TaxTMI 
TaxTMI 
TaxTMI 
2019 (11) TMI 651
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.... 251 of the Income-tax Act, 1961 ('Act') for case remanded back for adjudication of the matter by Honourable Income Tax Appellant Tribunal, Mumbai vide order dated 10th February 2017 bearing ITA No. 3736/Mum/2012 for AY 2006-07 on the following grounds: Ground 1 The Learned CIT(A) erred in dismissing the appeal of the Appellant on the ground that in case of completed assessment, the assessment u/s 153A has to be made on originally assessed/declared income and no alteration to the total income can be made. The Learned CIT(A) failed to appreciate the facts of the matter in case of Appellant is different and Honourable Income Tax Appellant Tribunal, Mumbai vide order dated 10th February 2017 has already decided the matter on admissibility of claim of the Appellant that legally admissible claim could be entertained while framing the assessment u/s 153A of the Act. Ground 2 The Learned CIT(A) has grossly erred in ignoring the direction given by Honourable ITAT, Mumbai while passing the Order. The Learned CIT(A) failed to apply the Principle of Judicial discipline that the Order of higher appellant authorities should be followed unreservedly by subordinate authorities. Th....
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.... d) The aforesaid additional claims amounting to Rs. 1,19,03,847/- made by the assessee in the return filed u/s 153A of the Act was not allowed as per the assessment order dated 30.12.2010 passed u/s 143(3) r.w.s 153A of the Act by then Deputy Commissioner of Income-tax, Central Circle-45, Mumbai. e) Against the aforesaid disallowances made by the then AO, the assessee filed an appeal before the erstwhile Commissioner of Income-tax (Appeals) - 38, Mumbai. The erstwhile CIT(A) vide order dated 29.02.2012 confirmed the addition merely on the technical ground that fresh claim cannot be made in return filed u/s 153A of the Act by placing reliance on decision of Hon'ble Supreme Court in the case of Sun Engineering Works Pvt. Ltd. (1992) 198 ITR 297. f) The assessee then filed an appeal on 23.05.2012 before this tribunal against the said order passed by the erstwhile CIT(A). In the aforesaid appeal before tribunal, the assessee pressed the ground on addition confirmed by erstwhile CIT(A) of Rs. 47,54,308/- on account of exempt dividend income earned during the captioned year. g) The Tribunal vide its order dated 10.02.2017 has discussed at length the admissibi....
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.... years in a different manner than the one accepted in earlier years and claim lower income. This decision was rendered on a different set of facts and is not applicable on the facts of present case. 9. Accordingly, in the present case on the anvil of aforesaid case laws including that from the Apex Court, we hold that a legally admissible claim could be entertaining while framing the assessment u/s 153 A of IT Act, Hence the present claim of exempt dividend income has to be entertained by the revenue. 10. Now, we come to the merits of the claim of the dividend income received by the assessee from its Brazilian subsidiary being exempt in India fn view of the beneficial provisions of DTAA. We find that Ld. CIT(A) has not at all adjudicated the merits of the claim, In this view of the matter we are of considered opinion that the matter needs to the remitted to the file of the Ld. CIT (A) to consider this claim of the assessee upon merits, Accordingly, the merits of the claim of the assessee regarding the dividend income being exempt Is remitted to the file of Ld. CIT (A). The Ld, CIT (A), is directed to consider this issue after giving the assessee proper opportunity of being heard.....
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.... the Brazilian company by the assessee on merits. We find that the assessee had made a detailed submission before the ld. CIT(A) on 23/08/2017 which is also reproduced in pages 5-10 of his order explaining both the factual position as well as legal position. 3.4. We find that assessee had received dividend from Brazilian entity and is governed by Double Taxation Avoidance Agreement (DTAA) entered into between India and Brazil. In the instant case, the assessee had availed the treaty benefit and in this regard, the following articles are relevant from India Brazil DTAA which are reproduced hereinbelow:- Article 10 - Dividends 1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State. 2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the recipient is a company which is the beneficial owner of the dividends the tax so charged shall not exceed 15 per cent of gross amount of the dividends. This paragraph shall not effect the taxation of the company in respect of t....
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.... Such deduction shall not, however, exceed that part of the tax, as computed before the deduction is given, which is attributable to the income which may be taxed in that other State. 2. For the deduction mentioned in paragraph 1, the tax paid in that other State shall always be deemed to have been paid at the rate of 25 per cent of the gross amount of interest referred to in paragraph 2 of Article 11 and of royalties referred to in paragraph 2(b) of Article 12, provided however, that the tax so deemed to have been paid shall not exceed the tax leviable on that income in the first-mentioned State. 3. Where a company which is a resident of a Contracting State derives dividends which, in accordance with the provisions of paragraph 2 of Article 10 may be taxed in the other Contracting State, the first-mentioned State shall exempt such dividends from tax. 4. Where a resident of India derives profits which, in accordance with the provisions of paragraph 5 of Article 10 may be taxed in Brazil, India shall exempt such profits from tax. 3.5. We find from the combined reading of Article 23(3) and Article 10(2) supra that if the dividend is paid by Brazilian company to Indian Company,....
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....stment in industrial venture for making railway wagon under the Banner of Santa Fe Vagoes Ltd., a Brazilian Company. Millinium Investmentos Ltd had invested 60% Equity of Santa Fe Vagoes, Manufacturing Railway Wagon in Brazil, wherein, balance equity is held by another Brazilian Company. Santa Fe Vagoes Ltd. declared dividend and paid the dividend to Millinium Investmentos Ltd and similarly Millinium Investmentos Ltd. has paid dividend to its equity holders and one of the equity holders is Besco Engineering & Services (P) Ltd (assessee herein). The assessee submitted certificate issued by Santa Fe Vagoes Ltd. in the name of Millinium and the Annual Performance Report (APR) submitted by assessee to RBI by declaring dividend received along with the bank documents and also the Brazilian Audited Balance Sheet of Millinium along with the English translated version which confirm payment of dividend to the assessee after all the statutory compliance of that country. The Learned AR stated that M/s Millinium Investmentos Ltd. had already paid tax at the rate of 34% as per Brazilian Tax Rate and the post tax profits were only distributed as dividend to Besco Engineering & Services Pvt. Ltd (....
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.... residence. In India's DTAA, double taxation relief is provided by a combination of two modes. The effect of DTAA is as follows:- a. If no tax liability is imposed under the Act, the question of resorting to the agreement would not arise, no provision of the agreement can possibly fasten a tax liability where the liability is not imposed by the Act; b. If a tax liability is imposed by the Act, an agreement may be resorted to for negotiating or reducing it; c. In case of difference between the provisions of the Act and of the agreement, the provisions of the agreement prevail over the provisions of the Act and can be enforced by the appellate authorities and the court. 7. It would also be relevant to reproduce Article 23 of DTAA between India and Brazil at this juncture - "ARTICLE 23: Methods for the elimination of double taxation - 1. Subject to the provisions of paragraphs 3 and 4, where a resident of a Contracting State derives income which, in accordance with the provisions of this Convention may be taxed in the other Contracting State, the first-mentioned State shall allow as a deduction from the tax on the income of that resident an amount equal to the tax paid i....