TaxTMI 
TaxTMI 
2009 (5) TMI 948
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....ins as well as dividend income. Thereafter, on the basis of a ruling of the Authority of Advance Ruling in the case of XYZ/ABC Equity Fund (2001) 250 ITR 194 as well as M/s Fidelity Advisor Series VIII (2004) 271 ITR 01, the assessee filed a revised return of income on 9th August, 2005, wherein it claimed that the Fund is carrying on business as an investment trust and that the shares and securities were held by the Fund as business assets and the profits from the purchase and sale of shares are in the nature of business income and not capital gains as reported in the original return of income filed. It took a stand that the objects of the Fund as could be seen from its chartered documents and registration with SEBI as a foreign institutional investor as well as the enormity and frequency of transactions of purchase and sale of shares and securities, it would be clear that is is carrying on business of purchase and sale of shares and securities and that the income is taxable only under the head "Business income" and as the assessee has no permanent establishment in India, it invoked the provisions of the Double Taxation Avoidance Agreement (DTAA) between India and USA and claimed t....
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....ess income" or under the head "Capital gains" and on this factual matrix, the question of coming to a conclusion that the assessees have concealed the particulars of income or have furnished inaccurate particulars of income so as to enable the levy of penalty u/s. 271(1)(c) does not arise. He relied on the decision of the jurisdictional Tribunal in the case of VIP Industries Limited in ITA Nos. 4524/Mum/2006 and 4383/Mum/2006 (Mumbai Bench "A") order dated 20th March, 2009. He submitted that the facts of both the cases are identical and hence the levy of penalty is bad in law. 4. Shri JVD Lengsteih, the learned departmental representative, on the other hand, opposed the contentions of Shri Lohia and submitted that the assessee had in fact filed a revised return of income and that in that return he has made a false claim that the income in question is assessable as business income and not as capital gains. He pointed out that the assessee chose not to dispute the assessment orders. He relied on the orders of the first appellate authority and submitted that the penalty has been rightly levied an upheld in these cases. He relied on the decision of the Hon'ble Supreme court in t....
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....s a Foreign Institutional Investor and the enormity and frequency of transactions of purchase and sale of shares and securities by the Fund. Further, in view of the provisions of the Double Taxation Avoidance Agreement ('DTAA') between India and USA, the business profits could be taxed in India only if there is a Permanent Establishment ('PE') in India. As the Fund does not have an office, a place of business or a dependent agent in India, it does not have a PE in India and therefore, the business income on sale of securities would not be taxable in India. With regard to our claim that the income earned by the Fund is in the nature of business income we would like to place reliance on a recent rulling delivered by the Authority for Advance rulings ('AAR') in respect of one of our sister funds, namely, Fidelity Advisor Series VIII reported in [2004] 271 ITR 0001 (AAR), the facts of the which are similar to our case. The ruling delivered by the AAR is enclosed herewith as Annexure B. In this case the AAR, after perusing certain parameters such as the objects for which the applicant was established, the frequency of trade, etc. held that the income earned by....
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....oks of account are maintained specifically, vis-a-vis Indian investments and hence the question of audit u/s. 44AB does not arise. The assessees enclosed the details of sales, purchase, dividend income as well as opening and closing stocks and submitted that the assessee do not have separate trading account, profit and loss account, etc. The assessing officer, after considering the detailed replies, vide his order dated 31st January, 2006 concluded as follows: "05. The assessee has thus filed a defective return and when such defect(s) were pointed out to the assessee, has within the time limits prescribed under section 139(9) of the Act, failed to rectify these defects. The return filed by the assessee on 09.08.2005 is therefore treated as an invalid return and the provisions of the Act shall apply as if the assessee had failed to furnish the return." 6.3 The assessing officer, in the assessment order, at paragraph 1.4 states that the original return as well as the revised return were processed u/s. 143(1) of the Income-tax Act. This is a contradictory finding and the assessee claims that it has not been served with any intimation evidencing processing of the revised return u....