Wp/55093/2015 Of Eplanet Ventures Mauritius Ltd v. The Director Of Income Tax (International Taxation

1 IN THE HIGH COURT OF KARNATAKA AT BENGALURUDATED THIS THE 31 DAY QF AUGUST 2Q16 PRESENT| THE HON’BLE MR.JUSTICE JAYANT PATEL§ AND| THE HON’BLE MR.JUSTICE S.N.SATYANARAYANA|$WRIT PETITION No.55093/2015(TIT) BETWEEN EPLANET VENTURES MAURITIUS LID.,C/O INTERNATIONAL FINANCIAL SERVICES LTD.,IFS COURT, TWENTY EIGHT,CYBER CITY, EBENE,MAURITIUS, |REPRESENTED HEREIN BY ITS DIRECTOR, |Ms.RESMAH BIBI MANDARY ... PETITIONER| (BY SRI T.SURYANARAYANA, ADVOCATE) AND THE DIRECTOR OF INCOME TAX(INTERNATIONAL TAXATION)R.P. BHAVAN , 6 FLOOR,14/3A, NRUPATHUNGA ROAD,BANGALORE -—- 560 OOL ... RESPONDENT| (BY SRI K.V.ARAVIND, ADVOCATEAND SENIOR STANDING COUNSEL) ? THIS WRIT PETITION IS. FILED UNDER ARTICLES226 AND 22/7 OF THE CONSTITUTION OF INDIA PRAYINGTO|SETASIDE|THE|ORDER.DATED05.08.7015(ANNEXURE-H)PASSED|BYTHE|AARIN|AARNo.1124/2011 AND DIRECT THE AAR TO HEAR THE,APPLICATION ON MERITS. THIS WRIT PETITION COMING ON FOR PRELIMINARYHEARING THIS. DAY,JAYANT PATEL J., PASSED THE!FOLLOWING: ORDER Tne petitioner by this petition is seeking appropriatewrit to quasn and set aside the order passed by the.Authority for Advance Rulings (Income Tax) at Annexure‘H’ dated 05.08.2015, whereby application made by the.petitioner is disposed of as having become infructuous. | 2).We have neard Mr.T. Suryanarayana, learnedcounsel appearing for the petitioner and Mr. K.V. Aravind,jiearnedseniorstanding.counselappearingfortnerespondent. 3 ‘3.Tne contention raised onsbehalf of the’petitioner was tnat once an application was made for the)advance ruling under Section 245Q of the Income Tax Act,1961 (nereinafter referred to as the Act’) and the samehaving been admitted, it was obligatory on the part of theAdvance Ruling Authority to render the decision on merits|and merely because the assessment proceedings in respect|of the petitioner were conciuded pursuant to the income.tax return filed, it cannot be said that the application made|by the petitioner had become. infructuous. Learned|counsel appearing for the petitioner submitted that under|these circumstances, this Court may interfere and directtne authority to render the decision on merits. 4Whereas, learned senior standing counselappearing for the respondent contended that it is true thatthe application was filed under Section 245Q of the Act bythe petitioner and it is also true that the application was)admitted, but thereafter, notice under Section 143(2) of 4 the Act for assessment was issued. In response to theSaid notice, tne petitioner — assessee appeared before the)Assessing Officer, raised objections and thereafter, theOrder of assessment Nas also been passed by the.Assessing Officer on 27.03.2015. He submitted that nopurpose would be served in deciding tne application|preferred for advance ruling by the petitioner. He alsosubmitted that once the assessment order is passed, and ifeither tne petitioner or Revenue is aggrieved, the.appropriate proceedings before the higher Forum are to beresorted to. He submitted that at the relevant point of)time when the proceedings were before the Assessing.Officer, the petitioner did not object to the assessment.proceedings and on the contrary, it submitted reply,|participated in tne assessment proceedings and allowed|the Assessing Officer to pass the assessment order.However, as the assessment proceedings are taken up in)revision under Section 263 of the Act, petitioner is raisingthe grievance by pursuing the application for advance. ruling. He submitted that in exercise of writ power, this.Court may not interfere witn the decision of the Advance|Ruling|Authoritytnat|tneapplicationnas|pecome|infructuous. ~ ruling. He submitted that in exercise of writ power, this.Court may not interfere witn the decision of the Advance|Ruling|Authoritytnat|tneapplicationnas|pecome|infructuous. ~ 5.It is nardly required to be observed that thepower of this Court under Article 226 of the Constitution is discretionary and while permitting any litigant to invoke)such power, the Court would also examine the conduct of|the petitioner. If this Court in a given case finds that theconduct of tne petitioner was sucn that ne should not be)allowed to invoke tne extraordinary discretionary power,|the Court may decline the entertainment of the petition|under Article 226 of the Constitution. | 6.If the facts of the present case are examinedfurther, it is an admitted position that the petitioner hadapplied to the competent Authority for Advance Rulings|under Section 2450 of the Act and the application waspending before the said authority. It is also an admitted| position that pending the aforesaid application before theAdvance Ruling Authority, the proceedings for assessment,under Section 143(2) of the Act were initiated. If thepetitioner had any grievance against the assessment,proceedings or finalization of the said proceedings, nothingprevented it from raising objection for conclusion of the)assessment proceedings by contending that the matter)was pending consideration before the Advance Ruling)Autnority with reference to the aspect of liability to pay)tax. However, the petitioner consciously participated in)the assessment proceedings and at no point of time, did it)raise any objection for continuation of the assessmentproceedings before the Assessing Officer. Not only that,|but thereafter, the Assessing Officer is allowed to pass theorder and resultantly, he has passed the order on.27.03.2015, copy whereof is produced at Annexure ‘G’. Itappears that thereafter, when the application came up for)consideration before the Advance Ruling Authority, sincethe assessment order was already passed, Advance Ruling> 7 Autnority observed that tne application nad become,infructuous and it would not be for the Advance Ruling|Autnority to sit in appeal over the assessment proceedings.Tnerefore, the Advance Ruling Authority has disposed of|the application by observing that the applicant may take.such recourse as is available in law and it may raise all)questions available to it in law. It appears that thereafter,the petitioner must have been served with notice dated|03.08.2015 in respect of initiation