ING BEEWAAR MAATSCHAPPIJ I B.V. AS TRUSTEE OF ING, MUMBAI V. ADDL DIT (IT) RG 3, MUMBAI

ITA 5276/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1705 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2016
• Appeal Filed By: Assessee
• Bench Allotted: I
• Next Hearing Date: 22-11-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 20-08-2014
• Court: TRIBUNAL
• Keywords: Double taxation relief; Period of limitation
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL L BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER I.T.A. NO. 5276/M/2014 (ASSESSMENT YEAR: 2006 - 2007 ) I.T.A. NO.7119/M/2014 (ASSESSMENT YEAR: 2007 - 2008) I.T.A. NO.7120/M/2014 (ASSESSMENT YEAR: 2008 - 2009) I.T.A. NO.7121/M/2014 (ASSESSMENT YEAR: 2010 - 2011) ING BEWAAR MAATSCHAPPIJI B.V. AS TRUSTEE OF ING EMERGING MARKETS EQUITY FUNDS, C/O. SRBC & ASSOCIATES LLP, 14 TH FLOOR, THE RUBY, 29, SENAPATI B APAT MARG, DADAR (W), MUMBAI 400 028. / VS. ADDL. DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) - 3, SCINDI HOUSE, BALLARD ESTATE, N.M. MARG, MUMBAI - 400038. ./ PAN : AAATH316D ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI DHANESH BAFNA & MS. CHANDNI SHAH / RESPONDENT BY : SHRI JABIR CHAUHAN, CIT - DR / DATE OF HEARING : 01.12 .2016 / DATE OF PRONOUNCEMENT : 09 .12.2016 / O R D E R PER D. KARUNAKARA RAO, AM: THERE ARE FOUR APPEALS UNDER CONSIDERATION. ALL THESE APPEALS ARE FILED BY THE ASSESSEE FOR THE ASSESSMENT YEARS 2006 - 07, 2007 - 08, 2008 - 09 AND 2010 - 11. SINCE, THE ISSUES RAISED IN ALL THESE APPEALS ARE INTER - CONNECTED / IDENTICAL, THEREFORE, FOR THE SAKE OF CONVENIENCE, THEY ARE CLUBBED, HEARD COMBINEDLY AND DISPOSED OFF IN THIS CONSOLIDATED ORDER. APPEAL WISE ADJUDICATION IS GIVEN IN THE FOLLOWING PARAS OF THIS ORDER. 2. IN ALL THE FOUR APPEALS, ASSESSEE RAISED IDENTICA L GROUNDS AND THE ADDITIONAL GROUND, LEGAL ONE, WHICH IS COMMON AND RELATES THE ISSUE OF NOTICE U/S 143(2) READS AS UNDER: - 2 1.5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LEARNED ADDITIONAL DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) - 3 (LEARNED AO) IS BAD IN LAW AND IS LIABLE TO BE QUASHED, AS THE STATUTORY NOTICE U/S 143(2) WAS NOT SERVED TO THE ASSESSEE. 4. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE , WHO IS A NON - RESIDENT, IS A FUND (V IZ ING EMERGING MARKET EQUITY FUNDS) (ING EMEF) ESTABLISHED IN NETHERLANDS AND REGISTERED WITH SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI) AS SUB - ACCOUNT OF ING ASSET MANAGEMENT BV. ASSESSEE FILED THE RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. N IL. ASSESSMENT WAS COMPLETED U/S 147 R.W.S 143(3) OF THE ACT AND THE ASSESSED INCOME WAS DETERMINED AT 39,66,10,670/ - . D URING THE YEAR UNDER CONSIDERATION, ASSESSEE INVESTED IN EQUITY SHARES OF INDIAN COMPANIES AND EARNED SHORT TERM CAPITAL GAINS OF RS. 26.59 CRS AND LONG TERM CAPITAL GAINS OF RS. 13.08 CRS. IN THE RETURN OF INCOME, ASSESSEE CLAIMED THE ENTIRE INCOME (STCG + LTCG) AS NON - TAXABLE IN INDIA IN ACCORDANCE WITH ARTICLE 13 OF THE INDIA - NETHERLANDS