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2013 (11) TMI 215
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....sp; The assessee had originally filed elaborate grounds of appeal, but subsequently filed concise grounds of appeal on the direction of the Tribunal. The concise grounds filed by the assessee are as under : "1. The order of the learned Commissioner of Income Tax (Appeals)-IV in so far as it is against the appellant, is opposed to law, equity, weight of evidence, facts and circumstances of the case. 2. The learned CIT (Appeals) erred in not holding that the assessment was barred by limitation of time. 3. The learned CIT (Appeals) failed to appreciate that it is not in accordance with law to issue a notice to one person and pass the assessment order and demand notice under section 156 of the Income Tax Act, 1961 ('the Act') in the hands of another person. 4. The learned CIT (Appeals) has erred in not holding that the notice issued under section 148 of the Act on 30 March, 2005, without holding M/s. GDF Suez Energy India Private Limited as an agent of the appellant, is bad in law. 5. The learned CIT (Appeals) erred in not holding that ....
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....d not 'made available' any technology, knowledge etc and the impugned claim would not fall within the purview of 'fees for technical service' under the DTAA. 14. Without prejudice to the above, the learned CIT (Appeals) ought to have held that the invoices under the Engineering Assistance Agreement and the Legal and Financial Assistance Agreement, for which claims were made, if at all the same were taxable, can only be taxed in the year during which the services were rendered and not in the impugned assessment year. 15. The learned CIT (Appeals) failed to adjudicate the alternate ground on issue of levy of interest under section 234B of the Act. He erred in not holding that the rate of interest under section 234B, if any, ought to be computed @ 1% per month, being the rate prevailing on the date of passing the assessment order. He further erred in not holding that interest leviable, if at all, ought to be computed with reference to the returned income. Further, the period for which the same has been levied is not in accordance with the provisions of the Act. 16. The above grounds are independent of ....
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....the assessee and Jindal Strips Ltd., the assessee initiated international arbitration proceedings before the International Chamber of Commerce (ICC) against JTPCL for violation of the terms of the Share holders Agreement, the Engineering Assistance Agreement and the Legal and Financial Agreement. In May, 2001, the Jindal Group also filed counter claims before the ICC. The various claims made by the assessee against JTPCL towards development costs / expenses amounted to Rs. 32.02 Crores. In Sept., 2001, the assessee and the Jindals entered into negotiations and resolved the dispute by mutually consenting to certain terms and conditions viz., that the Jindals buyout STSA; that STSA was to receive a suitable settlement amount and that Tractabel Energy South Asia (TESA) act as a conduit for the transaction between STSA and the Jindals. The assessee then transferred its 144,500,000 shares in JTPCL to TESA for a consideration of US $ 55,000,000 (equivalent to Rs. 2610,300,000 which worked out to Rs. 18.06 per share). 3.3 For Asst. Year 2002-03, the period under consideration, the assessee filed its return of income on 29.10.2002 declaring NIL taxable income. The said return was proces....
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..... Revenue has also preferred a cross appeal in so far the order of the learned CIT(A) is against it. LEGAL ISSUES RAISED BY ASSESSEE IN GROUND NOS.2 TO 6. 5.0 In the course of hearings before us, the learned A.R. was requested to put forth the arguments of the assessee on legal issues raised, which have been argued at length and have also been summarized on the issue of validity of the assessment for A.Y. 2002-03. The learned A.R. filed a synopsis of the contentions of the assessee on the legal issues raised which are as under : (i) Whether notice can be issued to an agent (TESA) and the consequent assessment can be made on STSA ? ; (ii) Whether there is a need to pass an order u/s. 163(2) of the Act before issuing notice u/s.148 of the Act ? ; (iii) Whether the communication of the reasons for initiating proceedings u/s. 147 of the Act, require to be done by the Assessing Officer before the completion of the assessment proceedings ? ; (iv) Whether the assessment for A.Y. 2002-03 is barred by limitation as the order has not left the control of the officer before 31.3.2006 ? ....
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....assessee company under the provisions of section 163 of the Act. The learned A.R. drew our attention to the provisions of section 163 of the Act. It was pointed out by the learned A.R. that page No.31 of the paper book compilation which was a copy of the show cause notice dt.30.3.2005 issued to TESA by the A.O. asking TESA to explain as to why it should not be treated as an agent of the assessee company as per the provisions of section 163(2) of the Act and requiring TESA to appear on the very next day i.e. 31.3.2005 for availing an opportunity of being heard in the matter. It was submitted by the learned A.R. that, in this connection, the Authorised Representative of TESA appeared before the A.O. and requested additional time to furnish their submissions in rebuttal of the assessing officer's view, and time was granted by the assessing officer, upto the end of April, 2005, for furnishing the assessee's objections to the show cause issued u/s.163(2) of the Act. It was further submitted by the learned A.R. that there was no hearing on this aspect at all thereafter. Subsequently, on the very next day i.e. 31.3.2005, a notice u/s.148 of the Act was issued in the name of TESA as an age....
