VARRIABLE INSURANCE PRODUCTS FUND III MIDCAP PARTFOLIO ( VIPFMP), V. ADIT (IT) 2(2),

MA 10/MUM/2011

• Counselvise Citation: [2011] 123 COUNSELVISE.COM (IT) 6418 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 25-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2006-2007
• Appeal Filed On: 04-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VANDANA SAGAR
• Keywords: Business income; Permanent establishment; Wrong claim; Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F MUMBAI BEFORE SHRI R.S. SYAL (AM) AND SMT. ASHA VIJAYARAGH AVAN (JM) M.A. NO. 10/MUM/2011 (ARISING OUT OF ITA NO.568/MUM/2010 ASSESSMENT YEAR-2006-07 M/S. VARIABLE INSURANCE PRODUCTS FUND III, MIDCAP PORTFOLIO (VIPFMP), C/O S.R. BATLIBOI & CO., 18 TH FLOOR, EXPRESS TOWER, NARIMAN POINT, MUMBAI-400 021 PAN-AAATV5594L VS. THE ADIT (IT) 2(2), SCINDIA HOUSE, BALLARD ESTATE, MUMBAI (APP LICANT ) (RESPONDENT) APP LICANT BY: SHRI M.P. LOHIA RESPO NDENT BY: SMT. VANDANA SAGAR O R D E R PER ASHA VIJAYARAGHAVAN (JM) BY THIS MISCELLANEOUS APPLICATION, IT HAS BEEN POI NTED OUT THAT THE HONBLE ITAT HAD MADE A MISTAKE IN DOCUMENTING THE FACTS AT PAGE 5 IN PARA 8. WE FIND THAT THE FACTS OF THE CASE ARE THA T THE ASSESSEE HAD FILED ORIGINAL RETURN OF INCOME TREATING THE INCOME EARNE D FROM SALE OF SECURITIES AS BUSINESS PROFITS AND SUBSEQUENTLY FIL ED REVISED RETURN OF INCOME TREATING THE INCOME AS CAPITAL GAIN. THEREFO RE THE ORDER OF THE I.T.A.T IS TO BE AMENDED INCORPORATING THE CORRECT FACTS. HENCE PAGE 5 AT PARA 8 SHALL NOW TO BE READ AS UNDER: 8. WE HEARD BOTH THE PARTIES. THE FACT IS THAT THE ASSESSEE FIRST RETURNED THE PROFIT ON SALE OF SECURITIES AS CAPITAL GAINS. AFTERWARDS, ON PERUSING THE ORDER OF THE AAR IN THE CASE OF XYZ/ ABC EQUITY FUND (250 ITR194) AND FIDELITY ADVI SORS M.A. NO. 10/M/2011 2 SERIES VIII (271 ITR 0001) THE ASSESSEE FELT THAT THE PROFITS MAY CONSTITUTE BUSINESS PROFITS AND AS THE ASSESSEE DOES NOT HAVE ANY PERMANENT ESTABLISHMENT IN INDIA, THE PROF ITS WILL NOT BE TAXABLE IN INDIA. THEREFORE, THEY FILED REV ISED RETURN CLAIMING THE INCOME AS EXEMPT AND APPENDING A NOTE EXPLAINING THE REASON FOR THE SAME. THIS WAS NOT AC CEPTED AND THE AO BROUGHT TO TAX RS. 48,60,43,404/-. BASED ON THIS, THE AO HAS LEVIED A PENALTY OF RS. 5,45,39,751/- ON THE GROUND THAT THE ASSESSEE HAS MADE A FALSE CLAIM. THE ASSES SEE HAS NOT GIVEN ANY INACCURATE PARTICULARS. THE TOTAL INCOME ARISING FROM SALE OF SECURITIES AT RS. 48,60,43,404/- HAS B EEN DISCLOSED. THE ASSESSEE HAS ALSO DISCLOSED THAT IN THE ORIGINAL RETURN THIS HAS BEEN RETURNED AS BUSINESS INCOME AN D FOR THE REASONS EXPLAINED ALONG WITH THE REVISED RETURN THE PROFITS WERE CONSIDERED AS CAPITAL GAINS. THE ASSESSEE BONA FIDE BELIEVED, BASED ON THE DECISIONS OF THE AAR, CLAIME D IT AS BUSINESS INCOME WHICH THEN HAS TO BE EXCLUDED FROM THE TAXABLE INCOME IN VIEW OF THE PROVISIONS OF THE DTA A BETWEEN INDIA AND CANADA. MERELY BECAUSE THE CLAIM THAT PRO FITS FROM SALE OF SECURITIES CAN NOT BE CONSIDERED AS BUSINES S AS CLAIMED BY THE ASSESSEE WOULD NOT MEAN THAT PENALTY IS LEVI ABLE. 2. IN THE RESULT, THE M.A. FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 25 TH DAY OF MAY, 2011 SD/- SD/- ( R.S. SYAL) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 25 TH MAY, 2011 RJ M.A. NO. 10/M/2011 3 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR F BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI M.A. NO. 10/M/2011 4 DATE INITIALS 1 DRAFT DICTATED ON: 2 0 . 5 .2010 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 2 0.5 .20 10 ______ SR. PS/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: _________ ______ JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: _________ ______ JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: _________ ______ SR. PS/PS 6. KEPT FOR PRONOUNCEMENT ON: _________ ______ SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: _________ ______ SR. PS/PS 8. 9 DATE ON WHICH FILE GOES TO THE HEAD CLERK: DATE ON WHICH FILE GOES TO AR _________ ______ 10 . DATE OF DISPATCH OF ORDER: _________ ______