CUPINO LTD., MUMBAI V. DY CIT (IT)-2(1)91), MUMBAI

ITA 7299/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 7039 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-04-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2015-2016
• Appeal Filed On: 28-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR SUBRAHMANIYAM LD
• Assessee Lawyers: MADHUR AGARWALLD
• Section: 143(3); 153

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, VP AND HONBLE SHRI MANOJ KUM AR AGGARWAL, AM (HEARING THROUGH VIDEO CONFERENCING MODE) ./ I.T.A. NO. 7299/MUM/2019 ( / ASSESSMENT YEAR : 2015 - 16 ) CUPINO L IMITED C/O PRICEWATERHOUSE COOPERS P VT. LTD. PWC HOUSE, PLOT NO.18 A G URU NANAK ROAD , BANDRA (W) MUMBAI - 400 0 50 / VS. D CIT (INTL. TAXN.) - 2 (1)( 1 ) 1713, 16 TH FLOOR AIR INDIA OFFICE NARIMAN POINT MUMBAI - 400 021 ./ ./ PAN/GIR NO . AADCC - 8438 - N ( / APPELLANT ) : ( / RESPONDENT ) ASSESSEE BY : SHRI MADHUR AGARWAL LD. AR REV ENUE BY : SHRI VIJAYKUMAR SUBRAHMANIYAM LD. DR / DATE OF HEARING : 02/03/2021 / DATE OF PRONOUNCEMENT : 05/04/2021 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR (A Y) 2015 - 16 CONTEST FINAL ASSESSMENT ORDER PASSED U/S 143(3) R.W.S. 144C(13) OF THE ACT BY LD. DCIT (INT. TAXATION) - 2(1)(1) ON 27/09/2019. WE FIND THAT T HOUGH THE FINAL ASSESSMENT ORDER HAS ACCEPTED THE RETURNED INCOME OF RS.34.12 CRORES AS FILED BY THE ASS ESSEE, HOWEVER, THE DISPUTE HAS ARISEN ON ACCOUNT OF APPLICABLE RATE OF TAX TO THE SAID INCOME. THE 2 ASSESSEE HAS OFFERED THE INCOME @10% IN TERMS OF ARTICLE 11 OF THE TAX - TREATY PROVISIONS BETWEEN INDIA AND CYPRUS. HOWEVER, LD. AO, HAS OPINED THAT THE INCO ME WOULD BE CHARGE ABLE @ 20% PLUS APPLICABLE SURCHARGE AND CESS IN TERMS OF SECTION 115A(1)(A)(II) OF THE ACT. THE INCOME EARNED BY THE ASSESSEE IS IN THE SHAPE OF INTEREST ON FULLY & COMPULSORILY CONVERTIBLE DEBENTURE S (FCCB) FROM SHREE AHUJA PROPERTIES AN D REALTORS PRIVATE LIMITED. THE ASSESSEE IS A COMPANY INCORPORATED IN CYPRUS. 2. THE LD. AR, AT THE OUTSET, DREW OUR ATTENTION TO THE ADDITIONAL GROUND RAISED BY THE ASSESSEE AND SUBMITTED THAT SINCE THERE IS NO VARIATION IN THE RETURNED INCOME / LOSS, THE RE WAS NO REQUIREMENT TO ISSUE THE DRAFT ASSESSMENT ORDER AND IN THAT EVENTUALITY, FINAL ASSESSMENT ORDER AS PASSED BY LD. AO WOULD BE BARRED BY LIMITATION AS PER THE PROVISIONS OF SECTION 153 . THE LD. AR ALSO DREW ATTENTION TO THE FACT THAT ASSESSEES APP EAL FOR EARLIER ASSESSMENT YEARS I.E. 2013 - 14 & 2014 - 15 HAS ALREADY BEEN HEARD BY THIS VERY BENCH ON IDENTICAL GROUND AND THEREFORE, THE ADJUDICATION IN THOS E APPEALS WOULD EQUALLY APPLY TO THIS APPEAL ALSO. HOWEVER, LD. DR, BY REFERRING TO THE AMENDMENT B ROUGHT INTO SECTION 144C(1) W.E.F. 01/04/2020 , SUBMITTED THAT THE AMENDMENT WAS INTENDED TO PROTECT THE INTEREST OF AN ELIGIBLE ASSESSEE AND PROVIDE A FAST TRACK DISPUTE RESOLUTION MECHANISM WHEREBY ONLY A DRAFT ASSESSMENT ORDER WILL BE ISSUED WHICH WOULD BE SUBJECT TO THE SCRUTINY OF COLLEGIUMS OF THREE COMMISSIONERS OF INCOME TAX TO RULE OUT ANY JUDGMENTAL ERRORS OF THE ASSESSING OFFICE INCLUDING TAX DEMAND ARISING ON ACCOUNT OF DENIAL OF TREAT BENEFITS ABSENT VARIATION IN THE RETURNED INCOME. WITH EFFECT FROM 01/04/2020, THE PHRASE VARIATION IN THE INCOME OR LOSS RETURNED WHICH IS PREJUDICIAL TO THE INTEREST OF THE ASSESSEE IN 3 SECTION 144C(1) HAS BEEN REPLACED BY THE PHRASE ANY VARIATION WHICH IS PREJUDICIAL TO THE INTEREST OF THE ASSESSEE . 