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TMI Blog2023 (6) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... ctory in the opinion of ld. AO. So far as explanation about the source of alleged investment, in the case under consideration is concerned, we find that the assessee has successfully explained the source of investment which is undoubtedly from the income earned outside India, part of which was paid by the assessee in the capacity of a non-resident Indian and the remaining part being paid by assessee s father who is also a non-resident Indian from his sources of income/asset located outside India. There is no iota of evidence bring forth by the Revenue authorities which could indicate that any element of the alleged investment in foreign asset is from so-called black money earned in India. Complete details of the bank account along with date of payment of the premium of the insurance policy supports this fact that the assessee has successfully explained the source of investment in the alleged foreign asset in the form of investment in insurance policy. For the other limb of Section 2(11) of Black Money Act, 2015 is concerned about the disclosure of the said asset, we find that the premium payment to the two life insurance policies was discontinued from 2010 onwards. These p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raising the following grounds: 1. For that on the facts of the case, the order passed by the Ld. C.I.T.(A) on 12.05.2022 is completely arbitrary, unjustified and illegal. 2. For that on the facts of the case, the impugned order is at best capable of being classified as a case of mere change of opinion, hence, the assessment is bad in law should be quashed. 3. For that on the facts and circumstances of the case, the Ld. C.I.T.(A) was wrong in dittoing the order of the A.O. and confirming the amount of Rs.1,08,01,726/- is being computed as undisclosed foreign asset as per the Provisions of the Black Money (Undisclosed Foreign Income and Assets] and Imposition of Tax Act, 2015 and the same is being assessed u/s. 10(3) of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act,2015 which is completely arbitrary, unjustified and illegal. 4. For that on the facts of the case, the Ld. CIT(A) ought to have considered that the assessee had discharged its onus by furnishing all the relevant documents in connection with the insurance premium paid and also proved the identity as NR1 during his stay in Dubai for the year 2000 2001, creditworthine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned outside India as a non-resident Indian. After payment of policies for certain periods, it was discontinued and thereafter, during the period 2018-19 the assessee lodged claim to get the surrender value of its policies. Against the total investment made by the assessee as well as his father, after certain deduction a reduced amount received in assessee's bank account in India through his father which is duly offered in the income tax return filed by the assessee and due taxes paid thereon. Based on this information about the income from foreign sources, ld. AO carried out proceedings u/s 10 of the Black Money Act, 2015. Ld. AO noted that the assessee has failed to declare the alleged foreign assets i.e. investment in life insurance policies in his income tax return. Summons u/s 131 of the Act issued to the assessee on 13.11.2018 to furnish necessary information. Various submissions were filed by the assessee stating the facts of the case, details of investments made in the insurance policies, reasons for discontinuation of the policy, communications from the insurance companies for lodging the claim to take the surrender value of the policy, details of payment made by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated that insurance maturity value is exempted income u/s. 10(10D) of the Income Tax Act. 1961 whether insured in India or abroad and cited various case laws in this regard. The matter of examination in this case is not the tax liability of surrendered value of the insurance policies. In the instant case, the matter has been examined under the provisions of Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act. 2015. The core issue is that the assessee had made foreign investment through insurance policies which he failed to disclose the same in his ITRs. The assessee was the insured person and the owner of the policies and accordingly, during the period when he was resident in India, he should disclose the same in the respective schedule of his ITRs. Moreover, the case laws referred by the assessee is relating to Income Tax Act, 1961 and not related to the core issue of the case, hence, the same is respectfully distinguished from the facts of the case of the assessee. 13. The contention of the assessee that he had not made investment in foreign policies after returning to India have been carefully considered and not found acceptable on the basis of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ney (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 read with Section 46 of the said Act is being initiated separately in respect of undisclosed foreign income and asset 15. In view of the above discussion and after considering all the facts, replies submitted by the assessee and after deliberation on the various issues, the total undisclosed foreign income asset of the assessee is computed as below: Amount (Rs.) Undisclosed foreign income asset [as discussed above] 1,08,01,726 Tax payable @ 30% as per Section 3 of the said Act 32,40,518 Add: Interest u/s 40 of the Black Money Act Rs.5,52,508/- 5,52,508 Interest u/s.234A of the Income Tax Act: Rs.32,405/- Interest u/s.234B of the Income Tax Act: Rs.3,56,457/- Interest u/s.234C of the Income Tax Act: Rs.1,63,646/- Total Tax payable in the light of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bed for Perspecta Single Life Policy that gives insurance cover of US dollar 10,00,000, at annual premium of dollar 8,781.18. This policy had an option for surrender after paying some amount