TMI Blog2023 (3) TMI 211X X X X Extracts X X X X X X X X Extracts X X X X ..... the ground no. 1 goes to the root exercise of jurisdiction of passing assessment order barred by limitations , therefore, the same along with sub grounds stands allowed. - ITA No. 784/Del/2020 - - - Dated:- 2-3-2023 - SH. SHAMIM YAHYA , ACCOUNTANT MEMBER AND SH. ANUBHAV SHARMA , JUDICIAL MEMBER For the Assessee : Sh. Sumant Chadha , CA Amit Sharma , Adv . For the Revenue : Sh. Sanjay Kumar , Sr. DR ORDER Per Anubhav Sharma , JM : The Assessee has come in appeal against order dated 17.12.2019 in appeal no. CIT(A), Delhi-42/10217/2018-19 for the assessment year 2016-17 passed by Commissioner of Income Tax (Appeals)-42, New Delhi (hereinafter referred to as the First Appellate Authority or in short Ld. F.A.A. ) in appeal before it against order dated 21.02.2019 u/s 143(3) r.w.s. 144C(3) of the Income Tax Act, 1961 passed by DCIT, Circle 1(1)(1), Int. Tax., New Delhi ( herein after referred to as Ld. Assessing officer or in short Ld. AO ). 2. The assessee has come in appeal raising following grounds :- (1) Confirming the validity of the order passed u/s 143(3) r.w.s 144C (3) of the Income - tax Act ( the Act ) (1.1) On the facts and cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lhi has erred in upholding the findings of Ld. AO that the Appellant was not the beneficial owner of interest income of INR 3,75,95,192/- earned on compulsory Convertible debenture ( CCDs ) and thereby not entitled to get the tax treaty relief under Article 11 of India - Cyprus Double Tax Avoidance Agreement ( DTAA ) which is bad in law and deserved to be set aside. (2.2) 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 was not the beneficial owner without appreciating the plethora of evidences as put forth before him, and confirmed the finding of the Ld. AO with a preconceived notions and subjective opinion. (2.3) 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 appellant is not a beneficial owner of the interest and not liable to claim a benefit of Article 11 of India - Cyprus DTAA without bringing any cogent evidence on record that the appellant is not operating from Cyprus or has no beneficial interest in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment order u/s 144C of the Act and accordingly it was submitted that the assessment order dated 21.02.2019 u/s 143(3) r.w.s. 144C(3) is barred by limitation. Ld. DR however defended the findings of Ld. Tax Authorities Below. 5. Appreciating the matter on record it can be observed that appellant company is registered under the laws of Cyprus, is a tax resident of Cyprus and is engaged in investment and financing activities. The return of assessee income arising from interest income earned from Compulsorily Convertible Debentures was offered to tax as per Article 11(2) of the India-Cyprus Double Taxation Avoidance Agreement at the rate of 10 percent, however, Ld. AO was of view that assessee is not beneficial owner of the interest income and rate of 30% was applicable. 6. The assessee had raised ground no. 1 before Ld. CIT(A) as follows:- 5. Vide Ground No. 1, the appellant has challenged the action of the AO in passing the assessment order under section 143(3) read with section 144C(3) of the Act dated 22nd February 2019 ( the impugned order ). The impugned order is void-ab-initio as the provisions of section 144C were not applicable there being no variation in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings Limited vs. ACIT dated 19.05.2021, Mumbai Bench in ITA no. 7026/Del./2018 Mausmi SA Investments vs. ACIT dated 10.04.2019 and IPF India Property Cyprus vs. DCIT ITA no. 6077/Mum/2018 dated 25.02.2020. 7.1 Further, Chennai Bench in Wolrdpart Limited, Maharashtra vs Dcit International Taxation, decided on 1 July, 2022, IT(TP). A.No.36/Chny/2018 while dealing with similar issue of fact and law observed; 10. We have heard both the parties, perused material available on record and gone through orders of the authorities below. The assessee challenged validity of assessment order passed by the Assessing Officer in light of provisions of section 153(1) of the Act, and argued that the assessment order passed by the Assessing Officer is beyond limitation and thus, invalid and void ab initio. The question of issue of draft assessment order in terms of section 144C arose only in case where any variation in income or loss returned which is prejudicial to the interest of the assessee. Therefore, in order to decide controversy, it is necessary to refer to section 144C(1) and provisions of section 153(1) of the Income Tax Act, 1961. The provisions of section 144C(1) speaks about draft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aft assessment order, even though, A.O is not required to pass draft assessment order, when there is no variation in income or loss returned by the assessee, which is prejudicial to the interest of the assessee. 7.2 Thus, sum and substance of these orders of co-ordinate Benches is that for AYs before the amendment, which has come into effect from 01.04.2020 in Section 144C of the Act, the cases in which no variation in the return income or loss were proposed, the draft assessment orders were not required to be issued. Accordingly, no extended period for concluding assessment. 8. In the case in hand admittedly there was no proposal for variation in the return income. The assessment order should have been passed by 31st December, 2018 while the impugned assessment order has been passed on 21.02.2019. Thus, impugned assessment order is beyond statutory time lines provided u/s 153(1) of the Act. Ld. CIT(A) has taken into account judgment of Hon ble Madras High Court however , in that case since the assessee had the alternate remedy available by way of appeal before Ld. CIT ( A ) the writ petition before High Court was disposed, without no findings on merits. 9. Thus, the Be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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