Sivagami Holdings Private Limited, CHENNAI V. DCIT, CHENNAI

CO 92/CHNY/2016

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3534 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 8 month(s) 3 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 14-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 02-08-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 11-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN ACIT
• Assessee Lawyers: R RAJASEKARAN; S THYAGARAJAN
• Keywords: Double taxation relief
• Section: 147; 148; 92

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: CHENNAI , , % BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.1322/CHNY/2016 /ASSESSMENT YEAR: 2004-05 M/S.SIVAGAMI HOLDINGS PVT. LTD., 202, ANNA SALAI, CHENNAI-600 002. [PAN: AAECS 3279 A] VS. THE ASST. COMMISSIONER- OF INCOME TAX, COMPANY CIRCLE-VI(3), CHENNAI-600 034. ( ' /APPELLANT) ( ()' /RESPONDENT) ./ ITA NOS.1419, 1420 & 1422/CHNY/2016 /ASSESSMENT YEARS: 2004-05, 2007-08 & 2011-12 THE DY. COMMISSIONER OF- INCOME TAX, CORPORATE CIRCLE-6(2), AAYAKAR BHAVAN, NEW BLOCK, 7 TH FLOOR, 121, M.G.ROAD, CHENNAI-600 034. VS. M/S.SIVAGAMI HOLDINGS- PVT. LTD., 202, ANNA SALAI, CHENNAI-600 002. [PAN: AAECS 3279 A] ( ' /APPELLANT) ( ()' /RESPONDENT) CROSS - OBJECTION NO S . 91, 92 & 93 / CHNY /20 16 (IN ITA NOS.1419, 1420 & 1422/CHNY/2016) /ASSESSMENT YEARS: 2004-05, 2007-08 & 2011-12 M/S.SIVAGAMI HOLDINGS PVT. LTD., 202, ANNA SALAI, CHENNAI-600 002. [PAN: AAECS 3279 A] VS. THE DY. COMMISSIONER- OF INCOME TAX, COMPANY CIRCLE-VI(2), AAYAKAR BHAVAN, NEW BLOCK, 7 TH FLOOR, 121, M.G.ROAD, CHENNAI-600 034. ( ' /APPELLANT) ( ()' /RESPONDENT) ITA NO.1322/CHNY/2016 ITA NOS.1419, 1420 & 1422/CHNY/2016 CO NOS.91, 92 & 93/CHNY/2016 (IN ITA NOS.1419, 1420 & 1422/CHNY/2016) :- 2 -: ASSESSEE BY : SHRI R.RAJASEKARAN, CA & SHRI S.THYAGARAJAN, CA DEPARTMENT BY : SHRI N.MADHAVAN, ACIT + /DATE OF HEARING : 14.03.2018 + / DATE OF PRONOUNCEMENT : 14.03.2018 / O R D E R PER BENCH : ITA NO.1322/CHNY/2016 IS AN APPEAL FILED BY THE AS SESSEE & ITA NO.1419/CHNY/2016 IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-15, CHENNAI , IN ITA NO.198/CIT(A)-15/2013-14 DATED 25.02.2016 FOR THE A Y 2004-05. 2.0 CO NO.91/CHNY/2016 IS A CROSS-OBJECTION FILED B Y THE ASSESSEE IN THE REVENUES APPEAL NO.1419/CHNY/2016 FOR THE AY 2 004-05. 3.0 ITA NO.1420/CHNY/2016 IS AN APPEAL FILED BY THE REVENUE & CO NO.92/CHNY/2016 IS A CROSS-OBJECTION FILED BY THE A SSESSEE IN THE REVENUES APPEAL IN ITA NO.1420/CHNY/2016 AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-15, CHENNAI, I N ITA NO.215/CIT(A)-15/2013-14 DATED 25.02.2016 FOR THE A Y 2007-08. 