Court relief for Aircel in I-T notice over Rs 7.5 crore tax

CHENNAI: The Madras high court on Wednesday directed the income tax department to keep in abeyance demand notices issued against Aircel Limited for payment of Rs 7.54 crore tax deducted at source (TDS) for foreign remittances made in financial year 2010-11.

Justice T Raja passed the interim order on a plea moved by Aircel challenging the demand notices issued by the department dated March 31.

According to Aircel, the department has served the notice on the petitioners’ group of companies under section 201(1) and 201(A)of the Income Tax Act for alleged failure to deduct TDS on certain foreign remittances. Subsequently, the company initiated proceedings under Section 10 of the Insolvency and Bankruptcy Code seeking for initiation of corporate insolvency resolution process.

The petitioners further submitted that in view of the insolvency process and declaration of moratorium, the employees of the companies are leaving the company and it needs some time to comply with the notice issued by the department.

It was further submitted that the assistant commissioner the department through an order dated July 19, 2010, has authorised the company to make payment outside India without deduction of TDS and only based on such certificate the remittance of foreign payments were made.

The notices are liable to be set aside as the transaction between the petitioners and the non-resident operators is one of the sales transfer for a purchase price consideration value and involves no element of fee for technical services or royalty, and no income, in respect of which the petitioner is responsible for deducting TDS, the company added and wanted court to quash the notices.