Case Law Details
Citicorp Trustee Company Ltd. Vs DCIT (ITAT Mumbai)
ITAT Mumbai held that the material/information on which AO have re-opened the assessment is no longer existing being legally incorrect. Hence, action of AO to have issued notice of re-opening of assessment u/s 148 of the Act itself fails.
Facts- The assessee is a company incorporated in the United Kingdom. The assessee company acted as a trustee for bond issuance in the capital markets M/s. Bharat Forge Ltd which had issued earlier US 39.9 millions Zero Coupon, Tranche B Convertible bonds; and redeemed the bonds and the total redemption payable was US $ 22.535 million. Though, M/s. Bharat Forge Ltd deducted tax on redemption premium of US$ 15.48 million no tax was deducted for redemption of US$ 7.06 million.
Accordingly, the AO of M/s. Bharat Forge Ltd. held it to be assessee in default u/s. 201(1) r.w.s 195 of the Act and taxed the interest on Foreign Currency Convertible Bonds (FCCB) as accrued in India as per the provisions of section 5(2)(b) of the Act and held that the interest to the tune of Rs.42,84,48,114/- was deemed to accrue or arise in India and the TDS liability was to the tune of Rs.4,46,54,333/-. Based on the aforesaid information, the AO of assessee taking note that the assessee having received funds amounting to Rs.42,84,48,114/- during the year, failed to file return of income despite having taxable income, opinioned that he has “reason to believe” income chargeable to tax amounting to Rs.42,84,48,114/- has escaped assessment.
AO rejected such a plea and proceeded to pass the assessment. This action of AO is being assailed before us by raising the legal issue.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Author Bio
