TaxTMI 
TaxTMI 
2014 (11) TMI 220
X X X X Extracts X X X X
X X X X Extracts X X X X
....21/Mum/2014, vide which the following grounds have been raised:- "1. Reassessment is bad in law. (a) The learned Assessing Officer (AO) erred in invoking the provisions of section 147 of the Income-tax Act, 1961 (the Act). (b) The impugned reassessment order dated 13 December 2011 is bad in law and ought to be quashed as the learned AO failed to issue a notice under section 143(2) of the Act. 2. Exemption under Article 14 of the tax treaty between India and Denmark. The learned AO erred in denying the exemption provided under Article 14 of the tax treaty between India and Denmark in relation to capital gains of Rs. 48,64,47,646. 3. Exemption under section 10(38) of the Act. Without prejudice, the learned AO ought to have allowed exemption under section 10(39) of the Act in respect of long term capital gains of Rs. 38,61,16,073 arising on sale of shares subject to securities transaction tax. 4. Interest under section 234B of the Act. The learned AO erred in levying interest under section 234B of the Act The appellant craves leave to add to, alter, amend, vary omit or substitute the aforesaid grounds of appeal or add a new ground or grounds of appeal at any....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the tax law of Luxumberg). Then the assessee is taxable in India in respect of the capital gain earned in India during the previous year relevant assessment year 2006-07. The possibility of AOP is not a taxable unit under the tax law of Denmark may not be ruled out. Accordingly possibility of loss of revenue of Rs. 46214144 (11.2% of 411890769) may also not be ruled out. In view of these, I have reason to believe that income chargeable to tax of Rs. 46214144 (11.2% of 411890769) has escaped assessment within the meaning of provision of section 147. Issue notice u/s.148 of the I.T.Act. Sd/- (Dr.Satya Pal Kumar) D.D.I.T. (IT), 3(1), Mumbai." ITA No.3721, 3722 & 3723/Mum/2014. 6. In response to notice u/s. 148, the assessee vide letter dated 26th April, 2011 and later on vide letter dated 25th November, 2011, raised objections for reopening the case u/s 147 and also made submissions on merits that the assessee is not liable to be taxed in India, in view of Article 14(5) of Indo-Denmark DTAA. Copy of tax residency certificate was also filed. The relevant submission made by the assessee vide letter dated 25th November, 2011 is reproduced hereunder:- "1. Backgrou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s resident. However, gains from the alienation of shares will be taxable in the country in which the company is resident only if such shares represent at least 10 per cent of the share capital of that company. Based on the above, it is submitted that as the Fund is resident of Denmark as evidenced from the TRC and is liable to tax therein, it is eligible to avail the terms of the Treaty. Should you need any further clarification, please let us know." 7. The Assessing Officer, however held that such a contention of the assessee cannot be upheld, that it is not liable to tax in India under the DTAA, because the assessee is an AOP-Trust being a FUND and in Denmark the AOP-Trust is not taxable, and therefore, the assessee is not eligible for DTAA benefit. Accordingly, he taxed the capital gain. 8. Before the CIT(A), the assessee raised various objections with regard to the reopening of the case u/s 147 and also on the merits of the case. However, the learned CIT(A) too dismissed the assessee's contention not only on the legal issues of reopening u/s 147, but also on merits. 9. Before us, the learned Counsel Shri Girish Dave submitted that the assessee along with the retu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....whether the assessee is tax resident of Denmark or not, and secondly, whether AOP-Trust is taxable unit in Denmark or not. This is evident from the reasons where he observes that, there is a possibility that AOP is not a taxable unit under the tax laws of Denmark and because of this, there is possibility of loss of revenue. The relevant observations made in the `reasons recorded' by the A.O. to this effect, which reads as under:- "In case, the Fund is not taxable unit under the taxation law in force in Denmark (as many countries do not recognize the "AOP" (trust) as a taxable unit for exempt the tax law of Luxumberg). Then the assessee is taxable in India in respect of the capital gain earned in India during the previous year relevant assessment year 2006-07. The possibility of AOP is not a taxable unit under the tax law of Denmark may not be ruled out. Accordingly possibility of loss of revenue of Rs. 46214144 (11.2% of 411890769) may also not be ruled out." 12. It is a trite law that for assuming the jurisdiction to reopen the case u/s 147, the A.O. must have `reasons to believe' that any income chargeable to tax has escaped assessment. The words `reasons to believ....