165A(2).

Editorial Note: The Writ emanates from the apprehension in cases of where PE exists and is being contested then Equalization levy would also be imposed on the assessee. Existence of a PE is a factual aspect which is normally decided only at the time of assessment especially in cases where the PE existence itself is contested. Thus if a PE were to be read and still if Equalization levy had been paid the same might have to be treated only like an advance tax nothing more as section 165A(2) confirms that if PE is in existence then Equalization levy cannot be sustained.