SA MALLIKA VENTURES LTD.(ERSTWHILE SA WINONA VENTURES LTD. PRIOR TO MERGER),MUMBAI vs. THE ACIT (IT)-4(2)(1), MUMBAI

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ITA 1021/MUM/2023Status: DisposedITAT Mumbai06 October 2026AY 2015-166 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal dismissed the appeal due to the assessee's persistent non-representation. The judgment notes that the appeal was fixed for hearing on 20 occasions, with the assessee remaining unrepresented on 11 recent occasions. Despite repeated opportunities, there was no effective representation from the assessee. Consequently, the Tribunal was constrained to proceed with the appeal in the absence of the assessee and dismiss it without deciding on the merits or legal contentions raised. The assessee was granted liberty to seek revival of the appeal by filing an appropriate application under Rule 24 of the Income-tax (Appellate Tribunal) Rules, 1963, upon demonstrating sufficient cause for its non-representation. No specific findings were made on the grounds of appeal, as the appeal was dismissed procedurally.

What were the facts?

The assessee, SA Mallika Ventures Limited (erstwhile SA Winona Ventures Limited), a Cyprus tax resident, invested Rs. 39.85 crore in Compulsory Convertible Debentures (CCDs) issued by Shobha Highrise Ventures Pvt. Ltd., Mumbai. The assessee earned interest income of Rs. 6,97,37,520 on this investment and claimed a tax rate of 10% under Article 11(2) of the India-Cyprus DTAA. The Assessing Officer (AO) proposed to tax this income at 40% under the Income-tax Act, finding the assessee to be a conduit company. The Dispute Resolution Panel (DRP) upheld the AO's view. The final assessment order, passed under section 143(3) r.w.s 144C(13) pursuant to DRP directions, taxed the interest income at 40%. The assessee appealed this order for Assessment Year 2015-16.

What were the issues?

1. Whether the reopening of assessment under section 147 of the Income-tax Act, 1961 ('the Act') was bad in law, and if the DRP erred in holding it to be in order. 2. Whether the assessee is the beneficial owner of the interest income, and thus eligible for the beneficial tax rate of 10% as per Article 11(2) of the India-Cyprus tax treaty, or if the assessee acted merely as an agent, nominee, or conduit company without substance, as held by the ACIT and DRP. 3. Without prejudice to the above, whether the interest income should be taxed at the normal rate of 40% applicable to foreign companies or the special rate of 20% provided in section 115A of the Act. 4. Whether interest under sections 234B and 234D was correctly levied. 5. Whether penalty proceedings under section 271(1)(c) were correctly initiated. Assessee's Contentions: The assessee argued that the reopening under section 147 was bad in law and that it was eligible for the 10% treaty rate as the beneficial owner of the interest income, relying on the Mumbai Tribunal's decision in Golden Bella Holdings Limited. Alternatively, it argued for the 20% rate under section 115A. The assessee also contested the levy of interest and initiation of penalty proceedings. Revenue's Contentions: The revenue, through the Sr. DR, did not make submissions on the merits of the case due to the assessee's repeated non-representation.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C(13),Section 144C(5),Section 147,Section 115A,Section 234B,Section 234D,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “I” BENCH, MUMBAI

Before: SHRI AMIT SHUKLA, JM & SHRI ARUN KHODPIA, AM

For Respondent: Shri Sridhar G. Menon (Sr. DR)
Hearing: 09.07.2026Pronounced: 06.10.2026

आयकर अपीलीय अिधकरण �ायपीठ मुंबईम�। IN THE INCOME TAX APPELLATE TRIBUNAL “I” BENCH, MUMBAI BEFORE SHRI AMIT SHUKLA, JM & SHRI ARUN KHODPIA, AM I.T.A. No. 1021/Mum/2023 (Assessment Year: 2015-16) SA Mallika Ventures Limited The Assistant Commissioner of (erstwhile SA Winona Ventures Income-tax (International Taxation)- Limited Prior to Merger) 4(2)(1) Room No.1708, 17th Floor, Air India C/O Deloitte Haskins & Sells Vs. LLP 28th Floor, Tower 3, One Building, Nariman Point, International Center, Senapati Mumbai-400021 Bapat Marg, Elphinstone (W), Mumbai-400013 PAN: AARCS0784P (of SA Mallika Ventures Limited) & AASCS2365K (of erstwhile SA Winona Ventures Limited) Assessee- अपीलाथ� / Appellant Revenue-��थ�/ Respondent :

Assessee by : None Revenue by : Shri Sridhar G. Menon (Sr. DR) Date of Hearing : 09.07.2026 Date of Pronouncement : 06.10.2026

O R D E R Per Arun Khodpia, AM: The captioned appeal is preferred by the assessee, against the assessment order u/s 143(3) r.w.s 144C(13) of the Income Tax Act, 1961 [in short, “the Act”] dated 31.01.2023 passed in pursuance to directions of Dispute Resolution Panel (in short, “the DRP”) u/s 144C(5) of the Act dated 23.12.2022 for Assessment Year (AY) 2015-16.

