2012 (10) TMI 275 - AT - Income Tax

Benefit of Tax Deduction in respect of profits retained for export business - Held that - The assessee is a non-resident in India and is a citizen of Canada as he do not have any Permanent establishment in India - assessee is not a tax resident of Canada, he cannot claim benefits of the Canada DTAA - Benefits under sec.80HHC were claimed by making a wrong claim of being a resident of India - Benefits under sec. 80HHC are now no longer available to assessee - in favour of Revenue. No useful purpose would be served by adjourning the matter, as there is no possibility of getting the notices served on the assessee when the duly constituted Power of Attorney holder acknowledges the receipt of notice but refused to co-operate for the reasons specified in the letter. - Decided against the assessee.

Summary

Issues:
Appeals by Revenue against impugned orders for multiple assessment years, cross objections by assessee, withdrawal of Vakalatnama by Power of Attorney holder, non-cooperation of assessee, residency status of assessee, Permanent Establishment (PE) in India, benefits under sec. 80HHC, claim under Canada DTAA, non-resident status, documentary evidence, treaty benefits, non-prosecution of cross objections.

Analysis:
The appeals by Revenue were directed against orders for various assessment years, with cross objections by the assessee arising from the same. The Power of Attorney holder, representing the assessee, expressed non-cooperation due to the assessee's unavailability and withdrawal of Vakalatnama. The issue of the assessee's residency status was central, as incriminating evidence suggested non-residency, leading to reopened assessments. The Department argued that the assessee failed to prove tax residency in Canada, essential for claiming benefits under the Canada DTAA. The Department contended that the assessee had a PE in India based on business activities, contradicting the claim of mere purchases for exports. The Department emphasized the need for documentary evidence to support residency claims under the treaty. The Department highlighted the assessee's inconsistent actions, challenging assessments without evidence and seeking adjournments to delay proceedings. Ultimately, the Power of Attorney holder withdrew the appeals citing non-cooperation of the assessee, leading to the dismissal of cross objections.

The Tribunal, noting the lack of cooperation from the assessee and the Power of Attorney holder's stance, proceeded to dispose of the appeals on merits. Considering the Department's arguments and the lack of defense from the assessee, the Tribunal allowed the grounds raised in the Revenue's appeals. The cross objections by the assessee were dismissed due to non-prosecution, resulting in the allowance of Revenue's appeals and the dismissal of assessee's cross objections. The judgment underscored the importance of providing documentary evidence to support residency claims under tax treaties and highlighted the consequences of non-cooperation in legal proceedings.