CONSTITUTION OF INDIA, 1950

Article 226

Writ - Maintainability - Fundamental error relating to exercise of jurisdiction by DRP - Revenue pleading availability of efficacious appellate remedy to assessee

Assessee was a tax resident of UAE, and was engaged in web presence, sale of domain names to global customers through its B2B brands. AO passed draft assessment order under section 144C holding that assessee's income arising from domain Name Registration Services and Web Hosting Serviceds was taxable under IT Act, and also under India-UAE, ('DTAA'). Assessee being aggreived by the said order filed its objections before DRP, inter alia objecting that its income arising out of domain name registration services and web hosting services was not taxable under India-UAE, DTAA. DRP, followed decision of ITAT, Delhi in GoDaddy.com LLC [ITA No. 1878/Del/2017 [Assessment Year 2013-14] and ITA No. 7123/Del/2017 [Assessment Year 2014-15]. Assessee challenged this by way of writ petition contending that DRP did not adjudicate assessee's categorical objections on taxability under the India-UAE DTAA and without any application of mind followed aforesaid decision not appreciating that taxability in GoDaddy.com was decided under the provisions of the Act, and not under any DTAA and this violated the principles of natural justice. Revenue raised a preliminary objection as to maintainability of petition. He argued that since there was an alternate efficacious remedy available to assessee under section 253(1)(d), whereby assessment order passed by AO in pursuance of DRP directions could be challenged in appeal before ITAT, the assessee could not be allowed to file writ petition.Held: One of the exceptions, which is well recognised, is that if there is an adequate efficacious alternate remedy available to the Petitioner, Court should ordinarily not entertain writ, unless there exist sufficient grounds to invoke extraordinary jurisdiction under article 226 of Constitution of India. If there is a fundamental error relating to the exercise of jurisdiction which is glaring and noticeable, it would fall within the exceptions that courts have carued out for entertaining such a petition. A perusal of impugned direction of DRP showed that apart from copying reasoning given in GoDaddy.com LLC, DRP had merely endorsed and followed the said reasoning without giving any indication as to how the same had been held to be applicable to assessee's case while dealing with its foremost objection regarding the provisions of the Treaty. There was also no discussion regarding sustainability of assessee's objection or as to how findings rendered by AO in draft order had to be accepted. DRP ought to have considered objections raised by assessee and discussed the same on the basis of material placed, before giving its conclusion. Accordingly DRP had completely failed to exercise its jurisdiction and had rendered entire process of dispute resolution as per scheme of the Act, farcical. Accordingly, writ petition was allowed and impugned order was set aside. Consequently, the matter was remitted back to AO for considering objections raised by assessee in detail, and for passing a fresh order on merits in accordance with law.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

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