9911796707
TMI Blog2024 (5) TMI 953X X X X Extracts X X X X X X X X Extracts X X X X ..... n 09.03.2020 and thereafter, the case was refixed on 21.10.2021. Pursuant to the hearing on 21.10.2021, the assessee kept a regular track of its registered email for receipt of any intimation of passing of appellate order. However, the counsel for the assessee approached the office of the ld CIT(A) on 30.05.2022 to file an application for re-fixing the case on priority, he was informed that the appellate order had already been passed and uploaded in the income tax portal on 28.03.2022. In this regard, it was submitted that no email intimation or computer intimation about passing of appellate order was ever received by the assessee. Accordingly, it was pleaded that the order was not served on the assessee on 28.03.2022 within the meaning of section 282 of the Act. This fact came to the knowledge of the assessee only on 30.05.2022 when the ld AR approached the office of the ld CIT(A) in person. Hence, immediately the assessee on 28.06.2022 had preferred this appeal before this Tribunal with delay condonation petition. Considering the reasons stated hereinabove, we are inclined to condone the delay and admit the appeal of the assessee for adjudication. 3. The assessee has raised the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned appellate order. 5. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in upholding of the initiation of penalty proceedings under section 270A of the Act." 4. We have heard the rival submissions and perused the material available on record. The assessee was incorporated in Cyprus and is tax resident of Cyprus. The assessee is wholly owned subsidiary of IL & FS India Reality Fund-II, LLC which is based in Mauritius. The return of income for AY 2017-18 was filed by the assessee on 28.09.2017 declaring gross total income of Rs.21,81,06,913/-. On 10.01.2012, the assessee entered into investment agreement with India Bulls Infra Estate Ltd for a project concerning transfer of rights in a land. As part of said agreement, the assessee subscribed 18,17,55,760 compulsorily convertible Debentures (CCDs) of India Bulls Infra Estate Ltd for Rs.10 each. This investment in CCDs was done by the assessee in its own name through proper banking channels, as is evident from the foreign inward remittance certificate, which are enclosed in pages 226 and 227 of the paper book. During the year under consideration, the assessee earned interest inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 (US$ 7,20,000/-). The assessee filed copy of resolutions of the Board Of Directors to prove the fact that all the board meetings of the assessee company were held in Cyprus, where all the decisions related to its operations were taken given the fact that the assessee was independently managed by its Board of Directors. 6. In the return of income, the assessee had submitted that the beneficial owner of the shares was IL&FS Realty Fund II LLC, which was based in Mauritius, being a registered shareholder and beneficial owner and 100% holding company of the assessee. It is well settled principle that shareholders of the company are distinct and separate from each other. IL&FS India Realty Fund II LLC is only a beneficial owner of shareholders of the assessee. It does not get any right over the assets of the assessee to such shareholder. Hence, the contention of the ld AO that IL&FC Realty Fund II LLC is also the beneficial owner of assets/ investments in CCDs held by the assessee is not sustainable in the eyes of law. 7. The AO had observed that on perusal of the bank statement of the assessee, there is hardly any other activity being performed by the assessee in Cyprus. In this re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in pages 8 and 9 of the paper book. The assessee pleaded that it would be entitled for the benefit provided in India-Cyprus DTAA. The assessee had determined the taxability of the interest income arising in India to a resident of Cyprus to be taxed in India @10% of the gross amount of interest if the beneficial owner of the interest income is a resident of Cyprus. As stated in the earlier part of this order, the assessee had got complete control over the interest income on investment in CCDs and is free to enjoy the same as per its own wish. The assessee is not obliged to pass on the same to any other person. Hence, it could be safely concluded that the assessee is indeed the beneficial owner of such interest income and as per Article 11(2) of India-Cyprus treaty, the same would be taxed in India @10% as all the conditions stipulated in Article 11(2) are complied with. We find that the ld AO had denied this benefit to the assessee. We find that the ld AO had denied the benefit of applicability of Circular 789 dated 13.04.2000 in the context of India-Mauritius Treaty to the facts of the instant case. In this regard, the ld AO stated that the Circular 789 was only regarding India-Mau ..... X X X X Extracts X X X X X X X X Extracts X X X X
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