as surrender charges. However, 8th year onwards there were no surrender charges. Applicant had to choose its own investment funds from a basket of Investment funds suggested by Insurer for the amounts deposited in the name of insurance premium. There is a clause regarding monthly deduction by Fund Manager from the amount deposited by the policy holder. It says that each month the Fund Manager will calculate the total monthly deduction to pay for administrative expenses incurred by the Fund Manager and the cost of the insurance of the policy holder. Perusal of the papers relating to the M/s. Scottish Provident International Life Assurance Ltd. shows that assessee had opted for Momentum Single Life Policy for the period of 20 years. For this policy, appellant had to pay US dollar 989.60 every year as regular contribution amount and US dollar 1039.08 as Regular Contribution Investment Element. For these policies life insurance covered was for US dollar 1,00,000. It appears that Shri Srinjoy B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by the policy provider. Apart from assuring handsome return on assessee s investment, these policy providers also covered for his Life Insurance. These policies speak about the surrender charges when the subscriber does not want to continue paying the premium. In that case, in the initial years, he has to pay steep penal charges but 8th year onwards there are no penal charges and he may opt out of paying the annual premium but he is still entitled to get back his investment made till that time. This is what has happened in assessee s case. For initial two years assessee has paid the premium and after that he has come back to India. Thereafter, assessee s father has continued paying the premium for the next 8 years. Assessee was well aware of the investments made with the foreign investment funds. W.e.f. 05-12-2017, assessee transferred these policies in the name of his father but assessee can not escape the fact that he was the beneficial owner of these foreign assets. Surrender request in respect of these policies was sent in October, 2018. Under the circumstances, assessee should have declared these assets while filing his Return of income from A.Y. 2012-13 onwards or under o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required to mention about it in the return of income filed since assessment year 2012-13. Assessee also had another opportunity to declare this foreign asset when one time compliance window was provided under chapter-VI of BMA, 2015. As assessee has not declared these foreign assets either in his return of income or as per the opportunity provided by chapter-VI of BMA, 2015. He is liable to be taxed for the value of undeclared foreign Investments, as per the Black Money Act, 2015. In view of the above discussion, the assessment of Undisclosed Foreign Income and Assets by A.O. at Rs.1,08,01,726/- under the Black Money (UFIA) and Imposition of Tax Act, 2015, is confirmed. 6. Aggrieved, the assessee is now in appeal before this Tribunal. Ld. Counsel for the assessee has filed a paper book containing 454 pages containing following details: 1. Details of days spent in Abroad for the assessment years 2001-02 2002-03. 2. Passport ( No. A8745789) of Srinjoy Bose. 3. Salary Certificate from SS GLOBAL FZE, Dubai, UAE 4. Standard Life Assurance Policy certificate [B0007108] Scottish Provident International [M021001210] 5. Details of SS Global Fze from wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... closed foreign asset, from a source of income within the country. 5. In the present case in hand, it is an, admitted and accepted by authorities below, fact that entire premium amount was paid from legal source outside India. Not a single Indian rupee, legally or illegally, was utilized for premium payment. There is no immediate or even a proximate nexus of such paid premium with any Indian money or any Indian source of money. Thus, the BMA is not applicable in this case. 6. Circular No. 12 of 2015, dated 02.07.2015 [ Explanatory notes on provisions relating to tax compliance for undisclosed foreign income and assets as provided in chapter VI of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015] INTRODUCTION THE BLACK MONEY (UNDISCLOSED FOREIGN INCOME AND ASSETS) AND IMPOSITION OF TAX ACT, 2015 (referred to here as 'the Act ) as passed by the Parliament received the assent of the President on the 26th May 2015. The Act contains provisions to deal with the menace of black money stashed away abroad. It, inter alia, levies tax on undisclosed assets held abroad by a person who is a resident in India at the rate 30 per c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch non-resident individual from his proprietorship concern named M/s S.S. Global Fze are assets within the scope of BMA when they themselves have accepted the fact that such foreign entities were non-resident on the date of premium payments. (c) Thus, considering the payees of the premium itself, the premium amount is not chargeable to BMA as the amounts were paid by non-resident entities and those payees are not falling the amended provision of section 2(2) of the BMA. 10. An amount of USD 157713.37 [equivalent to INR 1,08,01,725/-] being the amount of premium paid by 2 offshore entities has been assessed u/s 10(3) of the BMA and confirmed by the Ld. CIT(A) on the solo ground that the asset was not disclosed in Schedule FA of the ITR. 10(a) It is reiterated once again that the money USD 157713.37 paid by non-residents was never an Indian money and therefore, remained, all along, outside the scope of BMA. It was assessee s understanding, honest and bonafide belief that as the money is not falling under the ambit of BMA, there is no scope to declare the same in Schedule- FA of the ITR. 10(b) However, any financial interest in any foreign entity is foreign asset ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company and finally concluded in para 4.3.e/page-6 that these investments are definitely in the nature of assets and in the name of the appellant. 