Genpact India Tax Evasion Case: Delhi High Court Grants Interim Relief
Action for reassessment is premised on the allegation that Genpact India made foreign remittances without deducting tax at source.
The Delhi High Court has granted interim protection to Genpact India Pvt. against the reassessment proceedings initiated for the assessment year 2015-16.
The action for reassessment is premised on the allegation that Genpact India made foreign remittances to the tune of Rs 107.56 crore, without deducting tax at source. The reassessment notice also alleges that the company created fictitious liability in the form of interest expenditure on non-convertible debentures, amounting to Rs 8.33 crore, which has resulted in tax evasion from India.
The issues sought to being reexamined by the tax department for AY2015-16 have already been a subject matter of a regular assessment, Senior Advocate Percy Pardiwala appearing for Genpact India submitted.
On the issue of non-deduction of tax at source on foreign remittances, Pardiwala said that for two prior years, the reassessment proceedings initiated on this issue were duly dropped. So, the proceedings on this count do not survive for the year under consideration.
On the issue of alleged fictitious interest expenditure, the revenue department's counsel argued that funds which were never utilised by Genpact India were shown as liability; that only inflated the business expenditure and reduced profitability. This underscored a case of tax evasion.
The Delhi High Court’s tax bench of Justices Rajiv Shakdher and Tara Vitasta Ganju found the issue worth examining. It granted an interim protection to Genpact India. This implies that the revenue department can continue with the proceedings but cannot take any coercive action until further orders of the court. The matter will now be heard on April 26.
