INVESTERINGSFORENINGEN BANKINVEST AFD INDIEN & KINA, MUMBAI V. DDIT 3(1)(IT), MUMBAI

ITA 3723/MUM/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8202 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: L
• Next Hearing Date: 09-10-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 23-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY SHRIVASTAVA
• Assessee Lawyers: KADAMBARI DAVE
• Keywords: Reopening of assessment; Double taxation relief; Difference of opinion; Reason to believe; Change of opinion
• Section: 147; 148; 143(3); 234B

Judgement Text

I.T.A.NO.3721/MUM/2014-OTHER TWO APPEALS AND CORRIGENDUM 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES L, MUMBAI .. , !, ' #$ %, & ! ' BEFORE SHRI R.C.SHARMA, AM AND SHRI AMIT SHUKLA, JM ITA NO.3721/MUM/2014: ASST.YEAR 2006-2007 INVESTERINGSFORENINGEN BANKINVEST I AFD INDIEN & KINA (NOW KNOWN AS INVESTERINGSFORENINGEN BANKINVEST ASIEN), SUNDKROGSGADE 7 DK 2100 COPENHAGEN DENMARK PAN : AAATI4695M. = / VS. THE DY.DIRECTOR OF INCOME-TAX 3(1) (INTERNATIONAL TAXATION) MUMBAI. ( / APPELLANT) ( '()/ RESPONDENT) ITA NO.3722/MUM/2014: ASST.YEAR 2006-2007 INVESTERINGSFORENINGEN BANKINVEST I AFD FJERNOSTEN, SUNDKROGSGADE 7 DK 2100 COPENHAGEN DENMARK PAN : AAATI4692N. = / VS. THE DY.DIRECTOR OF INCOME-TAX 3(1) (INTERNATIONAL TAXATION) MUMBAI. ( / APPELLANT) ( '()/ RESPONDENT) ITA NO.3723/MUM/2014: ASST.YEAR 2006-2007 INVESTERINGSFORENINGEN BANKINVEST I AFD INDIEN & KINA, SUNDKROGSGADE 7 DK 2100 COPENHAGEN DENMARK PAN : AAATI4695M. = / VS. THE DY.DIRECTOR OF INCOME - TAX 3(1) (INTERNATIONAL TAXATION) MUMBAI. ( / APPELLANT) ( '() / RESPONDENT) I.T.A.NO.3721/MUM/2014-OTHER TWO APPEALS AND CORRIGENDUM 2 ? @ /APPELLANT BY : SHRI GIRISH DAVE & MS.KADAMBARI DAV E '() ? @ /RESPONDENT BY : SHRI AJAY SHRIVASTAVA L M NOP QR STUV / DATE OF HEARING : 09.10.2014 WXYZ QR STUV / DATE OF PRONOUNCEMENT : 31.10.2014 / O R D E R PER BENCH : THE AFORESAID APPEALS HAVE BEEN FILED BY THREE DIFF ERENT BUT CONNECTED ASSESSEES, AGAINST SEPARATE ORDERS PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) 10, MUMBAI, [CIT(A) FOR SHORT] OF EVEN DATE 27.12.2013 FOR THE QUANTUM OF ASSESSME NT PASSED U/S 143(3) READ WITH SECTION 147 OF THE INCOME-TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2006-2007. 2. SINCE THE ISSUES INVOLVED IN ALL THE THREE APPEA LS ARE COMMON, THEREFORE, THE SAME WERE HEARD TOGETHER AND ARE BEI NG DISPOSED OFF BY THIS CONSOLIDATED ORDER, FOR THE SAKE OF CONVENIENC E. 3. WE WILL FIRST TAKE UP ITA NO.3721/MUM/2014, VIDE WHICH THE FOLLOWING GROUNDS HAVE BEEN RAISED:- 1. REASSESSMENT IS BAD IN LAW. I.T.A.NO.3721/MUM/2014-OTHER TWO APPEALS AND CORRIGENDUM 3 (A) THE LEARNED ASSESSING OFFICER (AO) ERRED