TaxTMI 
TaxTMI 
2024 (9) TMI 953
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....us not an "eligible assessee" as per section 144C(15)(b). 52,19,475 3. The DRP/ AO, having accepted the fact that the Appellant was resident in India during the relevant previous year, ought to have held that the AO had no jurisdiction to assess the Appellant. 52,19,475 4. The impugned order deserves to be quashed as the initiation of proceedings under section 148 read with sections 147 and 148A is bad in law. 52,19,475 5. The DRP/ AO erred in confirming the addition of tax-free dividend from mutual funds of Rs. 1,36,96,832 and in denying exemption under section 10(35) in that respect. 47,40,200 6. Without prejudice and in the alternative, the DRP/ AO, having reached a finding that Rs. 1,36,96,832 was in fact a return of capital, ought not to have subjected the amount to tax as income from other sources. 47,40,200 7. The DRP/ AO erred in denying the benefit of carrying forward the short term capital loss under section 111A of Rs. 13,84,865. 4,79,275 8. The addition of Rs. 1,36,96,832 ought to be deleted as the DRP/ AO relied exclusively on the survey report of another entity, a copy of which was not furnished to the Appellant in violation of the principles of natu....
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....as found that a number of investors had claimed fictitious losses in equity/derivative trading. It was found that assessee had claimed divided exempt from tax to the tune of Rs. 1,30,96,832 for AY 2016-17. During the course of survey it was found that JM Balanced Fund - Quarterly Divid Plan of JM Financial had manipulated in accounting methodology so as to artificially inflate the distributable surplus. In the process, the SEBI guidelines have been flouted by J M Mutual Fund by classifying a portion of capital as distributable surplus and thereafter artificial pay-out to the investor in the form of dividend. In the case of assessee, dividend received is from sham transaction generated using colourable devices. The dividend received is not on account of appreciation of investment but is return of a part of the capital itself. As such, it cannot qualify as dividend. 4. During the course of survey action statement of the key persons responsible for the management of the mutual fund was recorded. Shri Sanjay Chhabaria, fund manager, admitted that the there has been no application of mind in managing the fund and as per the advice of Shri Bhanu Katoch, CEO, he has increased the distrib....
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....d strongly argued that the AO, JCIT(OSD), Intl. Taxation, Circle 1(1) has wrongly issued notice to the assessee. The jurisdiction of the assessee is not lying with International Taxation Officer and the assessee was not eligible assessee as per section 144C(1) and eligible assessee has been defined in section 144C(15)(b)(ii) of the Act. The assessee filed return of income as resident on 13.07.2016 and case was taken up for scrutiny and assessment was completed in the status of resident. In the remand report after verifying the passport o the assessee, the AO has observed for FY 2015-16 the status of assessee was treated as resident and the ld. DRP has also not disputed this fact. Further the ld. AR submitted that notice issued by the JCIT, International Taxation is not valid because of lack of jurisdiction. The notice ought to have been issued by the AO who has completed the assessment u/s. 143(3) who has jurisdiction of the assessee. The date of residential status should be seen for the relevant AY for which the case pertain, but not form the date of issue of notice u/s. 148. This is the fundamental principle of law. For completing the assessment law should be applicable for the r....
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.... assessment year, the assessee was a resident. However, the ld. DRP has considered the residential status on the date of issuing notice u/s. 148 which is not correct. It is well settled that the law applicable for the relevant AY should be seen. The assessee is not an eligible assessee as per section 144C(15). The Hon'ble Apex Court has settled this issue in the case of Shree Choudhary Transport Company v. ITO ]2020] 118 taxmann.com 47 (SC) in which it has been held as under:- 17.4 It needs hardly any detailed discussion that in income tax matters, the law to be applied is that in force in the assessment year in question, unless stated otherwise by express intendment or by necessary implication. As per section 4 of the Act of 1961, the charge of income tax is with reference to any assessment year, at such rate or rates as provided in any central enactment for the purpose, in respect of the total income of the previous year of any person. The expression "previous year" is defined in section 3 of the Act to mean 'the financial year immediately preceding the assessment year'; and the expression "assessment year" is defined in clause (9) of section 2 of the Act to mean 't....