2026 (4) TMI 1693

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....sfer to the appellant as contemplated u/s. 127 of the Act. 2. The assessment framed by the Ld. AO is bad in law and without jurisdiction in absence of prior approval of Principal Commissioner/ Commissioner as mandated by CBDT Circular No. 06 of 2017 dated 24.01.2017 required for initiating proceedings for holding the appellant as resident in India on the basis of place of effective management (POEM). 3. Both the lower authority erred in law and on facts in holding that the assessee has place of effective management (POEM) in India. 4. The Ld. CIT(A) has erred in law and on facts of the case in upholding jurisdiction assumed by Ld. AO u/s. 153A of the Act. 5. The Ld. CIT(A) has erred in law and on facts of the case in upholding the assessment framed by the Ld. AO without issuing mandatory notice u/s. 143(2) of the Act. 6. The Ld. CIT(A) has erred in law and on facts of the case in upholding the assessment framed u/s. 144 of the Act in absence of any of the conditions prescribed under sub-clauses (a) to (c) of S.144(1) of the Act and without issuing any show cause notice as mandated by first proviso to S.144(1) of the Act. 7. The ....

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....dequate opportunity of being heard and various submissions were filed by the assessee, which were rebutted by the Assessing Officer. Ultimately, the collegium held that for the impugned year i.e. AY 2020-21, the POEM of the assessee-company was in India. Accordingly, the Assessing Officer held that the entire income of the assessee-company was liable to tax in India since the assessee was a resident in view of the provisions of Section 6(3) of the Act. The assessee had filed its Tax Audit report in Form 3CD and a computation of income, disclosing Rs. 2,85,86,814/- as taxable profit, corresponding to USD 376538.7. The entire income, therefore, was treated by the Assessing Officer as taxable in India and assessed as the income of the assessee for the impugned year. The Ld. CIT(A) confirmed the addition made. 4. During the course of hearing before us, the Ld. Counsel for the assessee contended that the order of the Ld.CIT(A) was not sustainable since he categorically found the basis on which the collegium had found the POEM of the assessee to be in India to be non-existent, but however, he upheld the findings of the Collegium/AO noting that the collegium consisted of three Commissi....

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....se explanations. The appellant provides rebuttals, stating that GL was a de facto director and Power of Attorney was provided to him. The appellant further stated that the accounting staff had made a mistake in data compilation submitted before the Collegium as data was provided only up to date of search. Further the email referred by the Collegium was on account of commercial difference of opinion between Gaurav Mehta and Gerd Leopold. Against the observation of the AO that appellant did not provide a General Power of Attorney for the financial year 2019-20, it is submitted that as a Director, Mr. GL possessed de facto authority and that making a Power of Attorney unnecessary considering he already had a valid POA for earlier years. Thus appellant claimed that it proves beyond doubt that in fact GL was exercising authority over conclusion of deals abroad. So far as contention of Assessing Officer that GL finalized purchase agreements less than 50% of the ships/vessels during the year, the appellant has explained that the accounting staff mistakenly compiled data only up to the search date and that if the deals executed in the entire year is considered then the appellant would not ....

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....arlier assessment years. It is found that a search operation u/s. 132 of the Act was carried out in the case of the Appellant on 19-11-2019. The Collegium consisting of three CsIT have evaluated the data found during the course of search and held that the Appellant is a "resident of India". On perusal of Collegium's order it is observed that the Appellant is held to be resident primarily on the ground that Mr Gerd Leopold (GL) had finalized purchase agreement in respect of 10 out of 21 vessels in the year under consideration which is less than 50% of the total purchase of vessels, whereas, the Appellant before the Assessing Officer has claimed that purchase of total 25 vessels was executed by Mr. GL out of 34 vessels purchased by the Appellant which is more than 70% of the total purchase of vessels. The Appellant has also submitted that till 19-11-2019, being the search date, total vessels purchased by the Appellant were 16, out of which, GL had executed purchase deals of 13 vessels, which is more than 50% of total transactions till the date of search. The Appellant has submitted evidences in support of such claim which is not rebutted by the Assessing Officer in the assessment....

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....is observed that appellant before Assessing Officer as well as before the undersigned claimed that the Collegium has deduced on referring the mail of Gaurav Mehta dated 31-10-2021 that the understanding between GL and the Appellant has been redefined and he is having very limited authority as well as control over the conduct of business of the appellant. The Appellant also claimed that the mail was nothing but a correspondence between the two parties showing their importance in the business, which cannot be the deciding factor. The Appellant has claimed that even after such disputes, GL has executed purchase deal for more than 50% of total vessels purchased by the Appellant. As stated herein above, as the issue has already been adjudicated by the Collegium, consisting of three CsIT, the claim of the appellant is not sustainable at this stage and therefore, cannot be entertained." 9. We have heard both the parties and gone through the orders of the authorities below. The short issue for our consideration is whether the Ld. CIT(A) was right in upholding the order of the Assessing Officer, holding that the Place of Effective Management (POEM) of the assessee-company existed in Indi....