Bombay High Court
Siemens A.G. And Anr vs Asst. Commissioner Of Income-Tax 21(3) ... on 17 March, 2025
Author: M. S. Sonak
Bench: M.S. Sonak
2025:BHC-OS:4398-DB 56-WP-845-2015-J(F).DOCX
Amol
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO. 845 OF 2015
1. Siemens A.G.,
a company incorporated under the
laws of Germany and having its registered
office at :
Wittelsbacherplatz 2, CFR2,
80333 Munich, Germany
and the communication address in
AMOL India at c/o. BSR and Company
PREMNATH
JADHAV 1st Floor, Lodha Excelus,
Digitally signed by
AMOL PREMNATH
Apollo Mills Compount,
JADHAV
Date: 2025.03.19 N.M. Joshi Marg, Mahalakshmi,
17:04:02 +0530
Mumbai - 400011
2. Siemens Ltd,
a company incorporated under the
Companies Act, 1956 and having its
registered office at 130, Pandurang
Budhkar Marg, Worli,
Mumbai - 400 018. ...Petitioners
Versus
1. Asst. Commissioner of Income-tax
21(3), Mumbai having his office at
115, 1st Floor, Piramal Chambers,
Parel, Mumbai - 400 012
2. Principal Commissioner of Income-tax 21,
Mumbai, having his office at
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Room No. 517, Piramal Chambers,
Parel, Mumbai - 400 012.
3. Union of India
Through the Secretary,
Department of Revenue,
Ministry of Finance, North Block,
Parliament Street, New Delhi - 110 001 ...Respondents
______________________________________________________
Mr P. J. Pardiwalla, Senior Advocate, with Mr Nitesh Joshi,
i/b, Mr Atul K. Jasani, for the Petitioners.
Mr Suresh Kumar, for the Respondents.
______________________________________________________
CORAM
M.S. Sonak &
Jitendra Jain, JJ.
DATED: 17 March 2025
ORAL JUDGMENT (Per M. S. Sonak, J)
1. Heard learned Counsel for the parties.
2. The Petitioners seek the following reliefs in this
Petition:-
"a. the impugned notice dated 31.03.2014 issued by
the Asst. Commissioner of Income-tax18(1), Mumbai
(being the Respondent No.1) under section 148 of the
Act, to assess income of the alleged Association of Person
(the AOP) formed between Siemens A.G. (being a
company formed and registered under the laws of
Germany - hereinafter referred to as the Petitioner No. 1)
and Siemens Limited (being a company formed and
registered under the laws of India-hereinafter to as the
Petitioner No.2); and
b. the impugned order dated 20.02.2015 passed by
the Respondent No.1 dismissing the objections as raised
by the Petitioners before him."
56-WP-845-2015-J(F).DOCX
3. On 24 June 2015, Rule was issued in this Petition after
making some observations. Accordingly, the order dated 24
June 2015 is transcribed below for the convenience of
reference: -
"Heard. Rule.
2 The Petition challenges Notice dated 31 March
2014 issued under Section 148 of the Income-tax Act,
1961. The impugned notice is issued to an Association of
Persons (AOP) allegedly constituted of Petitioner No.1 &
2. The impugned notice alleges that income chargeable to
tax has escaped amount and called upon the AOP to file
its return of income for Assessment year 2009-2010.
3 The challenge in the petition is that the impugned
reopening Notice is without jurisdiction on the ground
that the issue whether Petitioner Nos.1 and 2 together
constitute an AOP is a subject matter of an appeal
pending before the Income Tax Appellate Tribunal (the
Tribunal) from the Assessment order dated 30 January
2014 passed in the case of Siemens A.G. In fact, both
revenue as well as the Siemens A.G. are in appeal before
the Tribunal with the revenue contending that there is an
AOP in existence while Siemens A.G. is contending that
there is no AOP in existence. In view of the third proviso
to Section 147 of the Act, prima facie there appears to be
a bar in issuing the impugned Notice. Besides other
contentions have also been raised on behalf of the
Petitioner to the effect that there was no independent
application of mind by the author of the impugned Notice
on the alleged tangible material for the purpose of coming
to the conclusion that there is an AOP constituted of
Petitioner Nos.1 and 2 in existence. The reasons recorded
in support of the impugned Notice prima facie indicate
that it has been issued only on the basis of an opinion
formed by some other person and not on independent
application of mind by the Assessing officer. These are
matters which would require consideration at the time of
final hearing.
4 In view of the above, interim relief in terms of
prayer clause (d)."
