9911796707
TMI Blog2015 (9) TMI 693X X X X Extracts X X X X X X X X Extracts X X X X ..... e at source as per the provisions of the Act. Question No. 35 was with respect to details of amount remitted/sent abroad supported by RBI prescribed certificate issued by C.A u/s. 195 of the Act, 1961 and Question No. 37 was in connection with the transactions reported in the Form 3CEB. The assessee had filed a detailed reply in respect of these queries raised during the assessment proceedings. Thus the observation of the CIT that the payment to its associated enterprise has not been considered and examined by the AO for disallowance u/s. 40(a)(i) of the Act is incorrect in the light of the facts stated hereinabove. AO has taken a view which may be different from the view of the Ld. Commissioner and assuming that the view taken by the AO is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to A.Y.2005-06. ITA 2 No. 5777/M/2011 2. The grievance of the assessee is that the Ld. CIT erred in passing an order u/s. 263 on the ground that the order passed by the AO u/s. 143(3) of the Act is erroneous and prejudicial to the interest of the Revenue. The assessee is further aggrieved by the direction of the CIT to the AO to reframe the assessment to disallow the expenditure for payment of reinsurance premium to associated enterprises u/s. 40(a)(i) of the Act. 3. The assessee is engaged in general insurance business. The assessee offers insurance in the form of fire, engineering, health, motor, travel, marine and liability insurance policies. The return of income for the year was filed on 18.10.2005 declaring total income at ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation Avoidance Agreement between India and Singapore. It was further explained that the payment to associated enterprise was made in accordance with the CBDT Circular No. 759 dt. 18.11.1997 and CBDT Circular No. 10 dt. 9.10.2002. It was brought to the notice of the CIT that the assessee has obtained a declaration from M/s. Odyssey America Reinsurance Corporation, Singapore that it is a non resident engaged in the business of reinsurance outside India and it does not have an office or permanent establishment or a fixed base in India. For this, the assessee drew support from the decision of the Hon'ble Supreme Court in the case of Toshuka Ltd. 126 ITR 525 wherein it has been held by the Hon'ble Supreme Court that if no operations are carried ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions and perused the assessment order and the order of the learned Commissioner. The first thing which has to be considered is whether the Learned Commissioner has rightly assumed the power under section 263 of the Act. The Hon'ble Supreme Court in Malabar Industrial Co. Ltd. 243 ITR 83 has laid down the following ratio:- "A bare reading of section 263 of the Income-tax Act, 1961, makes it clear that the prerequisite for the exercise of jurisdiction by the Commissioner suo motu under it, is that the order of the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment made by the assessee to the Singapore company was not for obtaining any technical/managerial services or for use of any property or asset. Therefore the payment could not be considered as royalty or FTS. The payment could only be considered as business income in the hands of the Singapore company which could be taxed in India only if the said company had PE in India. The claim of the assessee that the Singapore company did not have any establishment or employee in India has not been controverted before us. Therefore, in our view the payment to the Singapore company was not taxable in India." The Tribunal finally concluded by confirming the order of the CIT(A) directing the AO to delete the addition. 10. Considering the decision of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of revenue or where two views are possible and the Income Tax Officer has taken one view with which the Ld. Commissioner does not agree, it cannot be treated as an order which is erroneous or prejudicial to the interest of Revenue unless the view taken by the Income Tax Officer is unsustainable in law. 10. The Bombay High Court in CIT Vs Gabrial India Ltd., (1993) 203 ITR 108 has held that "the decision of the Income Tax Officer could not be held to be erroneous simply because in his order, he did not make an elaborate discussion in that regard". Considering the facts in totality in the light of the judicial decisions discussed hereinabove, in our understanding of law, the assessment order is neither erroneous nor prejudicial to the intere ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