ITA No. 1021/Mum/2023 SA Mallika Ventures Ltd. (Erstwhile SA Winona Ventures Ltd. prior to Merger) 2. The grounds of appeal raised by the assessee are as under: “1.Re-opening proceedings under section 147 are bad in law 1.1 The learned DRP erred in holding that reopening of assessment under section 147 of the Act was in order. 2. Taxability as per India-Cyprus tax treaty 2.1 The learned DRP/ACIT erred in holding that the appellant is not beneficial owner of interest income, and therefore not eligible for the beneficial rate of tax of 10% as per Article 11(2) of the India-Cyprus tax treaty. 2.2 The learned ACIT erred in holding that the appellant has merely acted as an agent or nominee or a conduit company, and is acting as a fiduciary or administrator on behalf of holding company; and the whole arrangement is a colorful device without any substance. 2.3 The learned DRP/ACIT erred in not considering the decision of Mumbai Tribunal in the case of Golden Bella Holdings Limited (109 taxmann.com 83) relied upon by the appellant, which is on identical facts of the appellant's case. 3. Rate of tax Without prejudice to the above grounds, the learned DRP/DCIT erred in taxing the interest income earned by the appellant at normal rate of 40% applicable to foreign company instead of special rate of 20% provided in section 115A of the Act. 4. Levy of interest under sections 2348 and 234D The learned DCIT erred in levying interest under section 2348 and 234D of the Act. 5. The learned DCIT erred in initiating penalty proceedings under section 271(1)(c) of the Act for furnishing inaccurate particulars of income. 6. Each one of the above grounds of appeal is without prejudice to the other. 7. The appellant reserves the right to amend, alter or add to the grounds of appeal.”

3.

The assessee, SA MALLIKA VENTURES LTD. (ERSTWHILE SA WINONA VENTURES LTD. PRIOR TO MERGER), a company incorporated in Cyprus and a tax resident thereof, is a wholly owned subsidiary of M/s Winona SA Investment LLC, Mauritius. During the year under consideration, the assessee had invested Rs. 39.85 crore in Compulsory Convertible Debentures 2

ITA No. 1021/Mum/2023 SA Mallika Ventures Ltd. (Erstwhile SA Winona Ventures Ltd. prior to Merger) (CCDs) issued by Shobha Highrise Ventures Pvt. Ltd., Mumbai, representing 17.75% of the total CCDs. The assessee earned interest income of Rs. 6,97,37,520 on the said investment and offered the same to tax at 10% by invoking Article 11(2) of the India–Cyprus Double Taxation Avoidance Agreement (DTAA).

4.

During the course of assessment proceedings, the AO required the assessee to substantiate its eligibility to avail the beneficial rate of taxation under the India–Cyprus DTAA. In response, the assessee furnished the requisite documents and submissions. The AO, however, was not satisfied with the assessee’s claim and, in the draft assessment order, proposed to tax the aforesaid interest income at 40% under the provisions of the Income-tax Act, instead of the treaty rate of 10%.

5.

The assessee raised objections before the DRP against the proposed taxation. The DRP, however, rejected the objections and upheld the findings contained in the draft assessment order. Consequently, the AO passed the final assessment order in conformity with the directions of the DRP, subjecting the interest income of ₹6,97,37,520 to tax at 40% instead of the 10% rate claimed under Article 11(2) of the India–Cyprus DTAA.

6.

The assessment order under section 147 read with section 144C(13) of the Act, was completed on 31st January 2023, wherein the interest on CCDs earned

ITA No. 1021/Mum/2023 SA Mallika Ventures Ltd. (Erstwhile SA Winona Ventures Ltd. prior to Merger) by the assessee company was held to be taxed at a rate of 40% instead of the beneficial 10% rate provided under the DTAA.

7.

Being aggrieved with the aforesaid order of Ld. AO, the assessee preferred the present appeal before us.

8.

At the outset it is noticed that the present appeal was initially fixed for hearing on 21 June 2023 and the assessee was represented through its authorised representatives on the initial dates of hearing, and adjournments were sought, inter alia, in view of the decision of the Hon’ble Madras High Court in the case of M/s Roca Bathroom Products Private Limited, concerning the issue of limitation for passing the assessment order. But thereafter, from 16 October 2024 onwards, the assessee remained unrepresented, except on one occasion when the appeal was fixed for hearing on 27 January 2025.

9.

In all, the appeal was fixed for hearing on 20 occasions, on 11 of the recent occasions the assessee remained unrepresented. Despite repeated opportunities, there has been no effective representation on behalf of the assessee. In these circumstances, we are constrained to proceed with the appeal in the absence of the assessee and, having regard to the continued non-representation, dismiss the appeal in absence of any submissions on merits as well as on legal contentions raised therein.

ITA No. 1021/Mum/2023 SA Mallika Ventures Ltd. (Erstwhile SA Winona Ventures Ltd. prior to Merger) 10. Needless to say, the assessee shall be at liberty to seek revival of the appeal by filing an appropriate application under Rule 24 of the Income-tax (Appellate Tribunal) Rules, 1963, upon demonstrating sufficient cause for its non-representation.

11.

Resultantly, the appeal of assessee stands dismissed.

Order pronounced in the open court on 06-10-2026.

Sd/- Sd/- (AMIT SHUKLA) (ARUN KHODPIA) JUDICIAL MEMBER ACCOUNTANT MEMBER

Mumbai, Dated : 06-10-2026. Ankit K., Sr. PS

ITA No. 1021/Mum/2023 SA Mallika Ventures Ltd. (Erstwhile SA Winona Ventures Ltd. prior to Merger)

Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. Guard File 5. CIT

BY ORDER, ABHINAV ANANT Digitally signed by ABHINAV ANANT GAVANDE GAVANDE Date: 2026.10.15 15:51:23 +05'30' (Dy./Asstt. Registrar) ITAT, Mumbai

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