Supreme Court junks plea against Xerox India arm for 215-day delay

The Supreme Court on Wednesday refused to entertain an appeal by the income tax department against the Indian arm of Xerox, saying the plea was filed 215 days late.

"How can the Supreme Court condone a 215-day delay by the income tax department? What message will it send to foreign investors, like 'see SC is condoning such huge delays'? Sorry, that cannot be done. These companies are working here and provide revenues, jobs, and courts also give a signal that there has to be some balance, you see. Sorry," said Chief Justice of India (CJI) DY Chandrachud.

The CJI said that such a delay by government departments is not in the interest of India's investment climate and that pursuing a case on time is an important part of the ease of doing business.

 

Under the Limitation Act, the period of limitation for an appeal to a high court is 90 days from the date of order/decree, and to any other court from an order, 30 days from the date of order/decree.

Last year, the Bombay High Court had observed how governments are the largest litigant. The government is now working on a National Litigation Policy to transform the government into an ‘efficient’ litigant, ensuring that it is well-represented in legal proceedings.

In January 2024, the apex court had expressed shock and surprise over the department filing an appeal four years late. The top court also said in January that in the absence of any particular period of time being prescribed to file an appeal, the same would be governed by the principle of 'reasonable time', for which, by virtue of its very nature, no straitjacket formula can be laid down and it is to be determined as per the facts and circumstances of each case.

The question before the apex court on Wednesday was whether the marketing expense incurred by Xerox would amount to an international transaction and be taxed accordingly.

Agreeing with the Income Tax Appellate Tribunal (ITAT) order, the Delhi High Court ruled in favour of Xerox.

"We allow this ground of assessee's (Xerox) appeal and direct to re-compute the depreciation and allow the necessary relief to the assessee," the HC order said.

Xerox, an American corporation, was the first to manufacture xerographic plain-paper copiers.