S. 147 : Reassessment-After the expiry of four years-Verification tax residency certificate issued by other jurisdiction-For determining residential status, treaty eligibility and legal ownership-bad in law-Reassessment Notice quashed-DTAA-India- Singapore. [S. 143(1), 148, Art. 13(4), Art. 226]
The reassessment notice was issued to verify the genuineness of the Transaction. The assesse filed the objections to the recorded reasons on the ground that, inaccurate reasons for formation of belief, reassessment cannot be done in the absence of tangible material, income chargeability to tax escapement of assessment, and eligibility to claim tax treaty benefits between India and Singapore. The Objection was dimmed by the Assessing Officer. On writ allowing the petition, the Court held that the revenue cannot go behind the tax residency certificate issued by the other tax jurisdiction and issue a re-assessment notice to determine issues of residence status, treaty eligibility and legal ownership. The act of the revenue is wholly contrary to the Government of India’s repeated assurances to foreign investors by way of CBDT Circulars, press releases, legislative amendments and judicial pronouncements.

It was also held that the reassessment proceedings cannot be initiated for verifying the genuineness of a transaction, on the basis of borrowed satisfaction, and without a live link between the material and formation to believe. Further, it was also held that the concept of beneficial ownership under DTAA is only qua dividend, interest and royalty, and not capital gains. (WP (C) 2562 of 2022 dated January 30, 2023)(AY. 2016-17).
Blackstone Capital Partners (Singapore) VI FDI Three Pte. Ltd. v. ACIT (Delhi)(HC) www.itatonline.org