D. P. Wadhwa, J. - (1.) These appeals are from the judgment dated December 18, 1984 of Division Bench of the Delhi High Court dismissing writ petitions of the appellant for various assessment years. In these writ petitions, the appellant had challenged notices issued under Section 148 of the Income-tax Act, 1961 (for short, the 'Act'). Civil Appeal 4074/85 pertains to assessment year 1969-70 and CAs 4075/85 and 4076/85 to assessment year 1967-68 and 1968-69 respectively. Civil Appeal 1089/85 pertains to 3 assessment years - 1971-72, 1972-73 and 1973-74. For the assessment year 1970-71, there are two appeals and these are CAs 1090/95 and 1091/85. While for each assessment year there was separate writ petition in the high Court, for assessment year 1970-71, there were two. Reason for two writ petitions for the assessment year 1970-71 was that while the first writ petition challenged the notice under Section 148 of the Act, second was filed as by that time the Income-tax Officer had completed the assessment and, thus, there was a challenge to the assessment itself.
(2.) The appellant is a wholly owned subsidiary of the Coca-Cola Company which is a company incorporated under the laws of the United States of America having its headquarters at Atlanta, Georgia, U. S. A. The appellant has its main office at New York referred to as the "home office". The appellant had a branch office at New Delhi which had been declared as a company under Section 2(17)(iv) of the Act by the Central Board of Direct Taxes. It is being assessed to income-tax as a non-resident company in India since it was established in the year 1958. The Coca-cola Company, the holding company, manufactures certain basic ingrediats like '7X' for the manufacture of Coca-Cola concentrate and other beverage bases in its factories in U. S. A. and in London. These basic ingredients are sold by the holding company exclusively to the appellant for further manufacture of Coca-Cola concentrate and beverage bases for its branches numbering 23 spread in various countries including that in India.
(3.) For the administrative convenience the whole area of operation of the appellant had been divided into four zones and 14 areas with district and regional offices. Different branches of the appellant including the Indian branch export their products to different countries and for that necessary services which are required are rendered by the district and regional offices. The branch offices have no staff or any other arrangement to render services to the purchasers of their products. These district and regional offices have no income of their own and the expenses they incur are termed as services charges and are borne by different branches of the appellant. There are thus Home Office expenses and the service charges by the zonal and area offices and also the district and regional offices. These are, as per report of the auditor, are distributed pro-rata basis on different branches on the basis of their exports and are met by the branches in US Dollars. The Indian branch primarily maintains accounts in respect of its liability for payment of pro-rated Home Office expenses and service charges in US Dollars as the liability is to be discharged in US Dollars only. At the same time the Indian branch also maintains accounts in respect of these liabilities in rupees as the accounts of the business carried on by it are generally in rupees. It is stated that this practice of pro-rating Home Office expenses and service charges is followed by multinational companies having branches in different countries and is an international accepted practice.;