3. THE ADD ITIONAL GROUND AS RAISED BY THE ASSESS E E READ AS UNDER: - ON FACTS, IN THE CIRCUMSTANCES OF THE CASE, IN LAW AND WITHOUT PREJUDICE TO EARLIER GROUNDS, THE LD.AO HAS ERRED IN NOT PASSING THE ASSESSMENT ORDER WITHIN THE TIME LIMIT PRESCRIBED FOR COMPLETION O F ASSESSMENT PROCEEDINGS UNDER SECTION 153 OF THE ACT. SINCE THIS IS PURELY LEGAL GROUND AND CONTEST THE VERY VALIDITY OF THE ASSESSMENT ORDER AND DO NOT REQUIRE APPRECIATION OF NEW FACTS, THE SAME IS ADMITTED IN TERMS OF DECISION OF HONBLE APEX COURT I N NATIONAL THERMAL POWER CO. LTD. V/S CIT (1998 229 ITR 383) . SINCE THIS GROUND GOES TO THE ROOT OF THE MATTER, WE PROCEED TO ADJUDICATE THE SAME IN SUCCEEDING PARAGRAPHS. 4. FOR THE PURPOSE OF ADJUDICATION, IT WOULD BE WORTHWHILE TO TAKE NOTE OF FEW DATES . THE ASSESSMENT YEAR INVOLVED IS AY 2015 - 16 AND THE FINAL ASSESSMENT ORDER HAS BEEN PASSED ON 27/09/2019. THE DATE OF DIRECTIONS GIVEN BY L D. DRP IS 29/08/2019. UPON PERUSAL OF FINAL ASSESSMENT ORDER, IT COULD BE OBSERVED THAT THERE IS NO PROPOSED VARIATI ON IN THE INCOME OR LOSSES REPORTED BY THE ASSESSEE. THE MATTER BEFORE LD. AO WAS ONLY WITH RESPECT TO THE APPLICABLE RATE OF TAX ON THE INTEREST INCOME EARNED BY THE ASSESSEE. IN SUCH A CASE, THE P ROVISIONS OF SECTION 144C(1) WOULD NOT APPLY AND THE DUE D ATE FOR COMPLETION OF ASSESSMENT PROCEEDINGS AND PASSING THE ASSESSMENT ORDER AS PER SECTION 153 WOULD BE 31/12/2018. AS AGAINST THIS, THE FINAL ASSESSMENT, IN THE PRESENT CASE, HAS BEEN PASSED ON 27/09/2019 AND THEREFORE CLEARLY BARRED BY LIMITATION. THE FACT OF ISSUANCE OF DRAFT ASSESSMENT ORDER, WHEN IT WAS NOT LEGALLY REQUIRED TO BE ISSUED, COULD NOT END UP ENHANCING THE TIME LIMIT FOR COMPLETION OF THE ASSESSMENT U/S 143(3). 4 5. WE FIND THAT WE HAVE ALREADY ADJUDICATED THIS ISSUE IN ASSESSEES OWN CA SE FOR AY S 2013 - 14 & 2014 - 15 (ITA NOS. 7130/MUM/2017 & 7236/MUM/2018 COMMON ORDER DATED 26/03/2021). IN THE SAID ORDER, RELYING U PON THE DECI SI ON O F COORDINATE BENCH OF TRIBUNAL IN IPF INDIA PROPERTY CYPRUS (NO.1) LTD. V.S DCI T ( 2020 183 ITD 46 ) , WE HAVE A LLOWED ADDITIONAL GROUND WITH FOLLOWING OBSERVATIONS: - 7 . WE NOTED THAT THE DRAFT ASSESSMENT ORDER WAS ISSUED ON 29.12.2016 UNDER SECTION 143(3) READ WITH SECTION 144C(1) OF THE ACT AND IN THAT EVENTUALITY, FINALLY THE ASSESSMENT ORDER WAS PASSED ON 16.10 .2017. FROM THE ABOVE, WE FIND THAT THERE IS NO DISPUTE THAT IF THERE WOULD NOT HAVE DRAFT ASSESSMENT ORDER, THE ASSESSMENT WOULD HAVE BEEN TIME BARRED AS ON 31.12.2016, THE PRESENT ASSESSMENT ORDER DATED 16.10.2017. ONCE, WE HOLD THAT NO DRAFT ASSESSMENT ORDER WOULD HAVE BEEN ISSUED IN THIS CASE AS THE PROVISIONS OF SECTION 144C(1) OF THE ACT COULD NOT HAVE BEEN INVOKED IN THIS CASE. THE TIME LIMIT FOR COMPLETION ASSESSMENT WAS AVAILABLE ONLY TO 31.12.2016, HENCE, WE ARE OF THE VIEW THAT THE ISSUANCE OF DR AFT ASSESSMENT ORDER CANNOT