I-T dept approaches High Court on tax relief to SNC Lavalin

The Income Tax department today approached the Delhi High Court seeking stay over a sectoral tribunal's order granting tax relief to canada-based engineering firm SNC Lavalin on the money earned from providing technical services.

In its petition, the I-T department said the tax relief to SNC Lavalin by the Income Tax Appellate Tribunal by staying the department's direction was "contrary to law".

The I-T department had directed the Canadian firm to pay 20 per cent tax on the revenue generated from providing technical services.

A division bench headed by Justice A K Sikri and Justice Siddharth Mridul has admitted the petition and directed it to list for hearing.

The department submitted that as per Section 115 A of the I-T Act, any foreign company would have to pay 20 per cent tax on the money earned from giving technical services.

SNC Lavalin made Rs 6.2 crore in 2002-03 from providing technical design to National Highway Authority of India for widening its stretches but exempted itself from paying taxes on the ground that it had provided only technical support and not the complete product.

It added that its services were also covered under Indo- Canadian DTAA and as per the treaty, the department could not charge more than 15 per cent tax.

Later, SNC Lavalin challenged IT department's direction before ITAT, which stayed the order.