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2016 (8) TMI 606 - ITAT MUMBAI

2016 (8) TMI 606 - ITAT MUMBAI - [2016] 50 ITR (Trib) 216 - Denial of benefit of provisions of DTAA between India and Singapore - capital gain arising to resident of Singapore - Held that:- The prima facie perusal of all the Articles suggest that capital gain arising to resident of Singapore may not be taxable in India. The assessee has furnished before us details of the capital gain showing that the entire amount of capital gain has been earned on account of sale of securities of mutual funds. .....

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s appeal. But, AO is not bound by it and it should not have any bearing on the ultimate decision to be taken by the AO with regard to applicability of these provisions upon income of interest and short term capital gains. The AO shall decide this issue on merits afresh after taking into account all the facts and evidences on objective basis and after giving adequate opportunity of hearing to the assessee. The assessee shall extend requisite cooperation to the AO by submitting requisite details a .....

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he AO for the Assessment Year 2008-09 on the following grounds: 1. On the facts and in the circumstances of the case and in law, the learned CIT (Appeals) has erred in holding that the AO has correctly rejected the rectification application filed by the appellant u/s. 154 of the Incometax Act, 1961 claiming relief u/s. 90 of the Act on the ground that there is no apparent mistake since the relief had not been claimed by the appellant in the Return of Income filed by him. 2. On the facts and in t .....

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s with the provisions of law, there is no mistake in the order of the A.O. which could be rectified and there is no ground to defer from the stand taken by the A.O. 4. The appellant prays that the learned ITO be directed to allow appropriate relief in terms of DTAA between India and Singapore as claimed by the appellant in the rectification application and accordingly, the A.O. be directed to - a) tax the Interest Income of ₹ 2,17,22,013/- @ 15% only instead of @ 30.9% actually charged to .....

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3. The solitary issue raised by the assessee by way of this appeal is with regard to denial to the assessee, the benefit of provisions of Double Tax Avoidance Agreement (DTAA) between India and Singapore. The case of the assessee is that benefits of provisions of Article 11 and Article 13 of India- Singapore Treaty have not been given to the assessee despite a specific petition having been filed in this regard u/s 154 of the AO. On the other hand, the case of the revenue is that the claim with r .....

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ade the arguments exhaustively, putting in ample amount of labour to bring out correct facts and legal position of law. 3.2. The brief background of the case is that the assessee filed its original return on 29.07.2010 which was subsequently revised by him on 13.09.2011. In both of these returns, the residential status of the assessee was shown as nonresident . The revised return included inter alia the income on account of interest from bank/financial institutions aggregating to ₹ 2,17,22 .....

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ertently paid tax on the interest income at maximum marginal rate and included the impugned amount of capital gain from sale of shares as part of taxable income. Thus, assessee claimed in the petition that it was mistake apparent from record since income not liable to tax was made taxable on the part of mistake committed by the assessee which was perpetuated by the AO. In support of its claim, the assessee enclosed Tax Residency Certificate of Singapore. It was further submitted by the assessee .....

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sana Hospital & Nursing Home vs. Commissioner of Income Tax-(2002) 253 ITR 507 (Ker) for the proposition that an error apparent on the face of the record cannot be said to be only from the record of one particular assessment, but from the entire record of the assessee relating to all the assessment years. On the basis of this judgment, it was requested by the Ld. Counsel that requisite facts were available in the file of the AO which should not be ignored in the interest of justice and fair .....

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hannel vs. Department of Income Tax in ITA No. 6345/M/2013 v. Sanchit software and Solution (P.) Ltd. V. CIT- 349 ITR 404 (Bom) vi. S.R. Koshti vs. CIT- 276 ITR 165(Guj) 3.3. Before concluding her arguments, Ld. Counsel of the assessee also submitted that in all subsequent years the assessee had claimed the relief as per DTAA and which has been allowed consistently for all of the assessment years viz. A.Ys. 2011-12 to 2015-16. Out of these 5 assessment years, returns of first 3 assessment years .....

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ification proceedings u/s 154. She relied upon the judgment of Hon ble Bombay High Court in the case of Gammon India Ltd. vs CIT 214 ITR 50 for the proposition that relief u/s 91(1) could not have been allowed to the assessee in the proceedings u/s 154, when requisite facts and documents to justify assessee s claim were not part of records of the AO of the concerned year. It was also submitted by her that requisite facts with regard to stay of assessee in India and Singapore at different points .....

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it is also true that the tax can be collected from the assessee strictly within the four corners of law only. If the assessee is able to show in a bona fide manner at any stage that a particular item of receipts is not liable to be taxed as income in its hands, then, an effort should be made in all fairness that tax upon the same is not recovered from the assessee, so long as nothing in-genuine or mala fide is found on the part of the assessee and so long as the conduct of the assessee is found .....