IN IN VOKING THE PROVISIONS OF SECTION 147 OF THE INCOME-TAX ACT , 1961 (THE ACT). (B) THE IMPUGNED REASSESSMENT ORDER DATED 13 DECEMBER 2011 IS BAD IN LAW AND OUGHT TO BE QUASHED AS THE LEARNED AO FAILED TO ISSUE A NOTICE UNDER SECTI ON 143(2) OF THE ACT. 2. EXEMPTION UNDER ARTICLE 14 OF THE TAX TREATY BE TWEEN INDIA AND DENMARK. THE LEARNED AO ERRED IN DENYING THE EXEMPTION PROVIDED UNDER ARTICLE 14 OF THE TAX TREATY BETWEEN INDIA AND DENMARK IN RELATION TO CAPITAL GAINS OF RS.48,64,47 ,646. 3. EXEMPTION UNDER SECTION 10(38) OF THE ACT. WITHOUT PREJUDICE, THE LEARNED AO OUGHT TO HAVE ALLOWED EXEMPTION UNDER SECTION 10(39) OF THE ACT I N RESPECT OF LONG-TERM CAPITAL GAINS OF RS.38,61,16,073 ARISI NG ON SALE OF SHARES SUBJECT TO SECURITIES TRANSACTION TAX. 4. INTEREST UNDER SECTION 234B OF THE ACT. THE LEARNED AO ERRED IN LEVYING INTEREST UNDER SE CTION 234B OF THE ACT THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER, AMEND, VARY OMIT OR SUBSTITUTE THE AFORESAID GROUNDS OF APPEAL OR AD D A NEW I.T.A.NO.3721/MUM/2014-OTHER TWO APPEALS AND CORRIGENDUM 4 GROUND OR GROUNDS OF APPEAL AT ANY TIME BEFORE OR A T THE TIME OF HEARING OF THE APPEAL AS IT MAY BE ADVISED. 4. BESIDES THIS, AN ADDITIONAL GROUND HAS ALSO BEEN RAISED, CHALLENGING THE REOPENING OF ASSESSMENT PROCEEDINGS ON THE GROUND OF CHANGE OF OPINION. 5. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A FOREIGN INSTITUTIONAL INVESTOR (FII) AND A TAX RESIDENT OF DENMARK. THE ASSESSEE IS A FUND, WHICH MADE CAPITAL GAINS BOTH LONG TERM AND SHORT TERM ON SHARES OF LISTED INDIAN COMPANIES. IN THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR 2006-2007, THE CAPITAL GAINS, EARNE D WERE CLAIMED AS EXEMPT UNDER ARTICLE 14 OF INDO-DENMARK DTAA. ALTER NATIVELY IT WAS CLAIMED THAT, SO FAR AS THE LONG TERM CAPITAL GAINS , ARE CONCERNED THE SAME SHOULD BE TREATED AS EXEMPT U/S 10(38). THE RE TURN OF INCOME WAS FILED AT NIL INCOME ON 26.07.2007 AND SUCH A RETU RN OF INCOME WAS ALSO PROCESSED U/S 143(1) VIDE INTIMATION DATED 28.03.20 08. THEREAFTER ON 16.03.2011, SUCH AN ASSESSMENT WAS REOPENED U/S 148 , MAINLY ON THE FOLLOWING REASONS RECORDED:- 16.03.2011 : REASONS FOR REOPENING THE ASSESSMENT RETURN OF INCOME FOR A.Y.2006-07 WAS FILED BY THE ASSESSEE ON 26.07.2006 DECLARING TOTAL INCOME OF RS.NIL/-. A SSESSMENT U/S. 143(1) OF THE I.T.ACT WAS COMPLETED ON 28.03.2 008 DE3TERMINING THE TOTAL INCOME AT RS.NIL/-. I.T.A.NO.3721/MUM/2014-OTHER TWO APPEALS AND CORRIGENDUM 5 AS PER ARTICLE 14.5 OF THE DTAA BETWEEN INDIA AND DENMARK, ANY GAINS FROM THE ALIENATION OF SHARES (OTHER THAN SHARES OF THE CAPITAL STOCK OF A COMPANY THE PROPERTY OF WHIC H CONSISTS DIRECTLY OR INDIRECTLY PRINCIPALLY OF IMMOVABLE PRO