JT. COMMISSIONER OF INCOME TAX ( OSD) (IT)-2(2)(2), Mumbai V. IPF INDIA PROPERTY CYPRUS (NO.1)LIMITED, MUMBAI

MA 88/MUM/2021

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 5069 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 9 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 03-03-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2014-2015
• Appeal Filed On: 22-03-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: FOUR TIMES WAS CLEARLY
• Keywords: Double taxation relief
• Section: 143(3); 144C

Judgement Text

MA No 88/Mum/2021 In ITA No. 6077/Mum/2018 Assessment year: 2014-15 Page 1 of 3 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI 'I' BENCH, MUMBAI [Coram: Pramod Kumar (Vice President), and Sandeep Singh Karhail (Judicial Member)] MA No 88/Mum/2021 In ITA No. 6077/Mum/2018 Assessment year: 2014-15 Joint Commissioner of Income Tax (OSD) (IT)-2(2)(2) Mumbai ........................Appellant Vs. IPF India Property Cyprus (No.1) Ltd., ...................... Respondent C/o SRBC & Associated LLP, 14th Floor, The Ruby, 29 Senapati Bapat Marg, Dadar (W), Mumbai 400028 [PAN: AAACH3759G] Appearances by T. Shankar for the applicant Madhur Agarwal along with Fenil Bhatt for the respondent Date of concluding the hearing : March 04, 2022 Date of pronouncement the order : March 04, 2022 ORAL ORDER (Dictated in the open court) Per Pramod Kumar, VP: 1. By way of this application, the Assessing Officer points out, what he perceives as, certain mistakes apparent on record in the order dated 25 th February 2021 passed by us. 2. The stand of the Assessing Officer, as evident from the rectification petition, is as follows:- The common order is passed by Hon'ble ITAT vide no. ITA No.6077/Mum/2018 dated 25.02.2021 for A.Y.2014-15. This Miscellaneous application is being filed on the following grounds: MA No 88/Mum/2021 In ITA No. 6077/Mum/2018 Assessment year: 2014-15 Page 2 of 3 ITA No.6077/Mum/2018 for A.Y. 2014-15 1. "On the facts and circumstances of the case and in law, the Hon'ble ITAT was not justified in quashing the draft assessment order passed by the AO u/s. 143(3) r.w.s. 144C(1) of the IT. Act without appreciating the fact that even as per section 143(3) of the I.T. Act, the AO shall, by an order in writing, make an assessment of the total income or loss of the assessee and determine the sum payable by him on the basis of such assessment. Thus even the net result of an assessment u/s. 143(3) is to determine the exact tax liability of the assessee which may arise either by addition to its income or by varying the tax rates on the returned income". 2. "On the facts and circumstances of the case and in law, the Hon'ble ITAT was not justified in quashing the assessment order passed by the AO u/s. 143(3) r.w.s 144C/13), when the order passed by the AO enhancing the tax liability of the assessee by four times was clearly prejudicial to the interest of the assessee?" 3. "On the facts and circumstances of the case and in law, the Hon'ble ITAT ought to have decided the issue of beneficial ownership of interest' in the hands of the assessee on merits." 4. "On the facts and circumstances of the case and in law, the Hon'ble ITAT could have set aside the order of the AO and directed him to follow the due procedure u/s 143(3) of the I T Act as the draft assessment order passed by the AO was in substance and effect in conformity with or according to the intent and purpose of the Act, being prejudicial to the assessee, and such mistake or defect was curable us 292B of the IT Act.” Brief facts: IPF India Property Cyprus (No.1) Ltd. (hereinafter "the assessee") is incorporated in Cyprus in 2010. The assessee is a SPV for investments to be made in India and has made certain investments in compulsory convertible debentures (CCDs) of an Indian Company- Krona Realties Private Limited (Krona). During the financial year ending 31 March 2014, the assessee received interest amounting to Rs.8,74,22,137 on these CCDs. The assessee offered the amount to tax @10% claiming benefit of the beneficial provisions of the Article 11(2) of the India-Cyprus DTAA (hereinafter "the treaty"), treating itself the beneficial owner of the interest. The AO passed the draft order dated 11.12.2017, wherein he rejected the claim of the assessee that its was eligible to the beneficial provisions of the treaty. He concluded that the assessee was merely a conduit for funds invested in India through it and cannot be termed as a beneficial owner of the interest received. He proceeded to tax the amount under Indian Income Tax Act @ 40% of the gross amount. Aggrieved the assessee filed its objections before the Hon'ble DRP, which in its order dated 26.07.2018 upheld the stand of A rejecting claim of beneficial ownership of interest income. Also, the Hon'ble DRP also rejected the objection of the assessee that the AO erred in passing a draft assessment order under section 143(3) read with section 144C(1) of the Act, even when no variation has been proposed therein to the income or loss returned by the appellant. Aggrieved the assessee filed appeal before the Hon'ble ITAT. Hon'ble ITAT decision : The Hon'ble ITAT has allowed the appeal of the assessee 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 academic and infructuous. MA No 88/Mum/2021 In ITA No. 6077/Mum/2018 Assessment year: 2014-15 Page 3 of 3 Comments for filing Miscellaneous appeal: It is noticed that Hon’ble ITAT was not justified in quashing the assessment order itself. The AO correctly understood the intent and purpose of Section 144C of the I T Act and passed the draft assessment order accordingly as the tax liability of the assessee has increased massively as a result same. 3. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of applicable legal position. 4. A careful perusal of the rectification petition clearly shows that the applicant Assessing Officer has not pointed out any mistake, much less a mistake apparent on record which can be rectified within inherently limited scope of Section 254(2), in the impugned order. What he has pointed out are possible arguments in support of the stand of the Assessing Officer in the appeal. At this stage, however, it is neither open for us to re-visit the conclusions arrived at on the merits nor the Assessing Officer has pointed out any mistakes in the conclusions arrived at by us. We therefore, deem it fit and proper to dismiss the rectification petition as ill conceived and devoid of substance. 5. In the result, the rectification petition is dismissed in the terms indicated above. Pronouncement and dictation in the open court today on the 04 th March, 2022. Sd/- Sd/- Sandeep Singh Karhail Pramod Kumar (Judicial Member) (Vice President) Mumbai, dated the 04 th March, 2022 Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) DR (6) Guard File By order True Copy Assistant Registrar/ Sr. PS Income Tax Appellate Tribunal Mumbai benches, Mumbai