DTAA. IN THE ASSESSMENT, AFTER CONSIDERING TH E SUBMISSIONS OF THE ASSESSEE IN SUPPORT OF ITS CLAIM AS WELL AS ON PERUSAL OF THE RELEVANT PROVISION OF INDIA - NETHERLANDS DTAA, AO CAME TO THE CONCLUSION TH AT SINCE THE ASSESSEE IS NOT FULFILLED THE CONDITIONS LAID DOWN IN ARTICLE 1 READ WITH ARTICLE 4 OF THE INDIA - NETHERLANDS DTAA, ASSESSEE IS NOT ELIGIBLE TO CLAIM BENEFIT OF THE DTAA AND ACCORDINGLY AO DENIED THE CLAIM. AGGRIEVED WITH THE SAID DECISION OF THE AO, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 5. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) UPHELD THE AOS DECISION VIDE PARA 8 OF HIS ORDER DATED 28.02.2014. AGAIN AGGRIEVED WITH THE SAID DECISION OF THE CIT (A), ASSESSEE IS IN APPEAL B EFORE THE TRIBUNAL BY RAISING THE ABOVE EXTRACTED GROUNDS AND ADDITIONAL GROUND. 6. DURING THE PROCEEDINGS BEFORE US, AT THE VERY OUTSET, SHRI DHANESH BAFNA, LD COUNSEL FOR THE ASSESSEE BRIEFLY NARRATED THE ABOVE FACTS OF THE CASE AND BROUGHT OUR ATTENTION TO THE ADDITIONAL GROUND, COMMONLY RAISED IN ALL THE FOUR APPEALS, IE GROUND NO.1.5 IN APPEAL ITA NO.5276/M/2014 AND GROUND NO.3 IN REST OF THE THREE APPEALS, AND SUBMITTED THAT IN ALL THE FOUR ASSESSMENTS, THE ASSESSING OFFICER COMPLETED THE RE - ASSESSMENT U/S 147 READ WITH 143(3) OF THE ACT, WHICH PROVIDES FOR THE BASIC 3 JURISDICTION FOR THE OFFICERS TO COMPLETE THE RE - ASSESSMENT. FURTHER, LD COUNSEL FOR THE ASSESSEE FILED WRITTEN SUBMI SSIONS STATING THAT THE ISSUE OF NOTICE U/S 143(2) OF THE ACT IS MANDATORY. IN THE ABSENCE OF THE SAID NOTICE ISSUED AND SERVED ON THE ASSESSEE, AO CANNOT PROCEED TO MAKE ENQUIRIES REQUIRED U/S 148 OF THE ACT. IN THIS REGARD, LD COUNSEL FOR THE ASSESSEE RELIED ON THE FOLLOWING DECISIONS. 1. ACIT VS. GENO PHARMACEUTICALS LTD (2013) 214 TAXMAN 83 (BOM) 2. COMMISSIONER OF WEALTH TAX VS. HUF OF H.H. LATE J.M. SCINDIA (2008) 300 ITR 193 (BOM.) 3. R. DALMIA VS. CIT [1999] 236 ITR 480 4. CIT VS. MR. SALMAN KHAN (ITA (L) NO. 2363 OF 2009, DT 1.12.2009) 5. ACIT VS. HOTEL BLUE MOON [2010] 321 ITR 362 (SC) 7. FURTHER, IN RESPONSE TO THE LD DRS ARGUMENT FOR THE DEFECTS, IF ANY, IN ISSUANCE AND SERVICE OF NOTICE U/S 143(2) OF THE ACT, ARE CURABLE B THE PROVISIONS OF SECTION 292BB OF THE ACT, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO VARIOUS DECISIONS VIZ (I) TRAVANCORE DIAGNOSTICS (P.) LTD VS. ACIT (2016) 74 TAXMANN.COM 239 (KERLA); (II) PR. CIT VS. SHRI JAI SHIV SHANKAR TRADERS (P) LTD (2016) 383 ITR 448 (DELHI HC); (III) CIT VS. SALARPUR COLD STORAGE (P.) LTD (2015) 228 TAXMAN 48 (ALLAHABAD) AND SUBMITTED THAT THE PROVISIONS OF SECTION 292BB OF THE ACT DO NO CURE THE DEFECTS OF THIS KIND. IN THIS REGARD, LD COUNSEL FOR THE ASSESSEE RELIED ON VARIOUS OTHER DECISIONS IE (I ) RAJIB SAIKIA VS. ACIT [2015] 154 ITD 405 (GUWAHATI TRIB) (II) ACIT VS. ASHED PROPERTIES & INVESTMENTS (P.) LTD (2015) 62 TAXMANN.COM 340 (BANGALORE TRIB). 