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TMI Blog2019 (1) TMI 1199X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer has made variation in the income returned, which is prejudicial to the interest of such assessee. The variation in the income is qualified by the words which is prejudicial to the interest of such assessee. Addition, if any is made to the returned income is on account of suo motu offer by the assessee of the receipts received by the assessee during the year under consideration from an Indian entity and by an inadvertent error, the same were not offered in the return of income. So, it does fail the test of prejudicial to interest of assessee. Hence, there is no merit in the order of CIT(A) in quashing the assessment order. The same is thus, reversed. The grounds of appeal raised by the Revenue are thus, allowed. Rate to be applied at the relevant time under section 115A(BB) - amount of income tax calculated on the income by way of fees for technical services, if any, included in the total income were to be taxed @ 10% OR 25% - Held that:- The year under appeal is assessment year 2013-14. On the other hand, the Assessing Officer refers to an amendment to the Act which is w.e.f. assessment year 2014-15, under which tax is to be charged @ 25%. AO was of the view tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce the variation in the income/loss was not prejudicial to the interest of the assessee as prescribed in section 144C(1), no draft assessment order was required to be passed. 2. The Ld. CIT(A) erred in law and on facts in deleting the addition ignoring the fact that in this case the draft order u/s 143(3) r.w.s. 144C(1) was not required to be passed since the criteria mentioned in the provisions of section 144C(1) are not fulfilled in this case. 4. The assessee in CO No.54/PUN/2018 has raised the following grounds of objections:- 1. The Assessee contends that the learned Assessing Officer erred in applying an incorrect rate of tax at 25% (plus surcharge and education cess) u/s 115A of Income Tax Act, 1961 on the income offered to tax by the assessee, instead of the correct tax at the rate of 10% (plus applicable surcharge and cess) as prescribed under section 115A of the Act applicable for AY 2013-14. 2. Alternately and without prejudice to the above ground, the Assessee contends that, the learned Assessing Officer erred in not applying the tax rate of 15% prescribed under the India-Canada Double Taxation Avoidance Agreement. 5. The Revenue is in appeal ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 144C(15)(b)(ii) of the Act. The CIT(A) further noted that the Assessing Officer had made addition of ₹ 62,12,060/- and assessed the income in the hands of assessee at ₹ 12.38 crores and along with assessment order, had also issued demand notice under section 156 of the Act. The CIT(A) observed that hence the assessment order passed by Assessing Officer was final assessment order and not draft assessment order. The CIT(A) was of the view that the Assessing Officer ought to have passed draft assessment order first, in accordance with provisions of section 144C(1) of the Act, before passing final assessment order. Since the Assessing Officer had failed to do so and hence, the assessee was denied the opportunity to defend against the addition made by Assessing Officer, before the Dispute Resolution Panel (DRP). The assessment order passed by the Assessing Officer was thus, quashed by the CIT(A) in turn, relying on the decision of the Hon ble Bombay High Court in the case of International Air Transport Association Vs. DCIT in WP (L) No.351 of 2016, dated 18.02.2016. 8. The Revenue is in appeal against the order of CIT(A). 9. The first issue by way of ground o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2016, for which reply was filed on 08.03.2016. The Assessing Officer then informed the assessee that since return of income was filed on 25.03.2015, the rate of income was amended in the Act from 10% to 25% w.e.f. 01.04.2014 and hence, the income is to be assessed @ 25% plus surcharge and cess. The plea of assessee before the Assessing Officer was that the amendment increasing tax rate to 25% would apply only to assessment year 2015-16 and subsequent assessment years; whereas the appeal under assessment was assessment year 2013-14. As the assessee was Resident of Canada and as per the benefits under Canada-India Income Tax Convention (Treaty), the rate which prescribed was 15%. However, the Assessing Officer rejecting the plea of assessee issued assessment order and applied rate of 25% to the income of assessee instead of 10%. The assessment order was passed including additional income voluntarily offered by the assessee at ₹ 62,12,060/-. The CIT(A) held that since the Assessing Officer had not passed any draft assessment order and had only passed final assessment order, he had violated the provisions of section 144C(1) of the Act and applying the ratio laid down by the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee and it cannot be said that the Assessing Officer has made variation in the income returned, which is prejudicial to the interest of such assessee. The variation in the income is qualified by the words which is prejudicial to the interest of such assessee. 14. In the facts of present case, addition, if any is made to the returned income is on account of suo motu offer by the assessee of the receipts received by the assessee during the year under consideration from an Indian entity and by an inadvertent error, the same were not offered in the return of income. So, it does fail the test of prejudicial to interest of assessee. Hence, there is no merit in the order of CIT(A) in quashing the assessment order. The same is thus, reversed. The grounds of appeal raised by the Revenue are thus, allowed. 15. Now, coming to the next aspect of the issue which is raised by way of Cross Objections by the assessee i.e. the rate to be applied at the relevant time under section 115A(BB) of the Act. The amount of income tax calculated on the income by way of fees for technical services, if any, included in the total income were to be taxed @ 10%. The year under appeal is assessment year 2013- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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