PERTY SITUATED IN THE CONTRACTING STATE) IN A COMPANY WHICH IS RES IDENT OF A CONTRACTING STATE MAY BE TAXED IN THAT STATE PROVID ED TO THE CONDITION THAT THE PERSON IS A TAXABLE UNIT UNDER T HE TAXATION OF LAWS IN FORCE IN THE STATE OF ITS RESIDENCE. IN THE PRESENT CASE THE ASSESSEE REGISTERED AS `FU ND FOR DEALING IN INDIAN STOCK MARKET WITH SEBI AND ALSO T AKEN PAN FOR TAXATION IN INDIA IN THE STATUS OF AOP (TRUST) WHOSE BENEFICIARIES ARE INDETERMINATE. FROM THE ABOVE FACTS, IT IS CLEAR THAT IN ORDER TO AVAIL THE BENEFIT UNDER THE PROVISIONS OF THE DTAA THAT THE A OP (TRUST) SHOULD BE A TAX RESIDENT OF DENMARK AND ALSO LIABLE TO TAX AS AOP UNDER THE TAXATION LAWS IN FORCE IN DENMARK. IN CASE, THE FUND IS NOT TAXABLE UNIT UNDER THE TA XATION LAW IN FORCE IN DENMARK (AS MANY COUNTRIES DO NOT RECOGNIZ E THE AOP (TRUST) AS A TAXABLE UNIT FOR EXEMPT THE TAX LAW OF LUXUMBERG). THEN THE ASSESSEE IS TAXABLE IN INDIA I N RESPECT OF THE CAPITAL GAIN EARNED IN INDIA DURING THE PREV IOUS YEAR RELEVANT ASSESSMENT YEAR 2006-07. THE POSSIBILITY OF AOP IS NOT A TAXABLE UNIT UNDER THE TAX LAW OF DENMARK MAY NOT BE RULED OUT. ACCORDINGLY POSSIBILI TY OF LOSS OF REVENUE OF RS.46214144 (11.2% OF 411890769) MAY ALSO NOT BE RULED OUT. IN VIEW OF THESE, I HAVE REASON TO BELIEVE THAT IN COME CHARGEABLE TO TAX OF RS.46214144 (11.2% OF 41189076 9) HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF PROVISION OF SECTION 147. ISSUE NOTICE U/S.148 OF THE I.T.ACT. I.T.A.NO.3721/MUM/2014-OTHER TWO APPEALS AND CORRIGENDUM 6 SD/- (DR.SATYA PAL KUMAR) D.D.I.T. (IT), 3(1), MUMBAI. 6. IN RESPONSE TO NOTICE U/S. 148, THE ASSESSEE VID E LETTER DATED 26 TH APRIL, 2011 AND LATER ON VIDE LETTER DATED 25 TH NOVEMBER, 2011, RAISED OBJECTIONS FOR REOPENING THE CASE U/S 147 AND ALSO MADE SUBMISSIONS ON MERITS THAT THE ASSESSEE IS NOT LIABLE TO BE TAXED IN INDIA, IN VIEW OF ARTICLE 14(5) OF INDO-DENMARK DTAA. COPY OF TAX RESIDENCY C ERTIFICATE WAS ALSO FILED. THE RELEVANT SUBMISSION MADE BY THE ASSESSEE VIDE LETTER DATED 25 TH NOVEMBER, 2011 IS REPRODUCED HEREUNDER:- 1. BACKGROUND INVESTERINGSFORENINGEN BANKINVEST I AFD. PENSION I NDIEN & KINA (PAL) IS AN APPROVED SUB-ACCOUNT OF AMAGERBANK EN AKTIESELSKAB, A FOREIGN INSTITUTIONAL INVESTOR (FII ) REGISTERED WITH SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI). ACCORDINGLY, AND WITH RESPECT TO REGULATION 13(3) O F THE SECURITIES AND EXCHANGE BOARD OF INDIA (FOREIGN INS TITUTIONAL INVESTOR) REGULATIONS, 1995, THE FUND IS A FII FOR THE PURPOSE OF SECTION 115AD OF THE ACT. THE FUND IS TAX RESIDE NT OF DENMARK. 