ASST. COMMISSIONER OF INCOME TAX (IT) 2(1)(1), MUMBAI, MUMBAI vs. CREDIT SUISSE (SINGAPORE) LIMITED, MUMBAI
Facts
The Revenue filed appeals challenging the CIT(A)'s order allowing the assessee to withdraw appeals after a revisionary order under Section 263 was quashed. The assessee, a Singapore resident FPI, had claimed capital losses and gains, with the latter exempted under the India-Singapore Tax Treaty. The original assessment order was passed under Section 143(3) r.w.s. 144C(3).
Held
The Tribunal held that the CIT(A) rightly dismissed the appeals as infructuous because the quashing of the Section 263 revisionary order rendered the consequential assessment order unsustainable in law. The CIT(A)'s power under Section 251 includes deciding appeals on merits, and not merely allowing withdrawal without considering the merits, especially when the basis of the original order no longer exists.
Key Issues
Whether the CIT(A) can dismiss an appeal as infructuous due to the quashing of a revisionary order, or must decide it on merits? Can an assessee withdraw an appeal if the consequential assessment order is rendered void?
Sections Cited
263, 250, 143(3), 144C(3), 74, 246A, 251(1)(a)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “I” BENCH, MUMBAI
IN THE INCOME TAX APPELLATE TRIBUNAL “I” BENCH, MUMBAI BEFORE MS. KAVITHA RAJAGOPAL, JM AND SMT. RENU JAUHRI, AM ITA Nos.1698 & 1711/Mum/2024 (Assessment Years: 2017-18 & 2016-17)
Asst. CIT (IT) 2(1)(1) Credit Suisse (Singapore) Limited 1714, 17th Floor, Air India Building, 1 Raffles Link, 33/34-01 South Vs. Nariman Point, Mumbai-400 021 Lobby Singapore
PAN/GIR No. AACCC 7328 N (Assessee) (Respondent) :
Assessee by : Shri Harsh Shah Respondent by : Shri Anil Sant
Date of Hearing : 03.07.2024 Date of Pronouncement : 03.07.2024
O R D E R Per Kavitha Rajagopal, J M:
The captioned appeals are filed by the Revenue, challenging the order of the learned Commissioner of Income Tax (Appeals) (‘ld.CIT(A) for short), National Faceless
Appeal Centre (‘NFAC’ for short) passed u/s.250 of the Income Tax Act, 1961 (‘the Act'), relevant to the Assessment Year (‘A.Y.’ for short) 2016-17 and 2017-18.
Since the issues are identical in both the appeals, we hereby pass a consolidated
order by taking ITA No. 1711/Mum/2024, pertaining to A.Y. 2016-17 as the lead case.
ITA No. 1711/Mum/2024 3. The Revenue has challenged these appeals on the ground that the ld. CIT(A) has
erred in allowing the assessee to withdraw the appeal against the order u/s. 143(3) r.w.s.
2 ITA Nos. 1698 & 1711/Mum/2024 (A.Ys.2017-18 & 2016-17) Asst. CIT (IT) vs. Credit Suisse (Singapore) Limited 263 of the Act on the ground that the Tribunal has quashed the section 263 order and that
the ld. CIT(A) has erred in not deciding the appeal on the merits of the case.
Briefly stated the assessee company is a resident of Singapore which invests in
Indian capital market registered with Security and Exchange Board of India (SEBI) as a
Foreign Portfolio Investor (FPI). The assessee had filed its return of income on
29.11.2016, declaring total income at Rs.62,91,62,077/- after exempting the dividend
earned by it. The assessee had claimed net short term capital loss (STCL) and long term
capital loss (LTCL for short) had carried forward the same u/s. 74 of the Act. The
assessee has also shown the short term capital gain (STCG for short) and long term
capital gain (LTCG for short) and had claimed exempt under Article 13 of India
Singapore Tax Treaty. The assessee’s case was selected for scrutiny and pursuant to the
draft assessment order, the ld. A.O. passed the final assessment order dated 18.02.2020
r.w.s. 143(3) r.w.s. 144C(3) of the Act, determining the total income at Rs.94,93,38,360/-
The ld. PCIT invoked the revisionary powers u/s. 263 of the Act for the reason
that the assessment order is erroneous insofar as it is prejudicial to the interest of the
Revenue for the reason that the income under the head ‘capital gains’ under IT Act would
be inclusive of all capital gains and losses in accordance with the Act without taking
selective recourse to the DTAA and further that the assessee if chooses to take the benefit
of tax treaty between India and Singapore then the income and losses should be covered
under the said treaty and no carry forward of losses shall be allowed under the Income
Tax Act. In this case the assessee had carry forwarded the losses u/s. 74 of the Act. The
impugned order u/s. 143(3) r.w.s. 263 of the Act dated 18.07.2022 was passed by the ld.
