TaxTMI 
TaxTMI 
2013 (1) TMI 259
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....ssessing Officer has erred in holding that the Appellant has a Permanent Establishment ("PE") in India through which it carries out its sales in India. 1 : 2 The Appellant submits that considering the facts and circumstances of its case and the law prevailing on the subject, it has no PE in India and the stand taken by the Assessing Officer in this regard is erroneous, misconceived and not in accordance with law. 1 : 3 The Appellant submits that the Assessing Officer has erred in arriving at various unwarranted and erroneous conclusions unsupported by any relevant material to hold that the Appellant had a PE in India. Further he also failed to consider the contrary material and evidence adduced by the Appellant. 1: 4 The Appellant submits that the Assessing Officer be directed to recompute its total income accordingly. Without prejudice to the foregoing: 2:0 Re.: Attribution of profits: 2 : 1 The Assessing Officer has erred in attributing the profits made by the Appellant. 2 : 2 The Appellant submits that considering the facts and circumstances of its ....
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....pellant craves leave to add, alter, amend, substitute and I or modify in any manner whatsoever all or any of the foregoing grounds of appeal at or before the hearing of the appeal. 2. Consequent to raising of substantial demands, assessee preferred stay applications and vide the orders dated 21.01.2011, stay was granted for a period of 180 days i.e. till 20th July, 2011 and the case was originally posted on 06.04.2011. As the matters involved were of international transactions, the cases were transferred to 'L' Bench and on 20.04.2011 the learned Counsel for assessee submitted that assessee had sought inspection of records and the copies of certain documents which AO has not allowed so far. Therefore, the case was adjourned to 30.06.2011 with a direction to the learned DR to produce the relevant assessment records in order to expedite the disposal of these stay granted appeals. Subsequently due to various reasons the cases were not heard either because the DR sought adjournment or because the Bench was not functioning. Accordingly assessee's stay was extended periodically by the orders dated 05.08.2011, 10.02.2012 and further order dated 07.09.2012. The stay of demand granted in....
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....om DDIT(IT)3(1) dated 31/07/2012 intimating the position that the efforts made by the said Officer with other Officers for procurement of the relevant documents. Subsequently, the case came up for hearing on 03.09.2012, 06.11.2012 and 06.12.2012. On 06.12.2012 the Bench finally gave a last opportunity with a direction to the learned CIT (DR) to produce the assessment records and the correspondence between AOs if any, so that assessee's contention that there is no satisfaction recorded before initiating the proceedings under section 153C can be verified. It was further noted that since these are stay granted matters, which was extended four times so far, no further adjournment in this case would be granted and the parties were informed accordingly. Therefore, the case was taken up on 19.12.2012 on which date the learned CIT (DR) furnished the correspondence addressed by the Asstt. Director (IT) (Invest.) Unit 7(2) Mumbai to Additional DR (IT) International Taxation Range-3 Mumbai and a letter by DDIT(IT)3(1) dated 13.12.2012. After placing the above two correspondence on record, the learned CIT (DR) submitted that the original record with reference to satisfaction note is not made a....
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....ry issue raised by assessee by way of additional ground is with reference to the validity of the proceedings under section 153C. The issue arose on the following facts. A search & seizure action under section 132(1) of the Act was carried out in the case of Ingram Micro India Pvt. Ltd/M/s Tech. Pacific (India) Ltd at their business premises at Gate No.1A, Godrej Industries Complex, Pirojshah Nagar, Vikhroli (E) Mumbai 400079 on 06/07.09.2007. The basic allegation against the group was that Ingram Micro India Exports Pte Ltd/Tech Pacific India (Exports) Pte Ltd Singapore based company is not paying any Income Tax in India though it is having a permanent establishment in India though Ingram Micron India Limited/Tech Pacific India Ltd. It was communicated from the Investigating Wing that the proceedings are required to be initiated in this case to bring to tax the profits of Ingram Micro India Exports Pte Ltd/Tech Pacific India (Exports) Pte. Ltd. 7. A notices under section 153C dated 18.11.2008 were issued in the case of Ingram Micro India Exports (P) Ltd for assessment years 2002-03 to 2007-08 and stated to be duly served upon assessee. In response assessee filed returns of incom....
