TMI Blog2022 (6) TMI 1407X X X X Extracts X X X X X X X X Extracts X X X X ..... fuller enquiry to find out if the view taken is erroneous. This power of revision can be exercised only where no enquiry, as required under the law, is done. It is not open to enquire in case of inadequate inquiry. Thus the order framed u/s 263 of the Act deserves to be set aside and that of the AO deserves to be restored. Decided in favour of assessee. - ITA No. 501/DEL/2021 - - - Dated:- 13-6-2022 - SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND MS. ASTHA CHANDRA, JUDICIAL MEMBER For the Assessee : Shri Percy Pardiwalla, Sr. Adv, Shri Sachit Jolly, Adv, Shri Rohit Garg, Adv, Shri Sohum Dua, Adv For the Department : Shri Gangadhar Panda, CIT-DR, Shri Sanjay Kumar, Sr. DR, Shri Vinod Sharma, Addl. CIT, Shri Mandeep Singh, DCIT ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER:- This appeal by the assessee is preferred against the order dated 30.03.2021 framed u/s 263 of the Income-tax Act, 1961 [hereinafter referred to as 'The Act'] pertaining to Assessment Year 2015-16. 2. The assessee has raised as many as 4 grounds of appeal, but the sum and substance of the grievance of the assessee is that the order passed by the CIT [International Taxation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e transfer of shares: Transfer by HCS of the shares held in Genpact India to Empower India would tantamount to transfer of capital asset as per Section 2(47) of the Act. However, in view of the specific exemption provided in Section 47{iv) of the Act, the aforesaid transfer would not be considered as a transfer for the purpose of computing capital gains under Section 45 of the Act and hence will not result into taxable capital gains in the hands of HCS, since Empower India was a wholly owned Indian subsidiary of HCS at the time of above transfer. Without prejudice to above, the gains arising to HCS from the above transfer of shares would also be exempt in India in view of the provisions of Article 13 of the DTAA. 4. Filing of Return of Income Although the gains arising to HCS on transfer of shares held in Genpact India to Empower India would not result In any taxable capital gains in the hands of HCS in India (in view of the provisions of Section 45 read with Section 47{iv) of the Act as well as provisions of Article 13 of DTAA), the Company is filing its return of income under the provisions of the Act declaring Nil taxable income in India. 5. The Company craves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ducted manually. (Arindam Misra) Assistant Commissioner of Income Tax. International Taxation, Circle 2(1)(1) New Delhi, 9. Alongwith the following Annexure: ANNEXURE M/s HEADSTRONG Consulting {Singapore PTE Ltd. PAN : AADCH4943D - A.V. 2015-16 1. Please give detailed background of the company alongwith its activities and sources ofrevenue with particular reference to business model and activities carried out in India during the year under consideration. Give a detailed note regarding nature of your business activities and furnish details in respect of the works undertaken/executed in India during the year. 2. Please give assessment history in your case from beginning, file copy of last, assessment order and status of appellate proceeding, if any. 3. Please intimate as to whether you had a Permanent Establishment (in the form of Fixed place PE, Agency PE. Installation PE, Service PE...) or Business Connection m India during the year. If so, please furnish names and complete addresses of such concerns. Also furnish details of Branch Offices/Project offices/Liaison office/Godowns and Warehouses and construction or other business sites in India. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iling portal for the AY 2015-16. Screenshot of the E-filihg portal is enclosed herewith as Annexure 2. Accordingly, for the purpose of compliance to the aforesaid notice, the Company will be filing the requisite information/documents manually with your goodselfs office and also to all future notices that may be issued during the course of captioned assessment proceedings until the facility of uploading the documents for AY 2015-16 is made available on the e-filing portal of the income Tax department. We trust that filing the required information/documents manually with your office would be treated as a sufficient compliance of the aforesaid notice and subsequent notices that may be issued if: the course of captioned assessment proceedings. We request your office to take the above information on record. Further, the Company is in process of collating/compiling the information sought for by your goodself as per the captioned notice which would be furnished in due course. We request your office to provide us with an opportunity to personally represent this case before finally concluding the present proceedings. Thank you Yours faithfully, Authorised Signatory End; As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Return of income for the Assessment Year 2015-16 along with the copy of Income tax Return Form and notes to return of income with your goodself's office vide submission dated August 16, 2017. 8. Order of Advance Ruling Authority It is submitted that the Company has not sought any advance ruling from the Authority for Advance Rulings in India 9. Large International Transactions Detail of the international transactions as per the form 3CEB for the captioned year, already filed before your gcodself' submissions dated August 16, 2017 Copy of the Form 3CEB is enclosed herewith for your good self's ready reference as Annexure We request your office to take the above information on record. In addition to above, the Company would be obliged to furnish further information / documentation on hearing from yaur gondself s office We request your office you provide us with an opportunity to personally represent this case before finally concluding the present proceedings, Thank you Yours faithfully, Authorized Signatory Encl: : As Above. 