Delhi Registered Office Doesn't Confer Jurisdiction Over UP Tax Audit Dispute: Delhi High Court

The Delhi High Court on 21 August held that merely because the registered office of a company whose accounts were audited is situated in Delhi, it does not mean that any part of the cause of action arose within the territorial jurisdiction of the Court.

A Division Bench of Justices Dinesh Mehta and Rajneesh Kumar Gupta dismissed a petition filed by a Chartered Accountants firm challenging a dispute concerning its fee bill and interest arising from its appointment as a Special Auditor. It held:

“There was no nexus between the petitioner and the U.P. Hotels, registered office whereof is claimed to be in Delhi, so far as dispute relating to fee bill or interest thereupon is concerned.”

The Revenue opposed the maintainability of the petition, arguing that no part of the cause of action had arisen in Delhi. It submitted that the petitioner had been appointed as Special Auditor by the Assistant Commissioner of Income Tax, Central Circle, Varanasi.

The fee bill was raised in the name of the Commissioner at Varanasi and payment was also made from Varanasi, Uttar Pradesh. The audit concerned various hotels situated in Uttar Pradesh.

The petitioner, on the other hand, contended that the petition was maintainable in Delhi since the registered office of U.P. Hotels was situated in the national capital.

Rejecting the contention, the Division Bench held that the location of U.P. Hotels' registered office in Delhi, by itself, did not establish that any part of the cause of action had arisen within its territorial jurisdiction.

Accordingly, the High Court dismissed the petition with liberty to the petitioner to approach the appropriate forum.

For Petitioner: Mr. P.D. Gupta, Advocate.

For Respondents: Mr. Indruj Singh Rai, SSC along with Mr. Sanjeev Menon, Mr. Rahul Singh, Ms. Priya Sarkar, JSCs, Mr. Gaurav Kumar and Mr. Prateek Bhati, Advocates.