3 ITA Nos. 1698 & 1711/Mum/2024 (A.Ys.2017-18 & 2016-17) Asst. CIT (IT) vs. Credit Suisse (Singapore) Limited A.O. where the ld. A.O. determined the total income at Rs.62,91,62,079/- holding that the
assessee cannot carry forward losses as per the I. T Act and it was further appealed by the
assessee before the first appellate authority.
During the pendency of the appeal before the ld. CIT(A), the Tribunal vide order
dated 09.03.2023 had quashed the revisionary order passed u/s. 263 of the Act on the
ground that as the assessment was a limited scrutiny on the issue of examining outward
foreign remittance, the ld. CIT had no jurisdiction to invoke revisionary powers on issues
which were not subject matter of limited scrutiny. Subsequently, the ld. CIT(A) in his
order dated 19.01.2024 had dismissed the appeal filed by the assessee as infructuous for
the reason that as the Tribunal had set aside the revisionary order, the consequential
assessment order u/s. 143(3) r.w.s. 263 of the Act herein the impugned order, does not
survive in the eyes of law.
The Revenue is in appeal before us, challenging the order of the ld. CIT(A) for
dismissing the appeal as infructuous.
When the appeal came up for hearing today before us, the learned Departmental
Representative ('ld.DR' for short) for the Revenue contended that the ld. CIT(A) does not
have the power to allow withdrawal of appeal on the request of the assessee without
deciding the issue on the merits. The ld. DR relied on the decision of the Hon'ble
Jurisdictional High Court decision in the case of CIT vs. Premkumar Arjundas Luthra
(HUF) [2016] 69 taxmann.com 407 (Bom). The ld. DR contended that the ld. CIT(A)
cannot dismiss the appeal for non prosecution.
4 ITA Nos. 1698 & 1711/Mum/2024 (A.Ys.2017-18 & 2016-17) Asst. CIT (IT) vs. Credit Suisse (Singapore) Limited 9. The learned Authorised Representative ('ld. AR' for short), on the other hand,
vehemently opposed to the same and contended that the ld. CIT(A) has not dismissed the
appeal of the assessee as being withdrawn but has given a clear finding that since section
263 order has been quashed, the consequential order would not survive. This does not
amount to appeal being dismissed as withdrawn.
After duly considering both the rival submissions and on perusal of the materials
available on record, though the assessee vide letter dated 06.07.2023 has stated the fact
that since section 263 order has been set aside by the Tribunal, the consequential
assessment order would not survive and further requested for withdrawing the captioned
appeals and to dismiss the same accordingly, the Commissioner of Appeals has in his
order discussed the power of ld. CIT(A) as per section 251 of the Act whereby he can
confirm, reduce, enhance or annul the assessment while deciding the appeal u/s. 246A of
the Act filed by the assessee which are within the purview of section 251(1)(a) of the Act.
The ld. CIT(A) had also relied on the decision of the Hon'ble Jurisdictional High Court in
the case of Premkumar Arjundas Luthra (supra) which was relied upon by the ld. DR and
also the decision Hon’ble Madras High Court in the case of Loganathan v/s ITO,
[2013] 350 ITR 373 (Mad.) and also the Tribunals decision in the case of M/s. Deekay
Gears v/s. ACIT, Circle-29(1), Mumbai (ITA no.2366/Mum./2018), wherein it was held
that the power of allowing withdrawal of appeal is not within the provision of section
251(1)(a) of the Act and has further held that the ld. CIT(A) has to decide the issue on the
merits of the appeal. The ld. CIT(A) has further stated that inspite of the fact that the
assessee has filed an application seeking withdrawal of appeal, the appeal cannot be
5 ITA Nos. 1698 & 1711/Mum/2024 (A.Ys.2017-18 & 2016-17) Asst. CIT (IT) vs. Credit Suisse (Singapore) Limited dismissed in limine without getting into the merits of the case. The ld. CIT(A) has further
proceeded to conclude by saying that since the revisionary order u/s. 263 of the Act has
been quashed, the consequential order which is the very edifice of the impugned
consequential order u/s. 143(3) r.w.s. 263 of the Act would not survive in the eyes of law,
is according to us has rightly been held so by the ld. CIT(A). We do not find any
justification in the Revenue’s objection that it is evident that the appeal has not been
dismissed on the basis of the withdrawal application filed by the assessee, in holding so,
we find no merits in the grounds of appeal raised by the Revenue.
ITA No. 1698/Mum/2024 11. As the facts are identical in these two appeals, the finding in ITA No.
1711/Mum/2024 applies mutatis mutandis to this appeal also.
In the result, both the appeals filed by the Revenue are dismissed.
Order pronounced in the open court on 03.07.2024.
Sd/- Sd/-
(Renu Jauhri) (Kavitha Rajagopal) Accountant Member Judicial Member Mumbai; Dated : 03.07.2024 Roshani, Sr. PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. CIT - concerned 4. DR, ITAT, Mumbai 5. Guard File BY ORDER,
(Dy./Asstt. Registrar) ITAT, Mumbai