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....authorities below and the relevant records of assessment, we find merit in the arguments put forth by the learned A.R. that for treating a person as an agent of any other person an order has to be passed u/s.163(2) of the Act after affording such person an opportunity of being heard in the matter. In this regard it would be relevant to reproduce the provisions of section 163 of the Act for proper appreciation : "Who may be regarded as agent. 163. (1) For the purposes of this Act, "agent", in relation to a non-resident, includes any person in India- (a) who is employed by or on behalf of the non-resident; or (b) who has any business connection with the non-resident; or (c) from or through whom the non-resident is in receipt of any income, whether directly or indirectly; or (d) who is the trustee of the non-resident; and includes also any other person who, whether a resident or non-resident, has ....
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....that you had entered into a transaction with M/s. Tractebel S.A., Belgium for purchase of 14.45 Crores of shares of M/s. Jindal Tractebel Power Company Limited. In this connection, it is now proposed to treat you as an agent of M/s. Tractebel S.A, Belgium. In this connection, you are hereby required to show cause as to why you should not be treated as agent of the non-resident company, M/s. Tractebel S A, Belgium. This may please be treated as a notice u/s.163(2) of the Income Tax Act, 1961. This is to give you an opportunity of being heard. The case is posted for hearing on 31.3.2005 at 11.00 a.m. at the address mentioned above. Yours faithfully, Sd/- (R.S. Naik) Assistant Commissioner of Income Tax International Taxation Circle 19(1), Bangalore." ORDER SHEET NOTING "31.3.2005 Mr. Vishweshwar Mudigouda,Senior Manager, BSR and Co. appeared along with Mr. D.S. Vivek, CAPITAL ASSETS and Mr. Krishnan Narayana....
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....res to be communicated to the parties concerned. 8.4 In this context, we refer to the decision of the Hon'ble Punjab & Haryana High Court in the case of Kanhaya Lal Gurmukh Singh (supra), wherein their Lordships at page 493 have observed as under : "The obvious intention of the legislature in providing an appeal under clause (g) of section 246 against an order under section 163 of the Act was that a person who is treated as an agent could challenge this matter so as to avoid further botheration to himself in facing the assessment. The provisions of sections 246 and 249 of the Act leave no manner of doubt that, before an Income Tax Officer proceeds to assess the income, he must make up his mind to treat the person concerned as an agent or not to treat him as such and, therefore, he has to pass an order under section 163 of the Act before he initiates the proceedings by issuing a notice under section 148 of the Act. Even if there was some doubt, whether the phraseology of sections 149(3) and 163(2) of the Act was so different from that of sections 34(1) (second proviso) and 43 of the old Act as to show that it was necessary for the Income Tax Officer to....
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.... company. The learned A.R. submitted that the entities STSA i.e. the assessee company and TESA i.e. the wholly owned subsidiary of the assessee company are two distinct and separate legal entities having been incorporated under the respective Acts / Laws of their respective countries of residence. The learned A.R. contended that the Assessing Officer has issued the notice u/s.148 of the Act on the wholly owned subsidiary, TESA on 31.3.2005 and concluded the assessment proceedings by passing the order of assessment for A.Y. 2002-03 on the assessee company and therefore in view of the fact that the order of assessment was passed on a person other than the person to whom the notice u/s.148 of the Act was issued to initiate assessment proceedings, requires to be cancelled. In support of the proposition that where the notice is issued on one person, the assessment cannot be made in the name of another person, the learned A.R. placed reliance on the following judicial decisions : (i) CIT v. K. Adinarayana Murty [1967] 65 ITR 607 (SC) (ii) CIT v. Ishwar Singh & Sons [1981] 131 ITR 480/[1980] 3 Taxman 63 (All.) &n....
