Parallel Proceedings Against Taxpayer & Its Representative Assessee Valid: Rules Mumbai Tribunal

• Parallel assessment proceedings against a non-resident and its representative assessee are permissible under law;
• However, the liability of the representative assessee will stand exonerated to the extent of tax recovered from the non-resident.

Recently, the Mumbai Income Tax Appellate Tribunal ("Tribunal") held¹ that the Revenue is allowed to initiate assessment proceedings against a non-resident taxpayer as well the representative assessee of the non-resident taxpayer. However, in case the Revenue is able to recover the taxes directly from the non-resident taxpayer, the liability of the representative assessee shall stand exonerated to that extent.

Background

Air India Limited ("AIL"), an Indian public company entered into a wet lease² agreement ("Lease Agreement") for three aircraft with Cabrijet Inc. ("Cabrijet"), a company incorporated in Antigua and Barbuda. However, AIL prematurely terminated the Lease Agreement, following which Cabrijet