4.0 ITA NO.1422/CHNY/2016 IS AN APPEAL FILED BY THE REVENUE & CO NO.93/CHNY/2016 IS A CROSS-OBJECTION FILED BY THE A SSESSEE IN THE ITA NO.1322/CHNY/2016 ITA NOS.1419, 1420 & 1422/CHNY/2016 CO NOS.91, 92 & 93/CHNY/2016 (IN ITA NOS.1419, 1420 & 1422/CHNY/2016) :- 3 -: REVENUES APPEAL IN ITA NO.1422/CHNY/2016 AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-15, CHENNAI, I N ITA NO.45/CIT(A)- 15/2014-15 DATED 25.02.2016 FOR THE AY 2011-12. 5.0 SHRI N. MADHAVAN, ACIT, REPRESENTED ON BEHALF O F THE REVENUE AND SHRI R.RAJASEKARAN, CA & SHRI S.THYAGARAJAN, CA, RE PRESENTED ON BEHALF OF THE ASSESSEE. 6.0 AS ALL THE APPEALS AND CROSS-OBJECTIONS ARE REL ATED TO THE SAME ASSESSEE AND INVOLVED THE SAME ISSUES, THEY ARE BEI NG DISPOSED OFF BY THIS COMMON ORDER. ITA NO.1322/CHNY/2016 -ASSESSEES APPEAL - FOR THE AY 2004-05 : 7.0 THE ASSESSEE HAS CHALLENGED THE RE-OPENING OF T HE ASSESSMENT BY ISSUANCE OF NOTICE U/S.148 OF THE IT ACT, 1961. IT WAS SUBMITTED BY THE LD.AR THAT THE ASSESSEE COMPANY WAS INCORPORATED ON 10.10.2008 ON THE DEMERGER OF THE COMPANY KNOWN AS M/S.M.CT.M CORPORA TION PVT. LTD., AND M/S.M.CT.M GLOBAL PVT. LTD. W.E.F. 01.04.1999 IN AC CORDANCE WITH THE ORDER OF THE HONBLE MADRAS HIGH COURT DATED 10.02. 1999. IT WAS A SUBMISSION THAT THE ASSESSEE HAS FILED ITS RETURN O F INCOME FOR THE RELEVANT ASSESSMENT YEAR ON 31.10.2004 ADMITTING A LOSS OF R S.15,67,810/-. THE RETURN WAS PROCESSED U/S.143(1) ON 22.09.2005. SUB SEQUENTLY, NOTICES U/S.148 DATED 02.04.2007 WAS ISSUED AND SERVED ON T HE ASSESSEE. THE ITA NO.1322/CHNY/2016 ITA NOS.1419, 1420 & 1422/CHNY/2016 CO NOS.91, 92 & 93/CHNY/2016 (IN ITA NOS.1419, 1420 & 1422/CHNY/2016) :- 4 -: LD.AR DREW OUR ATTENTION TO THE REASONS RECORDED FO R THE PURPOSE OF RE- OPENING AT PAGE NO.102 OF THE PAPER BOOK, THE SAME READS AS FOLLOWS: GOVERNMENT OF INDIA INCOME TAX DEPARTMENT OFFICE OF THE ASSISTANT COMMISSIONER OF INCOME TAX COMPANY CIRCLE VI(3) 7 TH FLOOR NEW BLOCK, ROOM NO. 706, 121, MAHATMA GANDHI ROAD , CHENNAI-34 SL-87/2004-05 DATED: 02.01.2008 TO THE PRINCIPAL OFFICER, M/S. SIVAGAMI HOLDINGS PVT. LTD., 202, ANNA SALAI, CHENNAI-600 002. SIR, SUB: INCOME TAX ASSESSMENT - ASST YEAR 2004-05 - NOTICE U/S.148 DATED 02.04.2007 - REG. REF: YOUR LETTER DATED 07.04.2007 FILED ON 16.04. 2007 $$$ PLEASE REFER TO THE ABOVE. 2. VIDE YOUR LETTER CITED YOU HAD REQUESTED REASO NS FOR REOPENING THE ASSESSMENT AND THE SAME IS FURNISHED BELOW: THE ASSESSEE HAS CLAIMED MALAYSIAN (FOREIGN) INCOM E CLAIMED AS EXEMPT IN INDIA AS PER ADT BETWEEN MALAYSIA & INDIA. HOWEVER, IT IS NOTICED FROM THE P & L ACCOUNT THAT THE INCOME WHICH THE ASSESSEE CLAIMS AS EXEMPT IS EARNED OUTSIDE MALAYSIA AND THE SAME IS EXEMPT UNDER THE MALAYSIAN INCOME T AX ACT. THEREFORE, THE SAME INCOME, WHICH IS EXEMPT IN MALAYSIA, DOES NOT COME UNDER ADT AND THE INCOME WHICH IS CHARGEABLE TO