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TMI Blog2016 (8) TMI 606X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of these provisions upon income of interest and short term capital gains. The AO shall decide this issue on merits afresh after taking into account all the facts and evidences on objective basis and after giving adequate opportunity of hearing to the assessee. The assessee shall extend requisite cooperation to the AO by submitting requisite details and documentary evidences as per law. - ITA NO. 5386/Mum/2015 - - - Dated:- 29-6-2016 - Shri Joginder Singh, Judicial Member, and Shri Ashwani Taneja, Accountant Member For The Assessee : Mrs. D.J. Jariwala (AR) For The Revenue : Mrs. Surbhi Sharma (Sr.DR) ORDER Per Ashwani Taneja (Accountant Member): This appeal has been filed by the assessee against the order of Ld. Commissioner of Income Tax (Appeals), Mumbai- 56 {(in short CIT(A) }, dated 27.10.2015 passed against rectification order u/s 154 of the AO for the Assessment Year 2008-09 on the following grounds: 1. On the facts and in the circumstances of the case and in law, the learned CIT (Appeals) has erred in holding that the AO has correctly rejected the rectification application filed by the appellant u/s. 154 of the Incometax Act, 1961 claimin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 154, which could not have been granted as it required investigation of fact to examine whether the assessee can be granted the benefit of provisions of Article 11 Article 13 of the DTAA. 3.1. We have gone through the orders of the lower authorities and heard both the parties at great length. Both, the parties have made the arguments exhaustively, putting in ample amount of labour to bring out correct facts and legal position of law. 3.2. The brief background of the case is that the assessee filed its original return on 29.07.2010 which was subsequently revised by him on 13.09.2011. In both of these returns, the residential status of the assessee was shown as nonresident . The revised return included inter alia the income on account of interest from bank/financial institutions aggregating to ₹ 2,17,22,013/- and income from short term capital gain from sale of securities aggregating to ₹ 12,84,598/-. Subsequently, the assessee filed a petition u/s 154 to the AO claiming that since the assessee was resident of Singapore during the year under concern, therefore in view of DTAA between India and Singapore interest income was liable to be taxed @ 15% and short ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that in all subsequent years the assessee had claimed the relief as per DTAA and which has been allowed consistently for all of the assessment years viz. A.Ys. 2011-12 to 2015-16. Out of these 5 assessment years, returns of first 3 assessment years have already been processed wherein claim of the assessee has been accepted, and therefore, there should be no reasons to deny the claim in this year merely on some technical grounds when in substance the assessee is eligible for this relief. 3.4. Per contra, Ld. DR opposed the submissions of the assessee in detail. It was argued that the assessee did not make its impugned claim in the return. The assessee had missed the bus and the same could not have been allowed to the assessee by way of rectification proceedings u/s 154. She relied upon the judgment of Hon ble Bombay High Court in the case of Gammon India Ltd. vs CIT 214 ITR 50 for the proposition that relief u/s 91(1) could not have been allowed to the assessee in the proceedings u/s 154, when requisite facts and documents to justify assessee s claim were not part of records of the AO of the concerned year. It was also submitted by her that requisite facts with regard to stay of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ckground, we have analysed the facts of this case, evidences/other material available before the AO, the claim made by the assessee and the legal position brought before us. It is noted that in the return filed before the AO, the assessee had undoubtedly claimed its status as that of non-resident . Item wise details of income earned from all the sources were given in the computation sheet filed along with return of income (i.e. original as well as revised). It is also undisputed fact that copy of assessee s TRC of Singapore as well as DTAA between India and Singapore was available before the AO in the assessment proceedings of A.Y. 2009-10. It is noted that Hon ble Kerala High Court in the case of Upasana Hospital and Nursing Home v. CIT held as under: We feel that the power of rectification under Section 154 is to be exercised with reference to the records of the assessee available with the Assessing Officer, and not with particular reference to the assessment alone. The error apparent on the face of the record cannot be said to be the record of one particular assessment, but the entire record of the assessee relating to all the assessment years. The same is the view taken b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected the Revision Petition filed by the assessee under section 264 of the Act, against which, the assessee had filed a Writ Petition in the High Court of Bombay. The Bombay High Court while deciding the Writ Petition made the following observations: In any civilized system, the assessee is bound to pay the tax which he is liable under the law to the Government. The Government on the other hand is obliged to collect only that amount of tax which is legally payable by an assessee. The entire object of administration of tax is to secure the revenue for the development of the Country and not to charge assessee more tax than that which is due and payable by the assessee. It is in aforesaid circumstances that as far back as in 11/04/1955 the Central Board of Direct Tax had issued a circular directing Assessing Officer not to take advantage of assessee's ignorance and/or mistake. The Court then stated that the above Circular should always be borne in mind by the officers of the respondent revenue while administrating the said Act. Ultimately, the Court not only allowed the Writ Petition filed by the assessee and set aside the Order passed by the Commissioner whereby the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Thus, in view of the above said legal position, we find it difficult to simply ignore or brush aside, a genuine claim made by the assessee especially when it has been allowed to the assessee in all subsequent years. Under these circumstances, we have analysed the prima facie authenticity in the claim made by the assessee on the basis of India-Singapore DTAA in the light of primary evidences brought before us and our observations in this regard are as discussed in subsequent paragraphs. 4. As per Article 11 of India Singapore DTAA dated 24th January 1994 the treatment of interest shall be as under: ARTICLE 11: INTEREST - 1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2. However, such interest may also be taxed in the Contracting State in which it arises, and according to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed: (a) 10 per cent of the gross amount of the interest if such interest is paid on a loan granted by a bank carrying on a bona fide banking business or by a sim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Article and paragraph 3(b) of the Article 12 shall be taxable only in the contracting State of which the alienator is a resident. 4.2. In the Annexure B i.e. Amendment dated 29th June 2005 to Article 13 with regard to charging of capital gains was amended as under: Article 1 Paragraphs 4,5 and 6 of Article 13 (capital Gains) of the Agreement shall be deleted and replaced by the following: 4. Gains derived by a resident of a contracting state from the alienation of any property other than those mentioned in paragraphs 1,2 and 3 of this Article shall be taxable only in that state. 4.3. Thus, the prima facie perusal of all these Articles suggest that capital gain arising to resident of Singapore may not be taxable in India. The assessee has furnished before us details of the capital gain showing that the entire amount of capital gain has been earned on account of sale of securities of mutual funds. Under these circumstances, we find it appropriate to send both the issues back to the file of the AO for their examination on merits. The AO shall give adequate opportunity of hearing to the assessee to submit requisite details and documentary evidences to demonst ..... X X X X Extracts X X X X X X X X Extracts X X X X
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