TaxTMI 
TaxTMI 
2023 (3) TMI 211
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....ned Commissioner of Income Tax (Appeals) - 42, Delhi, has erred in upholding the cogency of the assessment order passed by Learned ACIT, Circle Int Tax 1(1)(1) ('the learned AO') under section 143(3) read with section 144C(3) of the Act dated 21st February 2019 without appreciating the fact that such order passed is barred by limitation. 1.2 On the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) - 42, Delhi, has erred in upholding the cogency of the assessment order passed u/sl43(3) r.w.s 144C(3) of the Act dated 21st February 2019 on the basis of passing observation w.r.t 144C of the Act made by Honorable Madras High Court while disposing the writ petition no: 7135 and 7138 of 2019 filed under article 226 of the Constitution of India in the case of M/s World Part Ltd vs CIT vide their order dated 30.08.2019 without appreciating the fact that no conclusion was drawn by their lordship with regard to matter in dispute has been curved out rather honorable court left all the question open to the discretion of the parties. Hence, the reliance placed by the Ld. CIT(A) to draw his conclusion is only based on surmises, caprice and whims. ....
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....de. (2.4) On the facts and in the circumstances of the case as well as in law, the Commissioner of Income Tax (Appeals) - 42, Delhi has erred in upholding the findings of Ld. AO that the appellant is conduit company as (a) there is a no commercial rational to form a company in Cyprus but only to take a benefit of tax rate as eligible under article 11 of India Cyprus DTAA (b) As the funds which are used to make an investment in India is not belong to the appellant and without appreciating the fact that the appellant is a commercial concern and have a vested business interest in Cyprus since its incorporation. (2.5) On the facts and in the circumstances of the case as well as in law, the Commissioner of Income Tax (Appeals) - 42, Delhi has erred in upholding the findings of Ld. AO that the appellant is conduit company which was incorporated for the passage of funds and therefore not eligible to claim the benefits under Article 11 of the India - Cyprus DTAA without appreciating the law as settled by the Honorable Supreme court in the case of Vodafone International Holdings B. V. v. UOI (2012) 341ITR 1 that every investment in India should be considered in a holistic manner and t....
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....equentially, the impugned order is without jurisdiction." 6.1 However, LD. CIT(A) did not sustain objections with following relevant findings :- "5.2 The appellant has challenged the impugned order as the provisions of section 144C were not applicable as there was not variation in mount of income and hence the extended period of limitation was not available. I find that in the present case, the AO has passed draft assessment order on 28.12.2018 u/s 144C (1) of the act. It is a case where the income particulars have not changed but it does involve change of computation of charge of tax on the interest income. The appellant argued that going by the provisions of section 144(c), it is not a case of variation of income/loss. However, it is a case where the assessee is adversely impacted due to higher rate of tax. 5.3 It may be relevant to note that Hon'ble Madras High Court vide its order dated 30.08.3019 in WP No. 7135 & 7138/2019 in the case of World Part Ltd dismissed the writ petition and observed at Para 19 as under: "Therefore the jurisdictional fact should be so striking that it strikes at the very root of the exercise of power. To be noted, there is further discussion....
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....n the income or loss returned which is prejudicial to the interest of the assessee. Therefore, from plain reading of the provisions of section 144C(1) of the Act, it is clear that there are two jurisdictional pre-conditions that are to be met before an Assessing Officer can invoke proceedings u/s.144C of the Act and pass a draft assessment order therein. The first pre-condition is that the assessee should be eligible assessee as defined u/s.144C(15) of the Act. The second condition is that the Assessing Officer should propose to make any variation in income or loss returned by an assessee, which is prejudicial to the interest of the assessee. In this case, it is an undisputed fact that the assessee is eligible assessee for the purpose of above said section, which is the first condition. However, it is also evident from above provision that jurisdictional precondition must exist before the Assessing Officer can invoke proceedings u/s.144C of the Act, and pass draft assessment order, as per the Assessing Officer should propose to make any variation in income or loss returned by the assessee, which is prejudicial to the interest of the Revenue. In this case, this condition is not sati....