TaxTMI 
TaxTMI 
2024 (10) TMI 72
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....raised the following grounds of appeals: "1. The order passed by the Ld. AO., under sec. 143(3) of the Income-tax Act, 1961 ("the Act") is bad in law and is based upon incorrect appreciation of facts and the law relevant thereto. 2. The Ld. AO has erred in fact in alleging that the Appellant has failed to counter his findings. The fact is that during the course of assessment proceedings, the Ld AO never shared his reservations mentioned in his speaking order passed under sec. 197 of the Act. 3. The DRP also failed to acknowledge the fact that the speaking order under sec. 197 of the Act (passed in response to the application of Nil / Lower Withholding Tax certificate) was not even shared with the Appellant. Hence, in the absence of an....
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....ain DTAA. The return was selected for scrutiny and the statutory notices were duly served on the assessee. The Assessing Officer (AO) called on the assessee to furnish details pertaining to LTCG and STCL declared by the assessee in the computation of income. The assessee made a detailed submission before the AO with regard to the capital structure of the assessee and how the capital gain is not taxable in India as per the DTAA between India and Spain. The AO did not accept the submissions of the assessee stating that the assessee has not provided any evidence in support of the claim and how the assessee is entitled for the benefit as per Article-14 of the India-Spain DTAA. The AO while holding so mainly relied on the findings recorded again....
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....lue of the intangible assets is reasonable and basis the same, the value of immovable properties is more than 50 per cent of the total assets and hence can be considered as principally constituting the total property of the company NxtGen Data centre& Cloud Technologies Private Limited. Hence the provisions of Article 14(4) of the India Spain DTAA is attracted and long term capital gains is taxable in India." 3. The AO passed the final order pursuant to the directions of the DRP in which the LTCG of Rs. 26,96,31,037/- was brought to tax in the hands of the assessee. The assessee is in appeal against the final order of assessment passed by the AO. 4. The ld. Authorized Representative (AR) to begin with drew our attention to the relevant Ar....
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....e taxed in that Contracting State. 6. Gains from the alienation of any property other than that mentioned in paragraphs 1, 2, 3, 4 and 5 shall be taxable only in the Contracting State of which the alienator is a resident." 5. The ld. AR further drew our attention to the capital structure of the assessee as tabulated below: 6. The ld. AR submitted that as per the above capital structure the percentage of holding of the ultimate parent company is less than 10% in assessee and therefore, sub-clause-(5) of Article-14 is not applicable in assessee's case. Further, the shareholding is that of preferential share capital and therefore, the said sub- clause cannot be applied in assessee's case even otherwise. The ld. AR further submitted....
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....n report of JLL (page 23& 24) to submit that JLL has considered various criteria for the purpose of valuing the immovable property and the lower authority are not correcting in rejecting the valuation report of JLL. 8. The ld. Departmental Representative (DR) furnished detailed written submission which is being taken on record. The main contention of the revenue in the written submission is that the valuation report of the immovable property is not reliable and therefore, the contention of the assessee that the value of immovable property is less than 50% cannot be accepted. According, the revenue is contenting the Article-14(4) is clearly applicable in assessee's case and therefore, the gain arising out of transfer of shares in IMI In....
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....4) of India-Spain DTAA cannot be applied in assessee's case on this count. Further, we notice that the Co-ordinate Bench of the Tribunal in the case of JCIT Vs. Merrill Lynch Capital Market Espana SA SV (ITA No. 6108/Mum/2018 dated 11.10.2019) has considered the issue of applicability of section Article-14(4) of DTAA between India and Spain and held that (i) Article 14(4) is only an extension of Article 14(1) which deals with the taxability of gains arising on sale of immovable property, to nullify the impact of corporate structures used for ownership of immovable properties. (ii) Interpretation of Article 14(4) must essentially remain confined to the shares effectively leading to control of the company or which gives the right to e....