MATRIX PARTNERS INDIA INVESTMENT HOLDINGS LLC,MAURITIUS vs. DEPUTY COMMISSIONER OF INCOME TAX, KAUTILYA BHAVAN, MUMBAI

On the facts and circumstances of the case and in law, the learned Chief Commissioner of Income tax (Intl. Tax.) West Zone, Mumbai (CCIT) has erred in initiating the revisionary proceedings under Section 263 of the Income Tax Act, 1961 (the Act) without appreciating that the proceedings under Section 263 of the Act cannot be invoked unless the twin conditions that assessment order passed under Section 143(3) r.w.s 144C(13) of the Act by learned 1 Assessing Officer (AO) dated 24 July 2023 is erroneous in law as well as prejudicial to the interests of the revenue are satisfied. Accordingly, the order under Section 263 of the Act is without jurisdiction, bad in law and deserves to be quashed. 2. On the facts and circumstances of the case and in law the learned CCIT has erred in invoking the provisions of section 263 on the same issue which has been evaluated by the DRP and decided by the Honorable ITAT (I.T.A. No.3097/Mum/2023) in appeal against the regular Assessment Order passed u/s 143(3) r.w.s 144C(13) of the Act. Accordingly, the order under Section 263 of the Act is without jurisdiction, bad in law and deserves to be quashed. 3. On the facts and circumstances of the case and in law, the CCIT has erred in stating that the Appellant has filed an appeal before the Honorable ITAT only on the ground of netting off its capital gain loss and not against the carrying forward of such loss without appreciating that the appellant had raised the ground with respect to carry forward the entire loss without netting off and the same was accepted by the Honorable ITAT. Accordingly, the order under Section 263 of the Act deserves to be quashed. 4. On the facts and circumstances of the case and in law, the learned CCIT has erred in invoking provisions of section 263 to revise the assessment order which has been passed after due inquiry and application of mind and without appreciating the fact that the provisions of section 263 can be validly invoked only in cases where no inquiry whatsoever has been conducted on the issue and not merely because the inquiry conducted was, in the opinion of the learned CCIT, insufficient or inadequate. Accordingly, the order under Section 263 of the Act is without jurisdiction, bad in law and deserves to be quashed. 5. On the facts and circumstances of the case and in law, the CCIT has failed to appreciate that where the Learned AO has adopted one of the plausible views permissible in law, or where two views are reasonably possible and the Learned AO has taken one such view, the order cannot be treated as erroneous and prejudicial to the interests of the Revenue merely because the Learned CCIT does not agree with that view, unless the view adopted by the Learned AO is shown to be unsustainable in law. Accordingly, the order under Section 263 of the Act is without jurisdiction, bad in law and deserves to be quashed. 6. On the facts and circumstances of the case and in law, the CCIT has erred in initiating revisionary proceedings under section 263 of the Act merely on having a different interpretation of the law, the interpretation of the learned AO/DRP has been conclusively examined and adjudicated by the Honorable ITAT. Accordingly, the order under Section 263 of the Act is without jurisdiction, bad in law and deserves to be quashed. 7. On the facts and circumstances of the case and in law, the CCIT has erred in stating that the loss claimed by Appellant on the treaty grandfathered shares is exempt under the provisions of the Act without appreciating that there is no such explicit provision under the Act. Accordingly, the order under Section 263 of the Act deserves to be quashed. 8. On the facts and circumstances of the case and in law, the CCIT has erred in placing reliance on the decision of Honorable Supreme Court in CIT v. Harprasad& Co. (P) Ltd. (1975) 99 ITR 118 (SC), to deny the carry forward of loss, without appreciating that the said decision was rendered based on completely different facts and a different statutory context. Accordingly, the order under Section 263 of the Act is without jurisdiction, bad in law and deserves to be quashed. The Appellant craves leave to supplement, cancel, amend, add and or otherwise alter / modify any or all the grounds of the appeal stated hereinabove, either before or at the time of hearing of this appeal and to submit such facts / documents / evidence in the course of hearing as may be necessary. 3. At the outset, it is submitted by the learned counsel of the assessee that the learned CCIT had exercised the revisionary powers conferred upon to him U/s 263 of the Act to revise the assessment, which was passed U/s 143(3) r.w.s. 144C(13) of the Act on 24.07.2023.Ld. CCIT in her order u/s 263 had noted that the impugned order dated 24.07.2023 was appealed by the assessee before the ITAT in ITA No. 3097/Mum/2023, the ITAT has disposed of the appeal and allowed the assessee to carry forward the losses of Rs.75,20,89,749/- for AY 2020-21, but the department filed an appeal before the Hon’ble Bombay High Court against the order of ITAT. The learned CCIT has observed in his order that on an independent perusal and study of the return of income of the assessee company for the A.Y. 2020-21 along with its computation of income with notes there too, the Form 3CB with notes, the other statutory filings made by the assessee company and other facts and material on record raising a question that whether the assessee had alienated/sold equity share of two companies, resident in India were eligible to be carry forward losses considering their exempt income under provisions of India-Mauritius DTAA. The issue has been discussed at length by the ld. CCIT and finally he concluded by describing following conclusion and directions: