Case Title: M/s Regen Renewable Energy Generation Global Limited vs ACIT
In a recent judgment, the Chennai ITAT emphasized the importance of adhering to the provisions of Section 144C of the Income Tax Act, particularly concerning eligible assessees. The case involved M/s Regen Renewable Energy Generation Global Limited, a non-resident company based in Cyprus, disputing the tax rate applicable to royalty income under the India Cyprus DTAA.
The dispute arose when the Assessing Officer, noting that the company was not the beneficial owner of the royalty income, denied the treaty benefit and applied a higher tax rate of 25% instead of the claimed rate of 15%. The tribunal observed that as there was no variation in the returned income and the assessed income, the final assessment order was time-barred.
The Chennai ITAT highlighted that the controversy centered on the taxation rate of the income returned by the assessee, as opposed to a variation in the quantum of income. It underscored that the company, being a non-resident entity fiscally domiciled in Cyprus, qualified as an eligible assessee under Section 144C(15)(b)(ii). Furthermore, the tribunal elaborated on the recent amendment proposed in the Finance Bill, 2020, which mandates the issuance of draft assessment orders for eligible assessees, even in cases where there is no variation in the income or loss returned.
In light of the application of a higher tax rate being prejudicial to the assessee, the tribunal directed the Assessing Officer to verify whether the company could indeed be considered the beneficial owner of the royalty income and accordingly be subjected to tax at the rates specified in the DTAA. Consequently, the tribunal partly allowed the appellant’s appeal and referred the matter back to the AO for re-examination.
The legal counsels involved in the case were B. Ramakrishnan representing the appellant/assessee and Jyothi Lakshmi Nayak representing the respondent/revenue.
For a deeper understanding of the case, you can download the full text of the judgment here.