2. SUBMISSIONS IN THE SUBJECT YEAR, THE FUND HAD CLAIMED THAT CAP ITAL GAINS ARE NOT TAXABLE IN VIEW OF ARTICLE 14(5) OF THE AGREEME NT FOR DOUBLE I.T.A.NO.3721/MUM/2014-OTHER TWO APPEALS AND CORRIGENDUM 7 TAXATION AVOIDANCE AGREEMENT BETWEEN INDIA AND DENM ARK (`THE TREATY) READ WITH SECTION 90(2) OF THE ACT. IN THIS CONNECTION WE DRAW YOUR ATTENTION TO ARTIC LE 1 OF THE TREATY WHICH READS AS UNDER: ARTICLE 1 : PERSONAL SCOPE THE CONVENTION SHALL APPLY TO PERSONS WHO ARE RESIDENTS OF ONE OR BOTH OF THE CONTRACTIN G STAGES. ARTICLE 1 EXTRACTED ABOVE SAYS THAT THE TREATY SHA LL APPLY TO PERSONS WHO ARE RESIDENTS OF ONE OR BOTH OF THE CON TRACTING STATES. CLAUSE (C) OF PARA 1 OF ARTICLE 3, THE TERM CONTR ACTING STATE AND OTHER CONTRACTING STATE MEANS INDIA OR DENMARK , AS THE CONTEXT REQUIRES. CLAUSE (E) OF PARA 1 OF ARTICLE 3 DEFINES THE TERM PERSON AS UNDER: THE TERM `PERSON INCLUDES AN INDIVIDUAL, A COMPA NY AND ANY OTHER ENTITY WHICH IS TREATED AS A TAXABLE UNIT UND ER THE TAXATION LAWS IN FORCE IN THE RESPECTIVE CONTRACTIN G STATES. FROM THE ABOVE DEFINITION OF PERSON IT FOLLOWS T HAT `ANY OTHER ENTITY WHICH IS TREATED AS A TAXABLE UNIT UNDER THE TAXATION LAWS IN FORCE IN THE RESPECTIVE CONTRACTING STAGES IS E LIGIBLE TO AVAIL THE TERMS OF THE TREATY. I.T.A.NO.3721/MUM/2014-OTHER TWO APPEALS AND CORRIGENDUM 8 APPLYING THIS COPE OF THE TREATY, THE FUND IS A PE RSON RESIDENT IN DENMARK AND HENCE IS COVERED UNDER THE TREATY TO AVAIL THE TERMS OF THE TREATY. IN THIS CONNECTION, WE ATTACH THE TAX RESIDENCY CE RTIFICATE (`TRC) WHEREIN THE DANISH TAX AUTHORITIES HAVE ALL OTTED NUMBER AS CVR-/SE-NR. (VAT.NO.)12.12.75.61 TO THE F UND. AS A RULE IN DENMARK, INCOME EARNED BY A TAX RESIDENT OF DENMARK FROM ABROAD IS TAXABLE ACCORDING TO DANISH REGULATIONS. IN OTHER WORDS THE FUND IS LIABLE TO T AX IN DENMARK. FURTHER, WE REFER TO ARTICLED 14(5) OF THE TREATY WHEREIN IT IS PROVIDED THAT GAINS FROM THE ALIENATION OF SHARES I N A COMPANY SHALL BE TAXED IN THE COUNTRY IN WHICH THE FUND IS RESIDENT. HOWEVER, GAINS FROM THE ALIENATION OF SHARES WILL B E TAXABLE IN THE COUNTRY IN WHICH THE COMPANY IS RESIDENT ONLY I F SUCH SHARES REPRESENT AT LEAST 10 PER CENT OF THE SHARE CAPITAL OF THAT COMPANY. BASED ON THE ABOVE, IT IS SUBMITTED THAT AS THE FU ND IS RESIDENT OF DENMARK AS EVIDENCED FROM THE TRC AND I S LIABLE TO TAX THEREIN, IT IS ELIGIBLE TO AVAIL THE TERMS O F THE TREATY. SHOULD YOU NEED ANY FURTHER CLARIFICATION, PLEASE LET US KNOW. 7. THE ASSESSING OFFICER, HOWEVER HELD THAT SUCH A CONTENTION OF THE ASSESSEE CANNOT BE UPHELD, THAT IT IS NOT LIABLE TO TAX IN INDIA UNDER THE DTAA, BECAUSE THE ASSESSEE IS AN AOP-TRUST BEING A FUND AND IN DENMARK THE AOP-TRUST IS NOT TAXABLE, AND THEREFORE , THE ASSESSEE IS NOT ELIGIBLE FOR DTAA BENEFIT. ACCORDINGLY, HE TAXED TH E CAPITAL GAIN. I.T.A.NO.3721/MUM/2014-OTHER TWO APPEALS AND CORRIGENDUM 9 8. BEFORE THE CIT(A), THE ASSESSEE RAISED VARIOUS OBJECTIONS WITH REGARD TO THE REOPENING OF THE CASE U/S 147 AND ALS O ON THE MERITS OF THE CASE. HOWEVER, THE LEARNED CIT(A) TOO DISMISSED THE ASSESSEES CONTENTION NOT ONLY ON THE LEGAL ISSUES OF REOPENIN G U/S 147, BUT ALSO ON MERITS. 