9911796707
TMI Blog2024 (9) TMI 637X X X X Extracts X X X X X X X X Extracts X X X X ..... the stance of the assessee that the company was incorporated in the year 1996 and the relevant investments were made by the Assessee in the year 2012 (which is 16 years after incorporation of Company). Also pleaded that the Assessee is an actual operating entity and is conducting business on a regular basis. The audited financials for the year 2017 reveals, it has generated revenue from sale of goods amounting to USD 2,472,828 (in 000). Further, The Assessee has employed 164 number of employees during the relevant year. The name of the employees was enclosed as Annexure 4. Assessee also pleaded that Singapore s Economic Development Board has also recognized the Company the Asia Pacific headquarters and the regional trading hub in 2016 for a period of 10 years. These aspect needed indulgence of the DRP, however, without making any enquiry the DRP has sustained the conclusion of AO. It was also pointed out that the Company has been consistently filing its return of income in India and has been availing the treaty benefits with respect to such income for all such years. The AO has not denied the treaty benefits in any of such years. We are of considered view that without assigning an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny to support the fact that it is entitled to the beneficial provisions of the India- Singapore DTAA. Further that the AO has erred in not appreciating the facts as disclosed by the Company through a declaration duly signed by the director of the Company furnished during the course of its assessment proceedings and the company duly satisfies Article 24 (Limitation of Relief clause) of India-Singapore DTAA. 2.2 The DRP, has taken into consideration the objections and law cited and held as follows; DRP Directions- Objection no. 2 to 9 pertains to allowability of benefits to the assessee under the India- Singapore DTAA. The assessee has shown income from interest to be charged at beneficial rates as well as capital gains exempt under the benefits of India-Singapore DTAA. Assessee has submitted TRC and a self-serving declaration by the director of the company and has also claimed that benefits of the treaty had been allowed in the previous years. During the assessment as well as DRP proceedings assessee submitted above referred documents and return of income in India. AO asked various documents to ascertain the facts and allowability of benefits under the treaty. However, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has not discharged the onus cast upon him and is claiming the benefit just on the basis of the documents referred above. He has further relied upon the CBDT circular no. 789 of 13.04.2000 and Apex Court order in the case of Union of India v/s Azadi Bachao Andolan (263 ITR 706). The claim of the assessee that TRC is the final authority for determining the allowability of benefits under the DTAA is not correct. Apex Court in the case of Vodafone International Holding v/s Union of India ([2012] 17 taxmann.com 202 (SC) has considered this aspect along with CBDT circular no. 789 of 13.04.2000 and Apex Court order in the case of Union of India v/s Azadi Bachao Andolan (263 ITR 706). The court has and observed that colorable devices used for tax evasion as dealt in the case of McDowell Co. Ltd. v. CTO [1985] 22 Taxman 11 (SC) are outside the scope of above circular/case. Thus, TRC cannot be held as the final requirement for availing the benefits under DTAA and the revenue can go beyond to investigate any device used for tax evasion. In accordance with this legal matrix AO had asked for details/documents from the assessee which were not furnished either during the assessment proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... activity. As for this proposition we rely a co-ordinate bench decision in case of Tiger Global Eight Holdings, Mauritius vs Dcit Intl. Taxation Circle 3(1)(1), New decided on 26 July, 2024 vide ITA No.2345/Del/2023 and in which one of us, the judicial member, was also in quorum has held as follows; 10. After considering the rival contentions, it comes up that the appellant is admittedly a resident of Mauritius and there is a TRC issued in favour of the assessee by the treaty partner. As with regard to the consequences of holding a TRC, we are of the considered view that circular number 682/1994 and circular no. 789/2000 of Board, along with the judgment of Hon'ble Supreme Court of India in the case of Azadi Bachao Andolan (supra) and others and Vodafon (supra), sufficient lay down that the TRC is a statutory evidence of the residential status and even if it is not considered conclusive evidence, the onus shifts on the Assessing Officer to establish by evidences that except for holding the TRC, the entity is a conduit, created and run for treaty shopping. 4.1 The order of DRP before us, mentions that the assessee had failed to establish before the AO that the entity was not form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia. . In this context assessee submitted that the Assessee has incurred total expenditure of USD 660,281 and USD 2,266,177 in the financial years 2016 and 2017 respectively which shows it has significant business operations/activities in Singapore. 6.3 We find that AO has not found any fault in this proposition. Once this is admitted, it cannot be alleged that the Company is not a resident in Singapore and that it has no taxable existence in any other country. We find substance in the plea that without finding where the residence of the Assessee, it cannot be denied the treaty benefits. Further we appreciate the stance of the assessee that the company was incorporated in the year 1996 and the relevant investments were made by the Assessee in the year 2012 (which is 16 years after incorporation of Company). 6.4 It was also pleaded that the Assessee is an actual operating entity and is conducting business on a regular basis. The audited financials for the year 2017 reveals, it has generated revenue from sale of goods amounting to USD 2,472,828 (in 000). Further, The Assessee has employed 164 number of employees during the relevant year. The name of the employees was enclosed as Anne ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