10(a). Ld. CIT(A) has absolutely misguided himself in deciding the issue. Appellant was not the owner of the insurance policy but he is the beneficiary of the policy. In other words, he had the beneficial interest on the policy to the extent of premium paid by himself as non-resident. Further, payment by a foreign company (M/s S.S.Global FZE) to its director Shri Swapan Sadhan Bose being father of the Appellant (a non-resident) for the purpose whatsoever, is governed by the law of said foreign country and such consideration is extremely extraneous to the fact of the present case. Above all, appellant provided services to the said foreign company and received due service charges which he regularly and properly reflected in his ITR in each year and the Department never detected that he received something extra. Ld. CIT(A)'s statement in this regard is purely an assumption or presumption when he himself has used the word Possibility . 10(b) [2021] 128 taxmann.com 152 (Delhi - Trib.) IN THE ITAT DELHI BENCH 'C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o exercise, or the actual exercising of significant influence or control as defined in clause (27) of section 2, over the company (significant beneficial owner), shall make a declaration to the company, specifying the nature of his interest and other particulars, in such manner and within such period of acquisition of the beneficial interest or rights and any change thereof, as may be prescribed. [Para 28] Testing the present case on the parameters laid down by the Companies Act it is apparent that there is no any arrangement, contract etc. between M/s S.S.Global FZE or its director Shri Swapan Sadhan Bose being father of appellant with the assessee regarding payment of premium. There is no demonstration by the revenue that assessee exercises any control as a shareholder of M/s S.S.Global FZE over that company. There is no evidence that assessee has received any interest therefrom over and above the income earned from the company for providing services. It is not also demonstrated that assessee exercises any control to appoint directors or control the management or policy decision of that company. Thus, the test of beneficial ownership as per the criteria laid down under the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above in the preceding paras. Ld. D/R also submitted that the assessee ought to have furnished the information in the income tax return or should have at least opted to disclose the said investment in foreign assets in the one time window provided under Chapter VI of Black Money Act, 2015. 10. We have heard rival contentions and perused the records placed before us. In ground no. 1 to 5 the sole grievance of the assessee is that ld. CIT(A) erred in confirming the action of ld. AO of making the addition towards undisclosed foreign assets at Rs. 1,08,01,726/- under the provisions of Black Money (UFIA) And Imposition of Tax Act, 2015 for the alleged investment in life insurance policies in the name of the assessee. Before moving further, we would like to recapitulate the facts of the case which are that the assessee was a non-resident Indian during the FY 2000-01 2001-02. During his stay outside India at UAE he took two insurance policies, one from Standard Life Assurance Company; Policy No. B00007108 commenced on 04.12.2000 and the second from Scottish Provident International Life Assurance Ltd.; Policy No. M021001210 commenced on 14.12.2000. Assessee s father Mr. Swapan Sadhan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oreign income and assets as per Section 2(11) 2(12) of the Black Money Act, 2015. For better perusal, we reproduce the same as under: Section 2(11) of BMA, 2015: Undisclosed asset located outside India means an asset (including financial interest in any entity) located outside India, held by the assessee in his name or in respect of which he is a beneficial owner, and he has no explanation about the source of investment in such asset or the explanation given by him is in the opinion of the Assessing Officer unsatisfactory; Section 2(12) of BMA, 2015: undisclosed foreign income and asset means the total amount of undisclosed income of an assessee from a source located outside India and the value of an undisclosed asset located outside India, referred to in section 4, and computed in the manner laid down in section 5. 12. Further, we find it relevant to go through one of the questions in questionnaires issued by CBDT vide Circular No. 13 of 2015 dated 06.07.2015: Question No. 17: A person has some undisclosed foreign assets. If he declares those assets in the Income -tax Return for assessment year 2015-16 or say 2014- 15 (in belated return) then should he ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come earned outside India, part of which was paid by the assessee in the capacity of a non-resident Indian and the remaining part being paid by assessee s father who is also a non-resident Indian from his sources of income/asset located outside India. There is no iota of evidence bring forth by the Revenue authorities which could indicate that any element of the alleged investment in foreign asset is from so-called black money earned in India. Complete details of the bank account along with date of payment of the premium of the insurance policy supports this fact that the assessee has successfully explained the source of investment in the alleged foreign asset in the form of investment in insurance policy. 15. Now as far as the other limb of Section 2(11) of Black Money Act, 2015 is concerned about the disclosure of the said asset, we find that the premium payment to the two life insurance policies was discontinued from 2010 onwards. These policies commenced in the year 2000 and they were for a period of 21 years. In the middle of the term of the policy, the premium payment was discontinued. As stated by ld. Counsel for the assessee, the assessee was of bona fide belief that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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