9. BEFORE US, THE LEARNED COUNSEL SHRI GIRISH DAVE SUBMITTED THAT THE ASSESSEE ALONG WITH THE RETURN OF INCOME HAD DULY F ILED THE TAX RESIDENCY CERTIFICATE ISSUED BY THE DANISH TAX AUTHORITY. ALL SUCH INFORMATION FOR CLAIMING BENEFIT UNDER THE DTAA WAS FURNISHED ALONG WITH THE RETURN OF INCOME ITSELF. ONCE SUCH AN INFORMATION WAS THERE I N THE RETURN OF INCOME, THEN THE ASSESSING OFFICER WAS NOT JUSTIFIED IN REO PENING THE CASE, MERELY ON SOME KIND OF POSSIBILITY THAT THE ASSESSEE MAY N OT BE A TAXABLE UNIT UNDER THE TAX LAW OF DENMARK. BEFORE THE A.O., VIDE LETTER DATED 25.11.2011, THE ASSESSEE HAD AGAIN FURNISHED THE TA X RESIDENCY CERTIFICATE AND ALSO MADE ITS SUBMISSION THAT HOW I T IS ELIGIBLE FOR BENEFIT UNDER ARTICLE 14 OF THE DTAA. FROM THE PERUSAL OF T HE REASONS RECORDED, HE SUBMITTED THAT IT CAN BE SEEN THAT THE A.O. HAS SOUGHT TO REOPEN THE CASE MERELY ON PRESUMPTION AND ON HYPOTHETICAL GROU ND, WHICH IS COMPLETELY DIVERGENT FROM THE FACTS AND MATERIAL ON RECORD. WHILE RECORDING THE REASONS, THE ASSESSING OFFICER HIMSEL F WAS NOT SURE WHETHER UNDER THE TAX LAWS IN FORCE IN DENMARK, THE ASSESSE E WAS TAXABLE UNIT OR NOT, AND SECONDLY, THE REASONS RECORDED BY HIM DO N OT FALL WITHIN THE REALM OF `REASON TO BELIEVE AS CONTEMPLATED IN SEC TION 147 BUT IS BASED ON CONJECTURES. THUS, THE ENTIRE REOPENING ON THE B ASIS OF SUCH REASONS IS BAD IN LAW. I.T.A.NO.3721/MUM/2014-OTHER TWO APPEALS AND CORRIGENDUM 10 10. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REP RESENTATIVE SUBMITTED THAT, WHAT THE ASSESSING OFFICER IS REQUI RED TO DO IS, TO HAVE PRIMA FACIE BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED A SSESSMENT. IN THE REASONS, THE ASSESSING OFFICER IS NOT REQUIR ED TO ESTABLISH THE FACTS AND THE ACTUAL ESCAPEMENT OF INCOME, BUT HE IS ONLY REQUIRED TO HAVE `REASONS TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. IN SUPPORT OF HIS CONTENTION, HE RELIED UPON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF PRAFU L CHUNILAL PATEL V. ACIT [(1999) 236 ITR 832 (GUJ.)]. THUS, HE STRONGLY RELI ED UPON THE ORDER OF THE ASSESSING OFFICER. