9911796707
Advanced Search 
TMI Blog2019 (1) TMI 866X X X X Extracts X X X X X X X X Extracts X X X X ..... in India by virtue of Double Taxation Avoidance Agreement ("DTAA" for short) between the two countries. 3. The Assessing Officer took the return of the petitioner in scrutiny. After detailed examination of the various claims of the petitioner, the Assessing Officer passed order under Section 143(3) of the Income Tax Act, 1961 ("the Act" for short) on 28.1.2016 in which he added a sum of Rs. 94.57 crores (rounded off) to the total income of the assessee by rejecting the petitioner's claim of such income on securities not being taxable in India. He however did not disturb the assessee's claim of interest income on ECB being not taxable. 4. To reopen such assessment, respondent No.1 -Assessing Officer issued the impugned notice, which, as can be seen was done beyond the period of four years from the end of relevant assessment year. In order to do so, he had recorded following reasons :- 1. M/s. HSBC Bank (Mauritius) Ltd. is a limited liability company incorporated, registered and tax resident in Mauritius. The company is a Foreign Institutional Investor (FII) duly licensed by the Securities and Exchange Board of India (SEBI). The Return of Income (ROI) for A.Y. 2011-12 was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, it was failure on the part of the assessee that it did not make true and full disclosure regarding its beneficial ownership status. 6. To summarize, it can be inferred that the claim of exemption to the tune of Rs. 1,43,43,83,544/- on 'interest on ECB' is chargeable to tax under the Income Tax and has escaped assessment. I have a reason to believe that the income of the assessee during the A.Y. 2011-12 has escaped assessment within the meaning of clause (c) of Explanation 2 of Section 147 of the Income Tax Act. Since the income escaping assessment in my opinion exceeds the sum of Rs. 1 lakh, it is a fit case for issue of notice u/S. 148 r.w.s. 149 of the IT Act for A.Y. 2011-12. Since the notice is being issued after expiry of four years from the end of the relevant assessment year, necessary sanction u/S. 151(1) has been obtained from the Commissioner of Income Tax." 5. Upon being supplied the said reasons, the petitioner raised objections to the notice of reopening of assessment under letter dated 24.5.2018. The Assessing Officer, however, rejected said objections on 14.9.2018, hence, this Petition. 6. Learned counsel for the petitioner submitted that the notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cluding all schedules and all of its annexure. 13.Detail of exempt income claimed by you in your return of income and reasons thereof and state under which provision of Act / DTAA you claimed exempt. In response to this communication, the assessee under its letter dated 16.12.2013 had conveyed to the Assessing Officer as follows:- 2. Copy of tax Residence Certificate: The copies of Tax Residency Certificate (TRC) issued by Mauritius Revenue Authorities dated 8 February 2010, 4 February 2011 and 17 January 2012 are enclosed as Annexure 2. 4. Please submit a hard copy of return of income filed in electronic form for AY 2011-12 along with computation of income, Form 3CEB, Form 3CD, Form 29B, Tax Audit report, Auditor's report, complete audited Balance Sheet, P & L A/c. including all schedules and all of its annexure: The Company on 26 September 2011 vide acknowledgment number 291837991260911 filed its return of income for the assessment year 2011-12. The copies of the following documents are enclosed as under: a. The copy of the acknowledgment of the return filed along with paper return is enclosed as Annexure 3; and b. The statement of computation of total income is e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State in which it arises and according to the laws of that State. 3. Interest arising in a Contracting State shall be exempt from tax in that State provided it is derived and beneficially owned by: (a) the Government or a local authority of the other Contracting State; (b) any agency or entity created or organized by the Government of the other Contracting State; or (c) any bank carrying on a bona fide banking business which is a resident of the other Contracting State" The copy of the India - Mauritius Tax Treaty is enclosed as Annexure D for ready reference. As the Company is a resident of Mauritius carrying on bonafide banking business, the aforementioned interest income arising in India will not be taxable in India in view of the exemption provided under Article 11(3) of the India - Mauritius Tax Treaty." 11. On 21.2.2014, the assessee once again wrote to the Assessing Officer, reiterated the earlier stand on the interest income and stated further as under:- 3. Details of interest income on transactions other than debt securities - the name of the Indian corporates to whom ECB has been granted, name of the lead bank / sponsor bank, if any and explanation on how the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a - Mauritius Tax Treaty. 12. It was after such detailed examination that the Assessing Officer passed the order of assessment on 28.1.2016 in which he disallowed the assessee's claim of exempt interest of Rs. 94.57 Crores which related to interest on securities. He, however, did not tamper with the assessee's claim of exempt interest of Rs. 143.43 Crores which was interest on ECB. Thus, the entire issue was minutely examined by the Assessing Officer during the original scrutiny assessment. To the extent, the Assessing Officer was not satisfied with the assessee's claim of exempt interest, the same was disallowed. However, in the context of assessee's claim of exempt interest of Rs. 143.43 crores, by virtue of DTAA between India and Mauritius, the Assessing Officer accepted the same by making following observations:- Less : exempt u/S. 10(34) of the Act 26,91,08,116 NIL Interest on ECB 1,43,43,83,544 Less : exempt u/S. 90 of the Act r.w. Article 11 of the DTAA between India and Mauritius (as the company is carrying on bonafide banking business in Mauritius) 1,43,43,83,544 NIL Interest Income on securities (as per discussed in para 6) taxable @ 20% ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
