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TMI Blog2019 (4) TMI 2079X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed in brief. The assessee herein is a tax resident of Cyprus. It has invested in an Indian company named Keystone Realtors P Ltd (KRPL) by subscribing to 1556 Compulsorily convertible Debentures (CCD) of KRPL. The assessee earned interest income of Rs.1963.74 lakhs during the year under consideration. The assessee offered the same as its business income in the return of income filed by it for the year under consideration. The assessee computed tax @ 10% as per Article 11(2) of India-Cyprus Treaty. 4. The assessing officer issued a draft assessment order on 31-12-2017, wherein he also assessed the interest income of Rs.1963.74 lakhs under the head "income from business". However, he proposed to compute tax @ 20% by applying the provisions of sec.115A(1)(a)(ii) of Income tax Act. The assessee filed objections before Ld DRP, wherein, the assessee, inter alia, objected to the draft assessment order by submitting that the same is illegal and bad in law, as the assessing officer did not follow the correct procedure as laid down in the Act. The said objection was rejected by Ld DRP. It further went on to hold that the provisions of sec.115A(1)(a)(ii) of the Act cannot be applied in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee on the assessed income. 7. In the rejoinder, the Ld A.R submitted that the dictionary meaning of the term "variation" may mean "difference in quality, amount or level". In the instant case, what was assessed is the interest income. The expressions "quality" or "level" are not applicable to the interest income. Hence the expression "amount" alone shall apply in the instant case, which would mean quantum of interest income. The AO has not changed the quantum of interest income and hence there is no variation of income or loss returned by the assessee, which is prejudicial to the interests of revenue. Accordingly he submitted that the AO was not legally correct in adopting the procedure prescribed u/s 144C of the Act and the same renders the assessment order illegal or void. 8. We heard the parties and perused the record. Before us, the Ld A.R placed his reliance on the decision rendered by the Chennai bench of Tribunal in the case of Mosbacher India LLC vs. Addl CIT (2016)(76 Taxmann.com 31). We notice that the Tribunal has examined the scope of provisions of sec.144C(1) of the Act in the above said case. The facts prevailing in this case are that, in this case also, the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of draft assessment order, is thus clearly fulfilled. [14] As for the second condition, i.e. the Assessing Officer proposing to make "any variation in the income or loss returned by the assessee which is prejudicial to the interest of such assessee", since the Assessing Officer has merely accepted the returned income, as filed by the assessee, the second condition is not fulfilled. In the present case, while making the impugned assessment under section 143(3), the Assessing Officer has not made any variation in the income or the loss returned by the assessee. The Assessing Officer has simply accepted the income returned by the assessee, and the variations, if at all, are in the computation of tax payable in respect of income returned by the assessee. The variation, as the statutory provision unambiguously states, has to be vis-à-vis returned income or loss. That is certainly not the case before us. The assessee's contention is that the income returned by the assessee was an inadvertent mistake and the Assessing Officer ought to have corrected the mistake as all the relevant facts were on record and what the Assessing Officer can bring to tax is income of the assessee in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal filed by the revenue. For the sake of convenience, we extract below the operative portion of the order passed on this issue by the Pune bench of Tribunal in the above said case:- "11. We have heard the rival contentions and perused the record. The assessee is a foreign company. For the year under consideration, the assessee had furnished return of income declaring total income at Rs. 11,75,89,802/- on 25.03.2015. The said fact is mentioned in the statement of facts filed by the assessee before the CIT(A). On the other hand, the Assessing Officer starts assessment order with a remark that the assessee had furnished the return of income at nil, which is incorrect. The assessee being a Non-resident had offered the said income to tax under section 115A of the. 6 at 10% (plus surcharge and cess), which was applicable for the year under consideration. The assessee during the course of assessment ITA No.2098/PUN/2016 CO No.54/PUN/2018 Magna International Inc Association Vs. DCIT (supra) had quashed the assessment order passed by the Assessing Officer. 12. The relevant provisions of the Act are in section 144C(1) of the Act, which provide that the Assessing Officer in the first in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, 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." 10. The Ld A.R also placed his reliance on the decision rendered by Hon'ble Delhi High Court in the case of ESPN Star Sports Mauritius SNC ET Campagnie vs. Union of India (2016)(68 taxmann.com 377). In this case, the AO, following the procedure laid down in sec.144C of the Act, passed a draft assessment order in the hands of the assessee. Before Ld DRP, the assessee raised an objection that the provisions of sec.144C will not apply to it, since it was not an "eligible assessee" in terms of sec.144C of the Act. Ld DRP also accepted the said contentions of the assessee. However, the AO, disregarding the order of Ld DRP, passed the final assessment order on the basis draft assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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