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.... not been served the said notice, then such order is bad in law and ab-initio, null and void. We also do not agree with the assertion of the learned D.R. that the aforesaid error on the part of the Assessing Officer, of issuing a notice under section 148 of the Act on one person in one capacity and completion of the assessment on another person who has not been served the said notice is curable. In coming to this view, we drew support from the judgment of the Hon'ble Kerala High Court in the case of P.N. Sasikumar & Others (supra), which has held that it is settled law that if no notice is served, or if the notice issued is invalid or not in accordance with law or is not served on the proper person in accordance with law, the assessment would be illegal and without jurisdiction and that such defect in issue of notice being a fundamental and vital infirmity that could not be cured by reliance on application of section 292B of the Act. We, therefore, following the ratio of the judicial decisions cited by the learned Authorised Representative at para 9 of this order holds that the order of assessment for Assessment Year 2002-03 passed under section 143(3) r.w.s. 148 of the Act to the ....
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.... Authorised Representative further contended that in spite of repeatedly asking for the reasons by the assessee, the Assessing Officer never provided or furnished the reasons to the assessee. It is contended by the learned Authorised Representative that the subsequent making available to the assessee of the reasons recorded for initiating assessment proceedings under section 147 of the Act by the learned CIT(Appeals) during appellate proceedings vitiates the entire proceedings conducted before the Assessing Officer. It was further argued that providing the reasons recorded by the Assessing Officer to the assessee company at the appellate stage by the learned CIT(Appeals) would not fulfil the requirement of law which requires that the reasons recorded have to be necessarily communicated to the assessee before the completion of the concerned assessment proceedings. The learned Authorised Representative argued that the non-communication of reasons recorded by the Assessing Officer for initiating proceedings under section 147 of the Act, during the course of assessment proceedings is not a curable defect and therefore an inference is to draw that the mandatory conditions for proceeding....
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....n compliance with the law. In view of this, the learned Departmental Representative submitted that the orders of the authorities below are correct and placed reliance on the findings in the orders of the CIT(Appeals). 14.1 We have heard both parties at length and perused and carefully considered the material on record and the judicial decisions cited. On application of the facts of the matter in the case on hand, we are inclined to agree with the contention of the learned Authorised Representative since the records of assessment admittedly reveal that the reasons recorded by the Assessing Officer for initiating proceedings under section 147 / 148 of the Act were not communicated / made available to the assessee by the Assessing Officer before the completion of assessment proceedings. This aspect of the matter can be confirmed from the order of the learned CIT(Appeals) dt.26.3.2009 for the period under consideration, wherein at para 4.3 on page 11 thereof the learned CIT(Appeals) records that the reasons recorded were communicated to the assessee by letter dt.12.2.2009. The learned CIT(Appeals) in para 4.3 at page 11 and 12 of the appellate order has also reproduced the reasons r....
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.... Assistant Commissioner of Income Tax International Taxation Circle 19(1), Bangalore. Copy to :: M/s. BSR & Co., CAs 20/2, Vittal Mallya Road, Bangalore-560 001" 14.2 From the factual details as laid out above, the reliance of the learned Departmental Representative on the reasons as recorded for initiation of proceedings under section 148 of the Act as being provided to the assessee by the Assessing Officer's letter dt.24.6.2005, is misplaced by any stretch of imagination, as clearly the reasons as recorded by the Assessing Officer do not find place therein. Further, we find that statement of the Assessing Officer in the letter dt.24.6.2005, that the above clarification would suffice, is not acceptable for the fact that the reasons as recorded by the Assessing Officer have not been communicated by the aforesaid letter at all. Rather, we find that the actual reasons as recorded by the Assessing Officer find reproduction at para 4.3 on pages 11 and 12 of the learned CIT(Appeals)'s order. It is als....
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....er of assessment dt.31.3.2006 for Assessment Year 2002-03 invalid and unsustainable in law. 14.5 The co-ordinate bench of this Tribunal in the case of Synopsys International Ltd. (supra), to which one of us is party to, after considering the decisions of the Hon'ble Apex Court in the case of GKN Driveshafts (India) Ltd. (supra); of the Hon'ble High Court of Bombay in the case of Videsh Sanchar Nigam Ltd. (supra) and of the Bangalore Tribunal in the case of K.Y. Venkataswamy Reddy (supra) and of the ITAT, Mumbai in the case of Tata International Ltd. (supra), has recorded its findings at para 4.1.5 of its order which are extracted and reproduced hereunder : "4.1.5 From the discussion in paras 4.1.1 to 4.1.4 of this order (supra), it is clear that the settled proposition of law, as laid down by the Hon'ble Apex Court, Hon'ble High Court of Mumbai and as followed by the two decisions of the coordinate benches of the Tribunal (all cited supra), is that the reasons as recorded by the Assessing Officer are required to be furnished to the assessee within reasonable time of their being recorded and certainly prior to the completion of assessment. In the insta....