TAX IN EITHER OF THE CONTRAC TING COUNTRY IS ONLY EXEMPT UNDER ADT. THEREFORE, THE FOREIGN INCOME HAS TO BE TAXED IN INDIA. THEREFORE, INCOME OF RS.251,55,324/- HAS ESCAPED ASSESSMENT WITHIN THE M EANING OF SEC. 147 R.W.S. 148. YOURS FAITHFULLY, SD/- [R. SAMPATH KUMAR] ASSISTANT COMMISSIONER OF INCOME-TAX COMPANY CIRCLE VI(3), CHENNAI 7.1 IT WAS A SUBMISSION THAT UNDER IDENTICAL CIRCUM STANCES, THE CO- ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES O WN CASE FOR THE AYS 2000-01, 2001-02, 2002-03 & 2005-06 IN ITA NOS.956 TO 959/MDS/2009 ITA NO.1322/CHNY/2016 ITA NOS.1419, 1420 & 1422/CHNY/2016 CO NOS.91, 92 & 93/CHNY/2016 (IN ITA NOS.1419, 1420 & 1422/CHNY/2016) :- 5 -: VIDE AN ORDER DATED 31.05.2011, HAS HELD THAT THE R EASONS RECORDED WERE ERRONEOUS AND CONSEQUENTLY, THE NOTICES ISSUED U/S. 148 WAS NOT VALID IN LAW. IT WAS A SUBMISSION THAT THE REASONS RECORDED FOR THOSE YEARS HAD BEEN EXTRACTED BY THE CO-ORDINATE BENCH OF THIS TRI BUNAL IN THE ASSESSEES OWN CASE IN PARA NO.36 OF ITS ORDER. IT WAS A SUBMI SSION THAT THE REASONS BEING PARI-MATERIA AND THE REASONS HAVING BEEN HELD TO BE ERRONEOUS, THE RE-OPENING OF THE ASSESSMENT IN THE ASSESSEES CASE FOR THE RELEVANT ASSESSMENT YEAR WAS ALSO LIABLE TO BE CANCELLED. 7.2 IN REPLY, THE LD.DR VEHEMENTLY SUPPORTED THE OR DER OF THE AO & THE LD.CIT(A). IT WAS A SUBMISSION THAT IN PAGE NO.5 O F THE ORDER OF THE LD.CIT(A) THE ISSUE OF THE RE-OPENING HAD BEEN HELD AGAINST THE ASSESSEE IN SO FAR AS THE FACTS IN EACH CASE WAS DIFFERENT A ND CANNOT BE APPLIED BLINDLY. 7.3 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. 7.4 A PERUSAL OF THE REASONS RECORDED FOR THE RELEV ANT ASSESSMENT YEAR CLEARLY SHOWS THAT THE SAME IS IN PARI-MATERIA WITH THE REASONS RECORDED FOR THE EARLIER ASSESSMENT YEARS IN THE ASSESSEES OWN CASE. A PERUSAL OF THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBU NAL CLEARLY SHOWS THAT THE ISSUE HAS BEEN HELD IN FAVOUR OF THE ASSESSEE I N PARA NO.52 OF THE ORDER OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE. ITA NO.1322/CHNY/2016 ITA NOS.1419, 1420 & 1422/CHNY/2016 CO NOS.91, 92 & 93/CHNY/2016 (IN ITA NOS.1419, 1420 & 1422/CHNY/2016) :- 6 -: THIS BEING SO, RESPECTFULLY FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE, THE RE -OPENING OF THE ASSESSMENT TO BE BAD IN LAW AND THE CONSEQUENTIAL A SSESSMENT IS HELD TO BE ANNULLED. 