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....Tech Pac. Holdings, a Bermuda based company. After the acquisition of the Tech. Pac. Holdings' shares by Ingram Micro Inc. in Nov. 2004,TPIEPL has come to be known as IMIEPL. For the calendar years 2001 to 2002 Tech Pacific (India) Ltd was known as Godrej Pacific Technology". 8. In the course of search, certain documents, email correspondence etc., were seized by the Department and after analysis of the same, AO came to the conclusion that assessee had a permanent establishment in India and accordingly on the basis of the seized documents arrived at the incomes in the respective assessment years and proposed a draft assessment order. Assessee objected to the draft assessment order before the DRP-I and DRP-I vide direction dated 29.09.2010 affirmed the stand of AO that there is a permanent establishment and also computation of income. However, vide Para 6 of the order, instead of assessing the 100% income of assessee as attributable to PE in India, the DRP directed that 90% of the income to be assessed as attributable to PE in India, whereas the balance 10% can be treated as activities related to Singapore. Consequent to the directions ....
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....epeated efforts and requests for adjournment by the DR for furnishing the record, the record has not been sent by the officers or any satisfaction has been placed on record. Since more than 20 months have passed from the time the first direction was given to the Revenue and since three different CIT (DRs) have followed up the matter with the concerned AOs, we are of the opinion that there is no satisfaction recorded while initiating the proceedings under section 153C either by AO who assessed the searched party or even by AO who completed the assessment in assessee's case. 10. Since assessee is not searched party, it is necessary to record a satisfaction under the provisions of section 153C. The provisions of section 153C are as under: "153C. [(1)] Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A, then the books of account or documents or assets....
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....on, such Assessing Officer shall issue the notice and assess or reassess total income of such other person of such assessment year in the manner provided in section 153A.]" This provision is pari materia with the provisions of section 158BD (in the block assessment procedure). 11. The Hon'ble Supreme Court in the case of Manish Maheshwari (supra) analyzed the provisions of section 158 BD r.w.s. 158BC and decided as under: "Condition precedent for invoking a block assessment is that a search has been conducted under section 132, or documents or assets have been requisitioned under section 132A. The said provision would apply in the case of any person, in respect of whom search has been carried out under section 132A or documents or assets have been requisitioned under section 132A. Section 158BD, however, provides for taking recourse to a block assessment in terms of section 158BC in respect of any other person, the conditions precedent wherefor are : (i) Satisfaction must be recorded by the Assessing Officer that any undisclosed income belongs to any person, other than the person with respect to whom search was made under section 132; (ii) The books of a....
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....nd in the course of the search, notice under section 153C, read with section 153A, was issued to the assessee. In response thereto, the assessee filed its return and assessment was completed. The assessee contended that the Assessing Officer had not recorded any satisfaction either in case of searched person or in case of the assessee and, therefore, impugned notice was invalid and consequential assessment was to be annulled. On appeal: HELD A perusal of the order sheet recording itself clearly shows that the Assessing Officer when he made the recording, was categorical in his view that the reasons recorded is no pre-condition for action under section 153C and the points noted are for the sake of ready reference and appropriate action. Once the Assessing Officer himself has accepted that the recording of reasons is not a pre-condition for action under section 153C and has accepted that the points are noted for the sake of ready reference and appropriate action, obviously cannot be treated as reasons recorded. A reading of the provisions of section 153C clearly shows that it is in pari materia with the provisions of s....
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....khija, the learned A.R. submitted that adverse inference should be taken and the Bench should decide the case in his favour as more than 1½ years has elapsed since directions were given to the Revenue and no records are produced till date. 8. After hearing rival contentions, we agree with the submissions of Mr. M.P. Makhija that no useful purpose would be served by adjourning the matter once again, to give further time to the Revenue, for producing the records, as more than 1 ½ year has elapsed since the date of issual of directions. Hence adverse inference is taken and ground No.2 of the assessee that no satisfaction was recorded by the AO who completed the block assessment of Nandokya group of cases, appears to be factually correct. Thus we quash the block assessment order by applying the judgment of the Hon'ble Supreme Court in the case of Manish Maheshwari 289 ITR 341 wherein it is held that (i) Satisfaction must be recorded by the Assessing Officer that undisclosed income belong to any person, other than the person with respect of whom search was made u/s 132 of the Act, and (ii) the books of account or the documents or assets seized or requ....