- Vide Decision of Supreme court of India in Cognizant Technology Solutions India (P.) Ltd. Vs. Deputy Commissioner of Income Tax
Facts of the case:
- The department addressed a communication to assessee that payments made to shareholders, under the purchase of shares through a scheme of 'arrangement and compromise' was dividend within the meaning of section 2(22)(d)/2(22)(a), requiring it to remit tax to the Government account under section 115-O.
- Since the company failed to remit the taxes within the stipulated period, the company was 'deemed to be an assessee-in-default', under section 115-Q. Therefore, the assessee company was directed to remit the taxes to the shareholders, and surcharge etc. along with the interest payable under section 115-P.
- The appellant challenged said communication by submitting inter alia that while the issue as to whether the assessee was liable to pay tax on buy-back of shares under section 115-QA or section 115-O was pending before the AAR under section 245Q, in view of the bar provided under section 245RR, the impugned communication was not sustainable.
Judgement
The honourable Supreme Court of India held the case as follows:
- In view of the agreement arrived at between the parties, the assessee was to be directed to file an affidavit to withdraw the proceedings initiated by it before the AAR, and at the same time, the Department was also to be directed to file an appropriate affidavit stating that it was willing to treat the impugned communication as a show-cause notice so that issue could be decided on merits.