7.5 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO.1322/CHNY/2016 STANDS ALLOWED. ITA NO.1419/CHNY/2016 - REVENUES APPEAL - FOR THE AY 2004-05 : 8.0 AS WE HAVE ALLOWED THE ASSESSEES APPEAL BY QUA SHING THE NOTICE U/S.148, THE APPEAL FILED BY THE REVENUE IN ITA NO. 1419/CHNY/2016 STANDS DISMISSED AS INFRUCTUOUS. CO NO.91/CHNY/2016 - ASSESSEES APPEAL - FOR THE AY 2004-05 : 9.0 AS WE HAVE ALREADY ALLOWED THE ASSESSEES APPEA L IN RESPECT OF THE ISSUE OF RE-OPENING IN ITA NO.1322/CHNY/2016, THE C ROSS-OBJECTION FILED BY THE ASSESSEE IN CO NO.91/CHNY/2016 STANDS ALLOWE D. ITA NO.1420/CHNY/2016 - REVENUES APPEAL - FOR THE AY 2007-08 & CO NO.92/CHNY/2016 - ASSESSEES APPEAL - FOR THE AY 2007-08 : 10.0 IN REGARD TO REVENUES APPEAL IN ITA NO.1420/C HNY/2016 FOR THE AY 2007-08, IT WAS SUBMITTED BY THE LD.DR THAT THE ISS UE WAS AGAINST THE RELIEF GRANTED TO THE ASSESSEE ON MERITS. IT WAS S UBMITTED BY THE LD.DR ITA NO.1322/CHNY/2016 ITA NOS.1419, 1420 & 1422/CHNY/2016 CO NOS.91, 92 & 93/CHNY/2016 (IN ITA NOS.1419, 1420 & 1422/CHNY/2016) :- 7 -: THAT THE ASSESSEE IS REGISTERED AS A NON-BANKING FI NANCE COMPANY AND CARRIES ON ITS BUSINESS OF INVESTMENTS IN CHENNAI. IT WAS A SUBMISSION THAT THE ASSESSEE CARRIES OUT ITS INVESTMENT OPERAT IONS THROUGH ITS PE IN KUALA LAMPUR, MALAYSIA. IT WAS A SUBMISSION THAT T HE AO ON THE GROUND THAT THE MANAGEMENT OF THE ASSESSEE COMPANY IS IN I NDIA HELD THAT THE INCOME OF THE ASSESSEE IN RESPECT OF ITS MALAYSIAN ENTITY WAS LIABLE TO BE TAXED IN INDIA. IT WAS A SUBMISSION THAT THE LD.CIT (A) HAD RELIED UPON THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE AYS 2000-01, 2001-02, 2002-03 & 2005-0 6 REFERRED TO SUPRA, HAD HELD THAT THE INCOME OF THE MALAYSIAN BRANCH OF THE ASSESSEE CANNOT BE BROUGHT TO TAX IN INDIA. IT WAS A SUBMISSION THA T THE ORDER OF THE LD.CIT(A) WAS LIABLE TO BE REVERSED. 10.1 IN REPLY, THE LD.AR VEHEMENTLY SUPPORTED THE O RDER OF THE LD.CIT(A). 10.2 IT WAS A SUBMISSION THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE, WHEREIN, THE CO-ORDINATE BENCH HAS HELD THAT THE INCOME OF THE MALAYSIAN BRANCH OF THE ASSESSEE COMPANY IS INCOME EARNED IN MALAYSIA AND BY VIRTUE OF DTAA THAT INCOME IS LIABLE FOR TAX ATION ONLY IN MALAYSIA AND THEREFORE, THE SAME CANNOT BE BROUGHT TO TAX IN INDIA. ITA NO.1322/CHNY/2016 ITA NOS.1419, 1420 & 1422/CHNY/2016 CO NOS.91, 92 & 93/CHNY/2016 (IN ITA NOS.1419, 1420 & 1422/CHNY/2016) :- 8 -: 10.3 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. 10.4 AS IT IS NOTICED THAT THE ISSUE IN THE REVENUE S APPEAL IS SQUARELY COVERED BY THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE, RESPECTFULLY FOLLOWING THE DEC ISION OF CO-ORDINATE BENCH OF THIS TRIBUNAL, THE FINDINGS OF THE LD.CIT( A) STANDS CONFIRMED. AS WE HAVE ALREADY DISMISSED THE REVENUES APPEAL AND THE ASSESSEES CROSS-OBJECTION IS ONLY IN SUPPORT OF THE ORDER OF THE LD.CIT(A), THE SAME STANDS ALLOWED. 