2019 (12) TMI 1316 - HC - Income Tax

Prima facie findings returned by the Authority for Advance Ruling in relation to the alleged tax avoidance - HELD THAT - It is evident that the said findings are only prima facie, which means, that they are not final and binding, and that they have not been arrived at after detailed examination of the materials placed before the authority or upon consideration of the rival submissions. It shall be open to the AO and the other statutory authorities to arrive at their own findings upon appreciation of the evidence and the materials placed on record and they should be not bound by the prima facie findings. While so observing, we also make it clear that we have not ourselves examined the merits of the said prima facie findings returned by the authority on the aspect of the tax avoidance. Issue that remains to be determined is whether the petitioner would be entitled to the benefit of the Indian-Mauritius Double Taxation Avoidance Treaty, and consequently to refund of tax deducted and paid by the purchaser of the shares in the year 2011. He, therefore, submits that the assessment proceedings may be expedited. Mr. Bhatia, Sr. standing counsel who appears on advance notice states that assessment gets time barred on 31st December, 2020. We hope and expect that the AO would expedite the assessment proceedings and would pass the assessment order preferably, on or before, 30.06.2020, subject to the petitioner co-operating in the assessment proceedings and not taking any adjournments.

Summary

Issues:
1. Exemptions allowed subject to exceptions.
2. Permission to file additional documents on record.
3. Interpretation of the impugned order by the Authority for Advance Ruling.
4. Entitlement to benefits under the Indian-Mauritius Double Taxation Avoidance Treaty.

Analysis:

1. The court allowed exemptions subject to exceptions in the case. The applications seeking permission to file additional documents on record were also granted. These decisions were made in relation to specific applications filed in the matter.

2. The judgment discussed the implications of the impugned order issued by the Authority for Advance Ruling. The court clarified that the findings in the order were prima facie and not final or binding. It emphasized that the Assessing Officer (AO) and other statutory authorities were not bound by these findings and should arrive at their own conclusions based on the evidence presented.

3. The court highlighted that the AO should not feel obligated to follow the prima facie findings and should conduct an independent assessment based on the materials on record. The judgment emphasized that the court had not assessed the merits of the findings regarding tax avoidance made by the authority, leaving the final determination to the AO and other relevant authorities.

4. The issue of whether the petitioner was entitled to benefits under the Indian-Mauritius Double Taxation Avoidance Treaty was raised. The petitioner sought expedited assessment proceedings to determine eligibility for a refund of tax deducted and paid by the purchaser of shares in 2011. The court noted that the assessment deadline was approaching and urged the AO to expedite the process, with an expectation for the assessment order to be issued by a specified date, subject to the petitioner's cooperation and no unnecessary delays.

In conclusion, the judgment addressed various issues related to exemptions, filing additional documents, interpretation of the impugned order, and entitlement to treaty benefits. It clarified the non-binding nature of prima facie findings and emphasized the need for independent assessment by the relevant authorities. The court encouraged expedited assessment proceedings to determine eligibility for tax refunds under the treaty.