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uations have made the tax laws also equally complex and cumbersome to understand not only by layman but also by the tax specialists. Under these circumstances, we should examine the return of the assessee and its claim on the touch stone of ground realities and circumstances and facts of the case. We cannot close our eyes towards prayer of the taxpayers even for their genuine claims merely because there was an omission on the part of the tax payers in making the same in the most appropriate mann .....

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rought before us. It is noted that in the return filed before the AO, the assessee had undoubtedly claimed its status as that of non-resident . Item wise details of income earned from all the sources were given in the computation sheet filed along with return of income (i.e. original as well as revised). It is also undisputed fact that copy of assessee s TRC of Singapore as well as DTAA between India and Singapore was available before the AO in the assessment proceedings of A.Y. 2009-10. It is n .....

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nt years. The same is the view taken by the Supreme Court and other High Courts in the decisions referred to above. 3.6. Thus, as per law, it was permissible for the AO to refer to the records available for other assessment years if these were somehow relevant for determining the correct tax liability of the impugned assessment year. 3.7. On the other hand, admittedly, there was an omission on the part of the assessee in making claim in the return of income with regard to benefits accrued to the .....

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hts. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing relief and in this regard the officers should take the initiative in guiding a taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the Department, for, it would inspire confidence in him that he may be sure of getting a square deal from the Department. Although, the .....

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n (P.) Ltd. (supra), the facts were like that claim was made by the assessee for exemption in respect of Dividend Income and Long Term Capital Gains on which Securities Transaction Tax was paid by filing an application for rectification in terms of section 154 of the Act as well as by filing a Revision Petition under sec. 264 of the Act, and not by filing a Revised Return of Income. The Commissioner rejected the Revision Petition filed by the assessee under section 264 of the Act, against which, .....

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t to charge assessee more tax than that which is due and payable by the assessee. It is in aforesaid circumstances that as far back as in 11/04/1955 the Central Board of Direct Tax had issued a circular directing Assessing Officer not to take advantage of assessee's ignorance and/or mistake. The Court then stated that "the above Circular should always be borne in mind by the officers of the respondent revenue while administrating the said Act. Ultimately, the Court not only allowed the .....

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ur attention was also drawn on the judgment of Hon ble Gujarat High Court in the case S.R. Koshti v. CIT (supra) wherein the facts were that the said assessee had made a claim for exemption u/s. 10(10C) of the I.T. Act by filing a Revised Return of Income, which was allowed by the AO by passing an Order u/s 154 of the Act, but said Order was not approved by the Addl. CIT and the CIT took action u/s. 263 to revise the Order passed by the AO u/s 154 of the Act and also rejected the application for .....

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sion in case of Vinay Chandulal Satia v. Shri N.O. Parekh., the Commissioner of income Tax, Special Civil Application No. 622/1981, rendered on 20-81981, has laid down the approach that the authorities must adopt in such matters in the following terms: "The Supreme Court has observed in numerous decisions, including Ramlal and Ors. v. Rewa Coalfields Ltd., AIR 1962 SC 361; The State of West Bengal v. The Administrator, Howrah Municipality and Ors.. AIR 1972 SC 749, and babutmal Raichand Osw .....

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e above said legal position, we find it difficult to simply ignore or brush aside, a genuine claim made by the assessee especially when it has been allowed to the assessee in all subsequent years. Under these circumstances, we have analysed the prima facie authenticity in the claim made by the assessee on the basis of India-Singapore DTAA in the light of primary evidences brought before us and our observations in this regard are as discussed in subsequent paragraphs. 4. As per Article 11 of Indi .....

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10 per cent of the gross amount of the interest if such interest is paid on a loan granted by a bank carrying on a bona fide banking business or by a similar financial institution (including an insurance company) (b) 15 per cent of the gross amount of the interest in all other cases. 4.1. From the perusal of the above said Article, it is clear that as per para 2(b) of Article 11, the income on account of interest is liable to tax @ 15% if the assessee is resident of Singapore in the period unde .....

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der: ARTICLE 13: CAPITAL GAINS - 1. Gains derived by a resident of a Contracting State from the alienation of immovable property, referred to in Article 6, and situated in the other Contracting State may be taxed in that other State. 2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a residen .....

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of which the alienator is a resident. 4. Gains derived by a resident of a Contracting State from the alienation of any property other than those mentioned in paragraphs 1, 2 and 3 of this Article shall be taxable only in that State. 5. Gains from the alienation of shares other than those mentioned in paragraph 4 in a company which is a resident of a contracting State may be taxed in that State. 6. Gains from the alienation of nay property other than that mentioned in paragraphs 1,2,3,4 & 5 o .....

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