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PER USED THE RELEVANT MATERIAL PLACED ON RECORD. THE ASSESSEE IS A FUND A ND A RESIDENT OF DENMARK. ALONG WITH ITS RETURN OF INCOME, IN INDIA, THE ASSESSEE HAD SUBMITTED TAX RESIDENCY CERTIFICATE ISSUED BY THE DANISH AUTHORITIES IN ORDER TO CLAIM THE BENEFIT OF ARTICLE 14 OF INDIA-D ENMARK DTAA. FROM THE PLAIN READING OF THE `REASONS RECORDED, IT IS SEEN THAT THE ASSESSING OFFICER IS FIRST OF ALL, IS NOT CLEAR WHETHER THE A SSESSEE IS TAX RESIDENT OF DENMARK OR NOT, AND SECONDLY, WHETHER AOP-TRUST IS TAXABLE UNIT IN DENMARK OR NOT. THIS IS EVIDENT FROM THE REASONS WH ERE HE OBSERVES THAT, THERE IS A POSSIBILITY THAT AOP IS NOT A TAXABLE UN IT UNDER THE TAX LAWS OF DENMARK AND BECAUSE OF THIS, THERE IS POSSIBILITY O F LOSS OF REVENUE. THE RELEVANT OBSERVATIONS MADE IN THE `REASONS RECORDED BY THE A.O. TO THIS EFFECT, WHICH READS AS UNDER:- I.T.A.NO.3721/MUM/2014-OTHER TWO APPEALS AND CORRIGENDUM 11 IN CASE, THE FUND IS NOT TAXABLE UNIT UNDER THE TA XATION LAW IN FORCE IN DENMARK (AS MANY COUNTRIES DO NOT RECOGNIZE THE AOP (TRUST) AS A TAXABLE UNIT FOR E XEMPT THE TAX LAW OF LUXUMBERG). THEN THE ASSESSEE IS TAX ABLE IN INDIA IN RESPECT OF THE CAPITAL GAIN EARNED IN INDI A DURING THE PREVIOUS YEAR RELEVANT ASSESSMENT YEAR 2006-07. THE POSSIBILITY OF AOP IS NOT A TAXABLE UNIT UNDER THE TAX LAW OF DENMARK MAY NOT BE RULED OUT. ACCORDINGLY POSSIBILITY OF LOSS OF REVENUE OF RS.46214144 (11.2 % OF 411890769) MAY ALSO NOT BE RULED OUT. 12. IT IS A TRITE LAW THAT FOR ASSUMING THE JURISDI CTION TO REOPEN THE CASE U/S 147, THE A.O. MUST HAVE `REASONS TO BELIEVE TH AT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THE WORDS `REASONS TO BELIEVE ARE STRONGER THAN THE WORDS SATISFIED AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF GANGA SARAN AND SONS P VT. LTD. V. ITO [(1981) 130 ITR 1 (SC)]. THE BELIEF ENTERTAINED BY THE ASSESSING OFFICER MUST NOT BE IRRATIONAL OR HYPOTHETICAL BUT MUST BE HELD IN GOOD FAITH AND NOT MERELY AS A PRETENCE. THE FORMATION OF BELIEF M UST HAVE RATIONAL CONNECTION WITH OR RELEVANT BEARING FROM THE MATERI AL ON RECORD HAVING LIVE LINK NEXUS WITH INCOME ESCAPING ASSESSMENT. THE REA SONS RECORDED BY THE A.O. CLEARLY SHOWS THAT THE REOPENING HAS BEEN DONE MERELY ON SOME KIND OF A POSSIBILITY FOR WHICH HE HIMSELF IS NOT S URE. THERE IS EVEN NO REFERENCE TO ANY MATERIAL THAT ASSESSEES CLAIM FOR BENEFIT UNDER ARTICLE 14 OF DTAA IS FALSE OR INCORRECT. HE IS EVEN NOT SURE WHETHER ASSESSEE IS A TAX RESIDENT WHEN TRC WAS THERE IN THE RETURN OF IN COME. IT APPEARS THAT THE REOPENING IS MERELY PRETENCE TO EXAMINE, WHETHE R THE ASSESSEE IS A TAXABLE UNIT OR NOT AND WHETHER THERE COULD BE POSS IBILITY OF LOSS OF I.T.A.NO.3721/MUM/2014-OTHER TWO APPEALS AND CORRIGENDUM 12 REVENUE. ONCE THE TAX RESIDENCY CERTIFICATE WAS THERE IN THE RECORD, THEN THERE COULD NOT HAVE BE EN ANY GROUND FOR PRESUMPTION THAT THE ASSESSEE IS NOT A TAXABLE ENTITY IN DENMAR K. HE HAS NOT REFERRED