Case Law Details
CIT Vs S.A. Chitra Ventures Ltd. (Delhi High Court)
Introduction: The recent judgment by the Delhi High Court in the case of CIT Vs S.A. Chitra Ventures Ltd. sheds light on the jurisdiction of Assessing Officers (AOs) in passing draft assessment orders. The court’s ruling clarifies the limitations on AO’s authority in the absence of any variation in income or loss.
Detailed Analysis: The case revolves around two appeals filed by the Commissioner of Income Tax – International Taxation questioning the judgment of the Income Tax Appellate Tribunal (ITAT). The key contention pertains to the jurisdiction of the AO to pass a draft assessment order without any variation in the income or loss returned by the assessee.
In the case, the AO framed a draft assessment order proposing a tax rate of 20% on the income declared by the assessee, rejecting their claim for benefits under the India Cyprus Double Taxation Avoidance Agreement (DTAA). However, the total income as declared by the assessee remained unvaried.
The Delhi High Court examined the provisions of Section 144C of the Income Tax Act, particularly the phrase “any variation in the income or loss returned.” It concluded that the AO’s authority to frame a draft assessment order is contingent upon a variation in the income or loss returned, which was not the case here.
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