8. ON THE OTHER HAND , LD DR FOR THE REVENUE BROUGHT OUR ATTENTION TO THE FACTS OF THE CASE AND SUBM ITTED THAT THE ASSESSEE COOPERATED THE RE - ASSESSMENT PROCEEDINGS AND THE ASSESSEE WAS AWARE OF THE EVENTS RELATING TO THE RE - ASSESSMENT PROCEEDINGS FOR THE AYS UNDER CONSIDERATION. WHEN COMES TO THE ISSUE OF NOTICE U/S 143(2) R.W.S 148 OF THE ACT, LD DR FOR THE REVENUE RELIED ON THE CONTENTS OF PARAS 4 AND 45 OF THE LETTER OF THE AO DATED 17.10.2016, WHICH READ AS UNDER: - 4. IT WAS ALSO REQUESTED BY AUTHORIZED REPRESENTATIVE OF THE ASSESSEE M/S. S.R. BATLIBOI & CO TO TREAT THE ORIGINAL RETURN FILED DATED 16.7.2006 AS RETURN FILED IN RESPONSE TO NOTICE U/S 148 OF THE INCOME TAX ACT, 1961. THE SAME REQUEST WAS REITERATED BY LETTER DATED 15.4.2011. IT IS SEEN THAT THE ASSESSEE HAS NOT FILED ANY RETURN IN RESPONSE TO THE NOTICE UNDER SECTION 148 OF THE INCO ME TAX ACT, 1961 DATED 16.3.2011. 4 5. FURTHER, IT IS TO BE NOTED THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE ASSESSEE WAS GIVEN AMPLE OPPORTUNITY TO APPEAR BEFORE THE ASSESSING OFFICER AND THE ASSESSEE DID NOT RAISE THE ANY QUESTION OF SERVICE OF THE NOTICE UNDER SECTION 143(2) OF THE INCOME TAX ACT, 1961 AT ANY POINT OF TIME DURING THE ASSESSMENT PROCEEDINGS. 9. THE ABOVE PARAS FROM THE AOS LETTER TO THE LD DR, CATEGORICALLY SILENT ON THE FACT RELATING TO THE ISSUE OF NOTICE AND THE SERVIC E OF THE SAME AS REQUIRED U/S 143(2) OF THE ACT. IT IS OBVIOUS THE RE - ASSESSMENT WAS MADE IN THIS CASE WITHOUT ISSUANCE OF THE SAID STATUTORY AND MANDATORY NOTICE U/S 143(2) OF THE ACT. 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVE NUE AUTHORITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE US AND THE CITED DECISIONS RELIED ON BY THE LD COUNSEL FOR THE ASSESSEE. ON HEARING BOTH THE PARTIES AND ON PERUSAL OF THE RATIOS LAID DOWN IN THE ABOVE CITED DECISIONS AS WELL AS THE CONTENTS OF THE AOS LETTER DATED 17.10.2016, WE FIND, CONSIDERING THE PASSIVE ADMISSION OF THE AO ON THE ISSUE O F THE NON - ISSUANCE OF THE STATUTORY NOTICE U/S 143(2) OF THE ACT, WHICH PROVIDES THE BASIC JURISDICTION IN MATTERS OF SCRUTINY ASSESSMENT, THIS IS NOT A CURABLE DEFECT AS ARGUED BY THE LD DR FOR THE REVENUE. FURTHER, AS DISCUSSED IN PARA 6 ABOVE, THE SAID PROVISIONS OF SECTION 292BB OF THE ACT DO NOT PROVIDE JURISDICTION TO THE AO FROM T HE DUTY OF ISSUE OF SERVICE OF STATUTORY NO TICE U/S 143(2) OF THE ACT. I T DOES NOT, IN ANY WAY, INSULATE THE AO FROM DEFAULT IN ISSUING NOTICE U/S 143(2) OF THE ACT WITHIN THE PERIOD OF LIMITATION CONTEMPLATED THEREIN. CONSIDERING THE SAME , WE ARE OF THE OPINION, ALL THE FOUR APPEALS OF THE ASSESSEE ARE REQUIRED TO BE ALLOWED ON TECHNICAL GROUNDS. WE ORDER ACCORDINGLY. THUS, THE OTHER GROUNDS AND THE ADDITIONAL GROUND RAISED BY THE ARE DISMISSED AS ACADEMIC CONSIDERING THE JURISDICTIONAL ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE. 11. IN THE RESULT, ALL THE FOUR APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOU NCED IN THE OPEN COURT ON 0 9 T H DECEMBER, 2016. S D / - S D / - ( PAWAN SINGH ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 09.12 .2016 . . ./ OKK , SR. PS 5 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI