Delhi HC quashes notices against Airtel over inter-connection charges
The HC said tax authorities cannot claim jurisdiction to issue showcause notices holding Airtel to be at default under provisions of the IT Act
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New Delhi: The Delhi high court on Monday quashed notices by the income tax department which required Bharti Airtel Ltd. to provide details of inter-connection charges paid by the telecom company to foreign entities.
The charges related to the periods of 2001-02 and 2010-11 and were restricted to Airtel’s payments on account of inter-connection charges to various foreign entities without tax deduction.
Two showcause notices were issued on 31 March, 2011 and 5 March, 2012 asking Airtel why it could not be held to be an assessee-in-default for non payment of tax under its inter-connection charges to foreign entities.
A bench headed by Justice Ravindra Bhat upheld the principle of “reasonable time” for initiating action where no period of limitation was prescribed due to which the showcause notices were liable to be quashed under the provisions of the Income Tax Act, 1961.
The tax authorities cannot claim jurisdiction to issue showcause notices holding Airtel to be at default under provisions of the IT Act, the order held.