Case Law Details
CIT Vs Cairnhill Cipef Ltd (Delhi High Court)
Introduction: The Delhi High Court has ruled on the case of CIT vs. Cairnhill Cipef Ltd., declaring proceedings on a representative assessee invalid after the principal taxpayer ceases to exist. The court allowed a delay condonation application, leading to an appeal concerning the Assessment Year 2016-17. The appellant/revenue contested the order of the Income Tax Appellate Tribunal (ITAT) dated 19.12.2022.
Detailed Analysis: The case revolves around a share purchase agreement involving Cairnhill CIPEF Ltd., Cairnhill CGPE Ltd., and Monet Ltd. The assessment order of Monet Ltd. was accepted, reflecting Long Term Capital Gain (LTCG) claimed under the India-Mauritius Double Taxation Avoidance Agreement. Monet Ltd. ceased to exist on 19.12.2018.
The Commissioner of Income Tax (CIT) passed an order under Section 163, treating Cairnhill CIPEF Ltd. as an agent of Monet Ltd. The Tribunal, however, deemed the order invalid due to the non-existence of Monet Ltd. during the revision. The Tribunal also highlighted jurisdictional issues, as the CIT’s order under Section 163 was appealable but not to the Commissioner (Appeals).
The appellant/revenue argued that the CIT’s concurrent powers allowed him to use Section 163 and that Cairnhill CIPEF Ltd. should be liable only to the extent of the benefits received. However, the court rejected these arguments, emphasizing the inapplicability of Section 163 when the principal taxpayer is non-existent.
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