In a recent ruling the Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) ruled that tax treaty benefits cannot be denied solely based on the mobile number provided in the Income Tax Return ( ITR ) showing fraud in True caller.
The Abu Dhabi Investment Authority ( ADIA ) holds a valid registration as a Category 1 Foreign Portfolio Investor (FPI) obtained in accordance with the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations 2019. ADIA is a tax resident of the United Arab Emirates ( UAE ) and holds a valid Tax Residency Certificate for calendar year 2018 and 2019. For the assessment year under consideration, the Appellant had electronically uploaded its return of income on 30 October 2019, declaring total income of Rs. 3,654,012,280 and claiming a tax refund of Rs. 1, 18, 99,120.
The Assessing Officer had added to the total income and raised tax demand of Rs 1, 46, 14, 53,649/- (including interest). In response to the aforesaid intimation, the Appellant had filed a request with CPC on the income tax portal to reprocess the return of income on 29 April 2021. On reprocessing the return, CPC issued a rectification order dated 24 May 2021 under section 154 of the Act. In the said rectification order the AO has erroneously shown a total income of Rs 9,41,82,13,620/- and raised tax demand of Rs 1,89,51,00,510
The Commissioner of Income Tax (Appeals) held that the assessee could not make out a case that it is the same company which is mentioned in Article 24(2) (b). His reason and the basis for denying the benefit was that in the return of income, the mobile no. was given ‘9999999999 ‘and from the true caller it was mentioned that it is a fraud having several spam reports.
Mr. Dhanesh Bafna representing the assessee has not explained the profile as well as business activities of the appellant company the contact No. 9999999999 has been mentioned in ITR as well as Form No. 35. The contact No. prima facie appeared to be wrong. From a search carried out in ‘True caller’ it was noticed that mobile no. 9999999999 is in the name of Raj Esh Rk J’ and it was reflected as “Likely fraud” having 6884 spam reports.
Further it was not explained that how the income earned by the appellant company in India is the income earned by the Government of UAE or the institutions mentioned therein it seriously raised doubt about the appellant company being the company name of which appeared in Article 24(2)(b)(ii) of India- UAE DTAA. He submitted that since return of income is not uploaded if the mobile number is not mentioned and since assessee does not have any mobile number in India, therefore, like all the assessee in such circumstances have been mentioned 9999999999.
The bench found that CIT (A) has denied the benefit of Article 24 disbelieving the assessee is not Abu Dhabi Investment Authority as mentioned in Article 24(2) (b)(ii) on a very flimsy ground. The reason given by him is that mobile number was mentioned “9999999999” which he tried to find it from True Caller that it is a fraud number and therefore the Abu Dhabi Investment Authority is a fraud company rather it was not company belonging to Abu Dhabi Government
The two member bench of the tribunal comprising Amarjit Singh (Accountant member) and Amit Shukla (Judicial member) hold that the Abu Dhabi Investment Authority was liable to benefit provided under Article 24 which provides that Government of one contracting state shall be exempt from tax in other contracting states in respect of any income derived by such income from that other contracting states.
Since Abu Dhabi Investment Authority has been specifically mentioned in Article 24(2)(b)(ii), therefore, none of its income is taxable in India. Accordingly, charging of interest of Rs. 365.40 crores was held to be non-taxable in India. In the result, the appeal of the assessee was allowed.
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