of proceedings under|Section 263 of the Act against the assessment order forINVOKING OT|tnerevisionalDOWETandundertne|circumstances, the petitioner nas approacned this Court by|the present petition. Tne Advance Ruling Authority in the) impugned order, Nas observedInter alidas under: “Had that been informed to assessing officer,the assessing officer would not have proceededwith the assessment proceedings, nowever,that was not informed. Now, in view of theassessment order passed, this application nasbecome infructuous as it will not be for this.Authority to sit on appeal over the assessmentproceedings and order.” | J.The aforesaid shows that the conduct of the|petitioner, if examined furtner, the petitioner voluntarily|participated in tne assessment proceedings and did not)opject at any point of time for continuation or conclusion of|the assessment proceedings. Once the petitioner nas)surrendered to tne jurisdiction of the Assessing Officer that|too without raising any objection for continuation orconciusion of the assessment proceedings and thereafter,|if the assessment order is passed by the Assessing Officer.and based on the same, if the competent Authority forAdvance Rulings has disposed of the application as having|become infructuous, we do not find that such a view taken by the Authority can be said as unreasonable or arbitrary. | 8.Further, aS observed by us, once a litigant hasaccepted the jurisdiction of a particular authority and hasnot resisted the proceedings before a particular quasi-judicial authority, he cannot be heard to say that he should 9 8.Further, aS observed by us, once a litigant hasaccepted the jurisdiction of a particular authority and hasnot resisted the proceedings before a particular quasi-judicial authority, he cannot be heard to say that he should 9 also|pesimultaneouslypermittedCOPUFSUEthe.proceedings, wnich has actually become infructuous. QO.Learned counsel for the petitioner attempted torely upon the object of constitution of tne Authority for)Advance Rulings and the mechanism provided therefrom.for contending tnat the purpose of advance rulings under|the Act is to make the tax payer aware about his/her)liability to pay tax and to avoid proliferation of litigation|and he submitted that the said object would be frustratedif the Advance Ruling Authority is allowed to dispose of the|matter as having become infructuous and therefore, thisCourt may consider the said aspect. 10.In our view, there cannot be any secondopinion on the aspect that the purpose of the Advance.Ruling Authority is to have certainty about the liability to pay tax and to avoid further litigation, but at the same.time, if by conduct of the petitioner, it was not desirous toinvoke such power, but was rather keen to have the. 10| assessment proceedings go on and also to Nave conclusion|of tne assessment proceedings and by conduct, the)petitioner nas not objected to the assessment proceedings, we do not find tnat the purpose of advance ruling.mechanism can be stretched to the extent of diluting thevoluntary conduct on the part of the petitioner as sougnt|to pe canvassed. Hence, the said contention cannot be|accepted. 11.Learned counsel for the petitioner also reliedupon the decision rendered by a coordinate Bencn of this)Court in the case of M/s. Onmobile Global Limited vs.The Chairman, the Authority for Advance Rulings|(Income Tax)in writ petition No.36749/2014 disposed ofon 06.03.2015 and contended that it is obligatory on the)part of the Advance Ruling Authority to decide theapplication on merits once it is admitted and it could not.nave been dismissed for default and hence, it can also be| said that the Advance Ruling Authority could not dispose of.the application as naving become infructuous. 17).We nave considered tne said decision. Tnis/Court had recorded at para No.8 that there were two.affidavits filed by the applicant-petitioner therein. In theinitial affidavit, the applicant had stated that notice for)nearing on 16.01.2014 was not received and in the second|affidavit, it was stated though the said notice may have)been delivered, but it was misplaced and was never)brought to the notice of the applicant. There were)contradictory statements of the applicant, but this Courtfound that there was consistent stand on the part of the)applicant that the notice was never witnin the knowledge|of the applicant. Therefore, in view of the said peculiar|circumstance, this Court observed that dismissal of the)application for non-appearance of the applicant on aparticular date, which was by a sufficient cause, was not.justified and therefore, the orders passed by the Advance Ruling Authority impugned in the said matter were setaside. Tne said decision cannot be read to lay down any.principle that in all matters, irrespective of the facts andcircumstances or irrespective of tne conduct of the)applicant or the subsequent circumstance of passing of theassessment order, the Advance Ruling Authority should)decide the application on merits. On the contrary, if suchis pleaded, the resultant situation would be to take away|the judicial discretion available to the Advance Ruling.Autnority. | 13.Further, in the present case, as reproducedhereinabove, the Advance Ruling Authority itself when)found that it cannot sit in appeal over the order of theAssessing Authority while deciding the matter, it has)disposed of the application as having become infructuous.Such a view cannot be said to be as unreasonable, which|may call for interference. | 13| 14.In view of the above, considering the peculiar 13.Further, in the present case, as reproducedhereinabove, the Advance Ruling Authority itself when)found that it cannot sit in appeal over the order of theAssessing Authority while deciding the matter, it has)disposed of the application as having become infructuous.Such a view cannot be said to be as unreasonable, which|may call for interference. | 13| 14.In view of the above, considering the peculiar conduct of the petitioner coupled witn the aspect that the)view taken by the Advance Ruling Authority cannot be said to be unreasonabie, no case is made out for interference.Hence, the petition being meritless is dismissed. Sd/-JUDGE Sd/-JUDGE