TO ANY OTHER INFORMATION OR MATERIAL THAT THE ASSES SEE IS NOT A TAX RESIDENT OF DENMARK AND THERE WAS LOSS OF REVENUE BECAUSE TH E ASSESSEE HAS FALSELY CLAIMED THE BENEFIT UNDER ARTICLE 14 OF THE DTAA. THE REASONS AS RECORDED BY THE A.O. FALLS IN THE REALM OF SURMISES AND PRESUMPTION DE HORS ANY MATERIAL FACT HAVING LIVE LINK NEXUS WITH THE FORMATION OF `REASONS TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THUS, WE ARE OF THE OPINION THAT ON THE FACE OF THE REASONS RECORDED, THE ASSESSING OFFICER CANNOT ASSUME JURI SDICTION TO REOPEN THE CASE IN THE CASE OF THE ASSESSEE. THUS, THE ENTIRE PROCEEDINGS INITIATED VIDE NOTICE U/S 148 IS BAD IN LAW AND DESERVES TO B E QUASHED. THUS, THE ENTIRE PROCEEDINGS U/S 147 ARE HELD AS NULL AND VOI D, AS REASONS RECORDED BY THE A.O. DO NOT GIVE HIM JURISDICTION TO REOPEN THE CASE U/S 148. ACCORDINGLY ON THIS PRELIMINARY GROUND ALONE, WE QU ASH THE ASSESSMENT ORDER AND THE APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED. 13. IN VIEW OF THE AFORESAID FINDING, THERE IS NO N EED FOR GIVING FINDING ON MERITS, AS THE REOPENING OF ASSESSMENT ITSELF IS HELD TO BE INVALID. 14. IN ITA NOS.3722/MUM/2014 AND 3723/MUM/2014, EXA CTLY SIMILAR REASONS HAVE BEEN RECORDED WITHOUT ANY CHANGE OF WORDS OR PHRASES AND THE ISSUES ARE ARISING OUT OF SIMILAR SET OF FA CTS, THEREFORE, THE FINDING GIVEN IN AFORESAID APPEAL WILL APPLY MUTATIS MUTANDIS IN THESE APPEALS I.T.A.NO.3721/MUM/2014-OTHER TWO APPEALS AND CORRIGENDUM 13 ALSO AND ACCORDINGLY, IN BOTH THE YEARS, THE IMPUGN ED PROCEEDINGS U/S 148 IS QUASHED, AND THE APPEALS OF THE ASSESSEE ARE TREATED AS ALLOWED. 15. [TZ\S] N_`[TS QR A BOQ C S QR DS EF IN THE RESULT, ASSESSEES APPEALS ARE ALLOWED. ORDER PRONOUNCED ON THIS 31 ST DAY OF OCTOBER, 2014. HIJK QR WXYZ LINMQ] QX QR NP SD/- SD/- (R.C.SHARMA) (AMIT SHUKLA) ! / ACCOUNTANT MEMBER & ! / JUDICIAL MEMBER \ M MOP MUMBAI; LINMQ DATED : 31 ST OCTOBER, 2014. DEVDAS* ? ]&$# _`$ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. '() / THE RESPONDENT. 3. H)QT H) M RS () / THE CIT, MUMBAI. 4. H)QT H) M RS / CIT(A)-10, MUMBAI 5. SOTN) 'SNU_, H)QT U) U_QTZ, \ M MOP / DR, ITAT, MUMBAI 6. NV` WP / GUARD FILE. I.T.A.NO.3721/MUM/2014-OTHER TWO APPEALS AND CORRIGENDUM 14 = / BY ORDER, L()SS 'S //TRUE COPY// B/C D (DY./ASSTT. REGISTRAR) , \ M MOP / ITAT, MUMBAI I.T.A.NO.3721/MUM/2014-OTHER TWO APPEALS AND CORRIGENDUM 15 , / Z IN THE INCOME TAX APPELLATE TRIBUNAL L BENCH, M UMBAI BEFORE S/SHRI R.C. SHARMA, (AM) AND AMIT SHUKLA, (JM) ' HT . L . K\` , JV LIB) , ZOM { |\S K M R , }))Q LIB) ' H)QT LM ./ ITA NO.3721/MUM/2014: ASST.YEAR 2006-2007 INVESTERINGSFORENINGEN BANKINVEST I AFD PENSION INDIEN & KINA ( PAL ) (NOW KNOWN AS INVESTERINGFORENINGEN