Case Law Details
Aberdeen Asia Pacific Including Japan Equity Fund Vs DCIT (Bombay High Court)
The issue under consideration is whether the notice u/s 148 issued by AO for re-opening of assessment is justified in law?
In the present case, AICFL was set up as a Trust under the laws of the State of Delaware, USA has been organised for the purpose of investing and dealing in all securities and instruments across the world. Because of popularity of the LLC regime e., Limited Liability Company across the investment funds industry, AICFL was re-organized / converted from a Trust into a Limited Liability Company (LLC). Prior to conversion, petitioner as a sub-trust had incurred and accumulated losses under the head ‘capital gains’. Such losses were fully and properly disclosed by the petitioner in the returns filed for each of the assessment years. After conversion, these losses were carried forward by the petitioner in return filed as LLC. Further, AICFL filed an application before AAR seeking an advance ruling whether the applicant was entitled to carry forward accumulated capital losses? The question was answered by the AAR in the negative and against the applicant. Hence, Applicant paid all the tax as per AAR directions.
Further, AO issued a notice under Section 148 mentioned in the reasons recorded that the application filed by the AICFL before the AAR was the principal source of tangible information coming to the possession of AO from which he had reasons to believe that income chargeable to tax had escaped assessment in the case of the assessee.
High Court states that if the Assessing Officer had no jurisdiction to initiate re- assessment proceeding, the mere fact that subsequent orders have been passed would not render the challenge to jurisdiction infructuous. If the very basis for re- opening assessment does not survive, orders on such re-opening would not survive too. Hence, considering the matter in its entirety HC are of the view that the impugned notice under Section 148 of the Act issued by AO cannot be sustained.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Author Bio