END UP INCREASING THE TIME LIMIT FOR COMPLETION OF THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT. THIS ISSUE HAS BEEN ADJUDICATED BY THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF IPF INDIA PROPERTY CYPRUS (NO.1) LTD. VS . DCIT (2020) 183 ITD 46 (MUMBAI - TRIB.), WHEREIN IT IS HELD AS UNDER : - 6. ONCE THIS AMENDMENT IS BEING INTRODUCED WITH EFFECT FROM 1ST APRIL 2020, IT IS BEYOND ANY DOUBT OF CONTROVERSY THAT SO FAR AS THE PERIOD PRIOR TO 1ST APRIL 2020 IS CONCERNED, THE C ASES IN WHICH NO VARIATIONS IN THE RETURNED INCOME OR LOSS WERE PROPOSED, THE DRAFT ASSESSMENT ORDERS WERE NOT REQUIRED TO BE ISSUED. WE, THEREFORE, UPHOLD THE PLEA OF THE ASSESSEE ON THIS POINT. 7. COMING TO THE SECOND POINT, WE FIND THAT THERE IS NO DISP UTE THAT IF NO DRAFT ASSESSMENT ORDER WAS TO BE ISSUED IN THIS CASE, THE ASSESSMENT WOULD HAVE BEEN TIME BARRED ON 31ST DECEMBER 2017 BUT THE PRESENT ASSESSMENT ORDER IS PASSED ON 17TH AUGUST 2018. ONCE WE HOLD THAT NO DRAFT ASSESSMENT ORDER COULD HAVE BEE N ISSUED IN THIS CASE, AS THE PROVISIONS OF SECTION 144C(1) COULD NOT HAVE BEEN INVOKED IN THIS CASE, THE TIME LIMIT OF COMPLETION OF ASSESSMENT WAS AVAILABLE ONLY UPTO 31ST DECEMBER 2017. THE MERE ISSUANCE OF DRAFT ASSESSMENT ORDER, WHEN IT WAS LEGALLY NO T REQUIRED TO BE ISSUED, CANNOT END UP ENHANCING THE TIME LIMIT FOR COMPLETING THE ASSESSMENT UNDER SECTION 143(3). WE, THEREFORE, UPHOLD THE PLEA OF THE ASSESSEE ON THIS POINT AS WELL. THE IMPUGNED ASSESSMENT ORDER IS INDEED, IN OUR CONSIDERED VIEW, TIME BARRED. WE, ACCORDINGLY, HOLD SO. 8. AS THE IMPUGNED ASSESSMENT ORDER ITSELF IS HELD TO BE TIME BARRED, ALL OTHER GRIEVANCES RAISED IN APPEAL, WHICH DEAL WITH THE MERITS OF STAND TAKEN BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER, ARE RENDERED 5 ACADEMIC AND INFRUCTUOUS. NO ADJUDICATION, THEREFORE, IS REQUIRED ON THESE GRIEVANCES AT THIS STAGE. 8 . WE NOTED THAT IN THE PRESENT CASE NEITHER THE LEARNED SR. DR NOR THE ASSESSEE HAS DISPUTED THE FACT AND THERE IS PROPOSED VARIATION IN THE INCOME OR LOSSES RE PORTED BY THE ASSESSEE TO THE INCOME TAX AUTHORITIES. THE MATTER BEFORE THE ASSESSING OFFICER WAS ONLY WITH RESPECT TO THE RATE OF TAX CHARGEABLE BY THE ASSESSEE AND ACTUALLY THERE IS NO VARIATION IN INCOME OR LOSSES. ONCE, THIS IS A FACT THE ISSUE IS SQUA RELY COVERED BY THE DECISION OF THIS TRIBUNAL IN THE CASE OF IPF INDIA PROPERTY CYPRUS (NO.1) LTD. (SUPRA). RESPECTFULLY FOLLOWING THE SAME, WE ALLOW THIS ADDITIONAL GROUND OF THE ASSESSEE AND HOLD THAT THE ASSESSMENT FRAMED BY ASSESSING OFFICER IS TIME BA RRED AND HENCE QUASHED. FOLLOWING OUR EARLIER VIEW, WE ALLOW THE ADDITIONAL GROUND OF APPEAL AND HOLD THAT THE ASSESSMENT FRAMED BY LEARNED ASSESSING OFFICER WAS TIME BARRED AND HENCE QUASHED. CONSEQUENTLY, OTHER GROUNDS RAISED IN THE APPEAL HAVE BEEN RE NDERED ACADEMIC IN NATURE. 6. THE APPEAL STAND ALLOWED IN TERMS OF OUR ABOVE ORDER. O RDER PRONOUNCED ON 5 TH APRIL, 2021. SD/ - SD/ - (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) / VICE PRESIDENT / ACCOUNTANT MEMBER MUMBAI; DATED : 05/04/2021 SR.PS, JAISY VARGHESE / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBA I.