COGNIZANT TECHNOLOGY SOLUTIONS Vs. DEPUTY COMMISSIONER OF INCOME

JUDGEMENT

(1.) The petitioner has filed this writ petition challenging an order dated 22.03.2018, which is a demand under Section 115-Q of the Income Tax Act, 1961 (for brevity "the Act").

(2.) By the impugned order, the respondent has pointed out that payments made to the shareholders under purchase of shares through the scheme of arrangements and compromise is a dividend within the meaning of Section 2(22)(d) / 2(22)(a) of the Act, requiring to remit the taxes into the Government account under Section 115-O of the Act. Further, it has been stated that since the petitioner has failed to remit the taxes within the stipulated period, the petitioner is deemed to be an assessee in default under Section 115-Q of the Act. Therefore, the assessee has been called upon to remit the taxes (calculated at the rate of 15% of the total payment of Rs. 19415,62,77,269/- to the shareholders and surcharges etc., as per the Act) along with the interest payable under Section 115-P of the Act. The impugned order has been challenged on several grounds. Firstly on the ground that it is in violation of principles of natural justice.

(3.) Mr.P.S.Raman, learned Senior Counsel for Mr.Srinath Sridevan, learned counsel for the petitioner contended that any action for collection of demand without determination and due process and opportunity would be ultra vires Article 14 of the Constitution of India. Further, it is submitted that there was no show cause notice issued to the petitioner, only a chance was given to them to justify their stand. It is submitted that the petitioner has filed an application before the Advance Ruling Authority on 20.03.2018 and as soon as the application is entertained by the said authority, it creates an automatic bar for proceedings to be initiated in the light of Section 245RR of the Act. It is submitted that the impugned order though dated 22.03.2018, was despatched only on 23.03.2018 and served on the petitioner on 26.03.2018 and the application before the Advance Ruling Authority having been filed on 20.03.2018, the respondent cannot violate the rigor of Section 245RR of the Act. It is submitted that the petitioner's shareholders have paid a sum of Rs. 898,01,63,318/- by way of withholding taxes on capital gains.