13. It can be seen from the above at Point No. 9 that the assessee has given details of International Taxation as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a tax resident of Singapore, is also entitled to claim the benefit under India Singapore Tax Treaty. The gains arising to HCS from the aforesaid transfer of shares are also exempt to tax in India, in view of the provisions of Article 13 of India- Singapore Tax Treaty. The Company would, however, be pleased to furnish-its detailed submissions and/or provide clarifications in this respect so as to substantiate its claim, on hearing from your goodself. 3. In view of the specific exemption provided under Section 47(iv) of the Act, the gains accrued to the Company on transfer of shares, as discussed under point 1 above, are not chargeable to tax in India. However, only with a view to explain the transaction in detail, the Company has prepared a working of gains, not chargeable to tax in India. The same is hereby respectfully submitted as Annexure Z. 4. Copy of the valuation report for the valuation of the shares of Genpact India is enclosed herewith as Annexure 3. We request your office to take the above information on record. In addition to above, the Company would be obliged to furnish further information / documentation on hearing from your goodself's office. We reque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer put the following office note: The case was selected for complete scrutiny for the examination of Large International transaction(s) [Form 3CEB]. Issue has been examined thoroughly and found in order. No adverse inference has been drawn. Assessment has been finalized as per order 21. Before us, the ld. DR had placed strong reliance on the decision of the Hon'ble Supreme Court in the case of Daniel Merchants Pvt Ltd Vs. ITO Appeal No. 2396/2017 order dated 29.11.2017. In our considered opinion, the facts of that case are totally different from the facts of the case in hand in as much as in that case, the Assessing Officer did not make any proper enquiry while making assessment and accepting the explanation of the assessee in so far as receipt of share application money is concerned, whereas in the case in hand, after receiving information relating to share transfer proper enquiries were made which is also evident from the office note exhibited elsewhere. 22. Another decision relied upon by the ld. DR is the case of Surya Financials Services Ltd ITA No. 2158/DEL/2017 where the Assessing Officer failed to carry out adequate enquiry about the alleged ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner to exercise power of revision under this sub-section, viz., (i) the order is erroneous; (ii) by virtue of the order being erroneous prejudice has been caused to the interests of the Revenue. It has, therefore, to be considered firstly as to when an order can be said to be erroneous. We find that the expressions erroneous , erroneous assessment and erroneous judgment have been defined in Black's Law Dictionary. According to the definition, erroneous means involving error; deviating from the law . Erroneous assessment refers to an assessment that deviates from the law and is, therefore, invalid, and is a defect that is jurisdictional in its nature, and does not refer to the judgment of the Assessing Officer in fixing the amount of valuation of the property. Similarly, erroneous judgment means one rendered according to course and practice of court, but contrary to law, upon mistaken view of law; or upon erroneous application of legal principles . 12. From the aforesaid definitions it is clear that an order cannot be termed as erroneous unless it is not in accordance with law. If an Income-tax Officer acting in accordance with law makes a certain assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the interests of the Revenue. We have already held what is erroneous. It must be an order which is not in accordance with the law or which has been passed by the Incometax Officer without making any enquiry in undue haste. We have also held as to what is prejudicial to the interests of the Revenue. An order can be said to be prejudicial to the interests of the Revenue if it is not in accordance with the law in consequence whereof the lawful revenue due to the State has not been realised or cannot be realised. There must be material available on the record called for by the Commissioner to satisfy him prima facie that the aforesaid two requisites are present. If not, he has no authority to initiate proceedings for revision. Exercise of power of suo motu revision under such circumstances will amount to arbitrary exercise of power. It is well-settled that when exercise of statutory power is dependent upon the existence of certain objective facts, the authority before exercising such power must have materials on record to satisfy it in that regard. If the action of the authority is challenged before the court it would be open to the courts to examine whether the relevant objective f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate the reasons for upholding the claim made by an assessee, the result would be an epitome and not an assessment order. In this case, during the assessment proceedings for both the Assessment Years, the Assessing . A.Y. 2009-10 Officer issued a query memo to the assessee, calling upon him to justify the genuineness of the gifts. The Respondent Assessee responded to the same by giving evidence of the communications received from his father and his sister i.e. the donors of the gifts along with the statement of their Bank accounts. On perusal, the Assessing Officer was satisfied about the creditworthiness/capacity of the donors, the source from where these funds have come and also the creditworthiness/ capacity of the donor. Once the Assessing Officer was satisfied with regard to the same, there was no further requirement on the part of the Assessing Officer to disclose his satisfaction in the Assessment Order passed thereon. Thus, this objection on the part of the Revenue cannot be accepted. 29. We find that the Hon'ble Delhi High Court in the case of CIT Vs Sunbeam Auto reported in 332 ITR 167 has held as held as under: 12. We have considered the rival submissions of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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