BANKINVEST ASIEN) = / VS. THE DY.DIRECTOR OF INCOME-TAX 3(1) (INTERNATIONAL TAXATION) MUMBAI B) JV LM ./ DH~HT LM ./PAN/GIR NO. : AAAT14701Q ( / APPELLANT) .. ( '() / RESPONDENT) H)QT LM ./ ITA NO.3722/MUM/2014: ASST.YEAR 2006-2007 INVESTERINGSFORENINGEN BANKINVEST I AFD FJERNOSTEN (NOW KNOWN AS INVESTERINGFORENINGEN BANKINVEST ASIEN) = / VS. THE DY.DIRECTOR OF INCOME-TAX 3(1) (INTERNATIONAL TAXATION) MUMBAI B) JV LM ./ DH~HT LM ./PAN/GIR NO. : NA ( / APPELLANT) .. ( '() / RESPONDENT) H)QT LM ./ ITA NO.3723/MUM/2014: ASST.YEAR 2006-2007 INVESTERINGSFORENINGEN BANKINVEST I AFD INDIEN AND KINA (NOW KNOWN AS INVESTERINGFORENINGEN BANKINVEST ASIEN) = / VS. THE DY.DIRECTOR OF INCOME-TAX 3(1) (INTERNATIONAL TAXATION) MUMBAI B) JV LM ./ DH~HT LM ./PAN/GIR NO. : NA ( / APPELLANT) .. ( '() / RESPONDENT) I.T.A.NO.3721/MUM/2014-OTHER TWO APPEALS AND CORRIGENDUM 16 CORREGENDUM THE TRIBUNAL HAS PASSED ORDER DATED 31.10.2014 IN THE AFOREMENTIONED APPEALS IN WHICH NAME OF THE ASSESSEES HAVE WRONGL Y BEEN MENTIONED AS UNDER : IN ITA NO.3721/MUM/2014 INVESTERINGSFORENINGEN BANKINVEST I AFD INDIEN & KINA (NOW KNOWN AS INVESTERINGSFORENINGEN BANKINVEST ASIEN), SUNDKROGSGADE 7 DK 2100 COPENHAGEN DENMARK PAN : AAATI4695M. THE SAME IS CORRECTED AND READ AS : INVESTERINGSFORENINGEN BANKINVEST I AFD PENSION INDIEN & KINA (PAL) (NOW KNOWN AS INVESTERINGSFORENINGEN BANKINVEST ASIEN) PAN: AAAT14701Q IN ITA NO.3722/MUM/2014 INVESTERINGSFORENINGEN BANKINVEST I AFD FJERNOSTEN, SUNDKROGSGADE 7 DK 2100 COPENHAGEN DENMARK PAN : AAATI4692N THE SAME IS CORRECTED AND READ AS : INVESTERINGSFORENINGEN BANKINVEST I AFD FJERNOSTEN (NOW KNOWN AS INVESTERINGFORENINGEN BANKINVEST ASIEN) PAN: NOT APPLICABLE I.T.A.NO.3721/MUM/2014-OTHER TWO APPEALS AND CORRIGENDUM 17 IN ITA NO.3723/MUM/2014 INVESTERINGSFORENINGEN BANKINVEST I AFD INDIEN & KINA, SUNDKROGSGADE 7 DK 2100 COPENHAGEN DENMARK PAN : AAATI4695M. THE SAME IS CORRECTED AND READ AS : INVESTERINGSFORENINGEN BANKINVEST I AFD INDIEN AND KINA (NOW KNOWN AS INVESTERINGFORENINGEN BANKINVEST ASIEN) PAN: NOT APPLICABLE THE ABOVE CHANGES MADE BY WAY OF CORRIGENDUM IN TH E ORDER PASSED BY THE TRIBUNAL. SD SD ( HT . L . K\` / R.C. SHARMA) ( |\S K M R /AMIT SHUKLA) ! / ACCOUNTANT MEMBER & ! / JUDICIAL MEMBER \ M MOP MUMBAI : ON THIS 8TH DEC, 2014 O . N . L ./ SRL , SR. PS ? ]&$# _`$ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. '() / THE RESPONDENT. 3. H)QT H) M RS ( ) / THE CIT(A)- 4. H)QT H) M RS / CIT 5. SOTN) 'SNU_ , H)QT U) U_QTZ , \ M MOP / DR, ITAT, MUMBAI 6. NV` WP / GUARD FILE. HIJKN M LT / BY ORDER, TRUE COPY LE)Q MDQT (ASSTT. REGISTRAR) I.T.A.NO.3721/MUM/2014-OTHER TWO APPEALS AND CORRIGENDUM 18 H)QT U) U_QTZ , \ M MOP /ITAT, MUMBAI