CUPINO LTD.,MUMBAI vs. DY CIT (IT)-2(1)91), MUMBAI

Aforesaid appeal by assessee for Assessment Year (AY) 2015-16 contest final assessment order passed u/s 143(3) r.w.s. 144C(13) of the Act by Ld. DCIT (Int. Taxation)-2(1)(1) on 27/09/2019. We find that though the final assessment order has accepted the returned income of Rs.34.12 Crores as filed by the assessee, however, the dispute has arisen on account of applicable rate of tax to the said income. The assessee has offered the income @10% in terms of Article 11 of the Tax-Treaty provisions between India and Cyprus. However, Ld. AO, has opined that the income would be chargeable @20% plus applicable surcharge and cess in terms of Section 115A(1)(a)(ii) of the Act. The income earned by the assessee is in the shape of interest on fully & compulsorily convertible debentures (FCCB) from Shree Ahuja Properties and Realtors Private Limited. The assessee is a company incorporated in Cyprus.

The Ld. AR, at the outset, drew our attention to the additional ground raised

For the purpose of adjudication, it would be worthwhile to take note of few dates. The assessment year involved is AY 2015-16 and the final assessment order has been passed on 27/09/2019. The date of directions given by Ld. DRP is 29/08/2019. Upon perusal of final assessment order, it could be observed that there is no proposed variation in the income or losses reported by the assessee. The matter before Ld. AO was only with respect to the applicable rate of tax on the interest income earned by the assessee. In such a case, the provisions of Section 144C(1) would not apply and the due date for completion of assessment proceedings and passing the assessment order as per Section 153 would be 31/12/2018. As against this, the final assessment, in the present case, has been passed on 27/09/2019 and therefore clearly barred by limitation. The fact of issuance of draft assessment order, when it was not legally required to be issued, could not end up enhancing the time limit for completion of the assessment u/s 143(3).

We find that we have already adjudicated this issue in assessee’s own case for AYs 2013-14 & 2014-15 (ITA Nos. 7130/Mum/2017 & 7236/Mum/2018 common order dated 26/03/2021). In the said order, relying upon the decision of coordinate bench of Tribunal in IPF India Property Cyprus (No.1) Ltd. V.s DCIT (2020 183 ITD 46), we have allowed additional ground with following observations: - 7. We noted that the draft assessment order was issued on 29.12.2016 under section 143(3) read with section 144C(1) of the Act and in that eventuality, finally the assessment order was passed on 16.10.2017. From the above, we find that there is no dispute that if there would not have draft assessment order, the assessment would have been time barred as on 31.12.2016, the present assessment order dated 16.10.2017. Once, we hold that no draft assessment order would have been issued in this case as the provisions of Section 144C(1) of the Act could not have been invoked in this case. The time limit for completion assessment was available only to 31.12.2016, hence, we are of the view that the issuance of draft assessment order cannot end up increasing the time limit for completion of the assessment under section 143(3) of the Act. This issue has been adjudicated by the co-ordinate bench of this Tribunal in the case of IPF India Property Cyprus (No.1) Ltd. Vs. DCIT (2020) 183 ITD 46 (Mumbai-Trib.), wherein it is held as under: - “6. Once this amendment is being introduced with effect from 1st April 2020, it is beyond any doubt of controversy that so far as the period prior to 1st April 2020 is concerned, the cases in which no variations in the returned income or loss were proposed, the draft assessment orders were not required to be issued. We, therefore, uphold the plea of the assessee on this point. 7. Coming to the second point, we find that there is no dispute that if no draft assessment order was to be issued in this case, the assessment would have been time barred on 31st December 2017 but the present assessment order is passed on 17th August 2018. Once we hold that no draft assessment order could have been issued in this case, as the provisions of Section 144C(1) could not have been invoked in this case, the time limit of completion of assessment was available only upto 31st December 2017. The mere issuance of draft assessment order, when it was legally not required to be issued, cannot end up enhancing the time limit for completing the assessment under section 143(3). We, therefore, uphold the plea of the assessee on this point as well. The impugned assessment order is indeed, in our considered view, time barred. We, accordingly, hold so. 8. As the impugned assessment order itself is held to be time barred, all other grievances raised in appeal, which deal with the merits of stand taken by the Assessing Officer in the assessment order, are rendered academic and infructuous. No adjudication, therefore, is required on these grievances at this stage.”

We noted that in the present case neither the learned Sr. DR nor the assessee has disputed the fact and there is proposed variation in the income or losses reported by the assessee to the Income Tax Authorities. The matter before the Assessing Officer was only with respect to the rate of tax chargeable by the assessee and actually there is no variation in income or losses. Once, this is a fact the issue is squarely covered by the decision of this Tribunal in the Case of IPF India Property Cyprus (No.1) Ltd. (supra). Respectfully following the same, we allow this additional ground of the assessee and hold that the assessment framed by Assessing Officer is time barred and hence quashed.