10.5 IN THE RESULT, THE REVENUES APPEAL IN ITA NO. 1420/CHNY/2016 STANDS DISMISSED AND THE CROSS-OBJECTION FILED BY T HE ASSESSEE IN CO NO.92/CHNY/2016 IS ALLOWED. ITA NO.1422/CHNY/2016 - REVENUES APPEAL - FOR THE AY 2011-12 : 11.0 IN REGARD TO REVENUES APPEAL IN ITA NO.1422/C HNY/2016 AND THE ASSESSEES CROSS-OBJECTION IN CO NO.93/CHNY/2016, I T WAS SUBMITTED THAT THE REVENUES APPEAL WAS IDENTICAL TO THE REVENUES APPEAL IN ITA NO.1420/CHNY/2016 FOR THE AY 2007-08. 11.1 AS WE HAVE ALREADY HELD THAT THE ISSUE ON MERI TS AS TO WHETHER THE INCOME OF THE MALAYSIAN BRANCH OF THE ASSESSEE IS L IABLE TO BE TAXED ONLY IN MALAYSIA AND NOT IN INDIA, RESPECTFULLY FOLLOWIN G THE DECISION OF CO- ITA NO.1322/CHNY/2016 ITA NOS.1419, 1420 & 1422/CHNY/2016 CO NOS.91, 92 & 93/CHNY/2016 (IN ITA NOS.1419, 1420 & 1422/CHNY/2016) :- 9 -: ORDINATE BENCH OF THIS TRIBUNAL AND AS IT IS NOTICE D THAT THE LD.CIT(A) HAS FOLLOWED THE DECISION OF THE CO-ORDINATE BENCH OF T HIS TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE AYS 2000-01, 2001-02, 2 002-03 & 2005-06, REFERRED TO SUPRA, THE FINDINGS OF THE LD.CIT(A) ST ANDS CONFIRMED AND CONSEQUENTLY, THE REVENUES APPEAL STANDS DISMISSED . 11.2 IN THE RESULT, THE REVENUES APPEAL IN ITA NO. 1422/CHNY/2016 STANDS DISMISSED CO NO.93/CHNY/2016 ASSESSEES APPEAL - FOR THE AY 2011-12: 12.0 GROUND NOS.1 & 8 ARE GENERAL IN NATURE WHICH D O NOT REQUIRED ANY ADJUDICATION. 12.1 IN REGARD TO GROUND NOS.2 TO 4, IT WAS SUBMITT ED THAT THE ISSUE WAS AGAINST THE DISALLOWANCE MADE U/S.14A OF THE ACT. NO SUBSTANTIAL ARGUMENT HAS BEEN PLACED IN RESPECT OF THE SAME AND CONSEQUENTLY, THE SAID GROUNDS ARE DISMISSED. 12.2 IN REGARD TO GROUND NO.5, IT WAS SUBMITTED BY THE LD.AR THAT THE ASSESSEE HAS CHALLENGED THE ACTION OF THE LD.CIT(A) IN NOT GRANTING THE RELIEF AVAILABLE TO THE ASSESSEE UNDER THE PROVISIO NS OF SEC.72 OF THE ACT. 12.3 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. ITA NO.1322/CHNY/2016 ITA NOS.1419, 1420 & 1422/CHNY/2016 CO NOS.91, 92 & 93/CHNY/2016 (IN ITA NOS.1419, 1420 & 1422/CHNY/2016) :- 10 -: 12.4 AS IT IS NOTICED THAT THE RETURNED INCOME IS NIL AND THE PROVISIONS OF SEC.72 IS IN RESPECT OF THE CARRY FORWARD OF THE BUSINESS LOSSES AND AS THERE IS NO INCOME AGAINST WHICH THE CARRY FORWARD BUSINESS LOSSES CAN BE SET OFF THE GROUNDS BECOME INFRUCTUOUS. 12.5 IN REGARD TO GROUND NOS.6 & 7, IT WAS A SUBMIS SION THAT THE ISSUE WAS AGAINST THE LEVY OF INTEREST U/S.234D OF THE AC T. AS IT IS NOTICED THAT THE LEVY OF INTEREST U/S.234D IS CONSEQUENTIAL IN N ATURE, WE FIND NO REASON TO INTERFERE IN THE SAME. 12.6 IN THE RESULT, CROSS-OBJECTION FILED BY THE AS SESSEE IN CO NO.93/CHNY/2016 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON MARCH 14, 2018, AT CHENNAI. SD/- SD/- ( ) ( S. JAYARAMAN ) /ACCOUNTANT MEMBER ( ) (GEORGE MATHAN) /JUDICIAL MEMBER /CHENNAI, 0 /DATED: MARCH 14, 2018. TLN + (12 32 /COPY TO: 1. ' /APPELLANT 4. 4 /CIT 2. ()' /RESPONDENT 5. 2 ( /DR 3. 4 ( ) /CIT(A) 6. /GF