56-WP-845-2015-J(F).DOCX
4. This Petition was called out for a final hearing on 11
March 2022. At that time, it was pointed out that the Appeals
filed by the Petitioners and the Respondents were pending
before the Income Tax Appellate Tribunal (ITAT). This Court
noted that the findings of the ITAT in the pending Appeal
would have a bearing on the disposal of this Petition.
Accordingly, by order dated 11 March 2022, this Court
requested that ITAT dispose of the two Appeals at the earliest
and, in any event, by 30 June 2022.
5. Since the Appeals were not disposed of by 30 June
2022, this Court made further orders dated 27 June 2022, 13
October 2023, 15 December 2023, 02 February 2024 and 19
April 2024 regarding the disposal of the two Appeals.
6. Finally, by order dated 7 June 2024, the ITAT has
disposed of the two Appeals. On the crucial issue of whether
an AOP existed, the ITAT has held that the Petitioners did not
constitute the AOP, and consequently, there was no AOP in
existence.
7. The relevant findings regarding the existence of the AOP
are in paragraphs 41 to 43 of the ITAT's judgment and order
dated 7 June 2024. The same are transcribed below for the
convenience of reference: -
".....41. After considering the aforesaid submissions and
the facts as discussed above including the judgment
referred and relied upon by both the parties, we find that
this case is squarely covered by the decision of the Hon'ble
Delhi High Court in the case of Linde AG which has been
discussed in detail in the foregoing paragraphs including
the judgment of AAR. From the perusal of the MOU dated
11/09/2006, it is clear that the parties had come together
only with a view to participate in the tender where the
scope of the work to be executed by each of the parties is
56-WP-845-2015-J(F).DOCX
separate and independent. There is neither any joint
management nor any joint execution of the work. Further,
there is no sharing of profits and losses between the parties
and each of the party is entitled to the gross consideration
to be received by them for executing their separate part of
the work. Lastly, it has been agreed that though both the
parties are jointly and severally liable to DMRC in respect
of the entire contract, they have agreed to indemnify each
other for losses suffered on account of defaults committed
by the other. Thus, in these circumstances, we find that the
prerequisite condition for constitution of an AOP being has
not been fulfilled.
42. Once there are separate obligations to be performed
and there is no over lapping of work and both the parties
have received monies payable under the contract
independent of each other and Indian party is entitled to
raise the bill separately for the work carried out by it and
assessee had received consideration separately for the
supply carried out by it through off-shore, it cannot be
inferred that both the parties acted in consort to perform
the contract together for the project. The nature of work
undertaken is being executed by each member separately
which has been clearly defined in Clause 5 and 6 of MOU.
Once there is a separate invoicing and payments in respect
of separate claim of work, then where is the question of
treating them as AOP, because each member does not act
as an agent of the other. In so far reliance placed on the
'joint and several liability' towards the DMRC as referred in
Clause 9.1 has been imposed by DMRC, this was only to
safeguard itself by having a better hold over the parties for
timely and successful completion of the project which
provides between the members of the consortium, each
Party shall indemnify and hold harmless the other Party to
its MOU from all costs, claims, actions, expenses or
liabilities incurred by or imposed upon the other Party as a
result of or in connection with its failure, breach, delay or
other default in the performance of its respective
obligations.
43. Lastly, Clause 1.3 of the MoU is very clear that nothing
in the contract agreement shall be deemed to constitute,
create, give effect to or otherwise recognize a corporation,
association, partnership, joint venture or formal or
informal business entity of any kind and the insurance qua
the contract has been taken by each member separately
and not by the consortium. Thus, we agree with the Ld. Sr.
Counsel for the assessee that on these facts it cannot be
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held that there constitutes of AOP between Siemens AG
and Siemens Ltd. Thus, this issue is decided in favour of
the assessee and against department......"
8. The impugned reopening notice in this case was
admittedly issued to the Petitioners on the premise that
together, they constitute an AOP. This premise would no
longer hold good, given the ITAT's finding that no AOP
existed. Since the base of the impugned reopening notice no
longer survives, the impugned reopening notice will have to
be set aside and is hereby set aside.
9. However, we clarify that this judgment and order will
not preclude the revenue from challenging the ITAT's
judgment and order dated 7 June 2024 or from urging that it
is entitled to seek a revival of the reassessment proceedings,
should this Court ultimately reverse the finding about the
existence of AOP. All contentions in this regard are therefore
left open.
10. This Petition is accordingly allowed, and the impugned
notice dated 31 March 2014 and the impugned order dated
20 February 2015 based upon the impugned notice are hereby
set aside.
11. Subject to the above clarification, the Rule is made
absolute in the above terms without any cost order.
12. All concerned can act on an authenticated copy of this
order.
(Jitendra Jain, J) (M.S. Sonak, J)
