Mumbai: Mere mention of an individual’s name in the account opening form foreign bank This does not mean that such a person is the beneficial owner of the bank account, as per a recent order passed by the Delhi Bench. Income Tax Appellate Tribunal (on it)
An IT official had admitted that Jatinder Mehra, who had ‘opened’ this bank account, had not disclosed this foreign asset in his tax return and had not disclosed its stringent provisions. black money act will apply. Thus, he demanded imposition of tax on Rs 5.7 crore (being money in this account) in the hands of Mehra.
However, ITAT found that Mehra had filed an affidavit disclosing full details of the ownership of the bank account. On the basis of the solitary fact of his name mentioned in the bank account-opening form and the lack of any other evidence relating to the ownership or beneficial ownership of such account, the amount in the hands of Mehra could not have been taxed in India , ITAT ruled.
There were many complex facts involved in this case. Mehra’s name was on the account opening form of a Singapore bank along with his passport details.
However, the account belonged to a foreign company – Watergate Advisors, which was incorporated into the tax haven of the British Virgin Islands. Mehra’s son, A Non Resident Indian Since 1998, was the director and sole shareholder of this company. Under the tax laws, foreign income held by a non-resident cannot be taxed in India.
It all started when a search was conducted in the case of Rakesh Agarwal Group, Baroda and details of six trust companies came to light, including one related to the case heard by ITAT. In April 2005, a Cayman Islands-based Revocable Trust was set up by Mehra, and the beneficiaries of this trust were his two sons and a grandson.
In December 2011 the trust deed was canceled and the trust fund (Rs 5.7 crore, if converted into Indian rupees) was transferred to a Singapore bank account. This is the amount that the IT officer had sought to be taxed in Mehra’s hands by invoking the provisions of the Black Money Act.
At the first level of appeal, Commissioner Appeals was ruled in favor of taxpayer. But the IT department filed an appeal in the Tax Tribunal. ITAT found that, in response to the questions raised by the IT officer, Mehra had submitted that he did not even have a copy of the trust deed. His son, in order to show respect and respect to his father, wanted him to be a nominal settlor of the trust, without him having to invest, contribute or dispose of any amount in the trust.
Based on the full facts, as the IT Department could not provide evidence that Mehra was the owner or beneficial owner of the amount lying in the Singapore bank account, the ITAT ruled in favor of the taxpayer.
An IT official had admitted that Jatinder Mehra, who had ‘opened’ this bank account, had not disclosed this foreign asset in his tax return and had not disclosed its stringent provisions. black money act will apply. Thus, he demanded imposition of tax on Rs 5.7 crore (being money in this account) in the hands of Mehra.
However, ITAT found that Mehra had filed an affidavit disclosing full details of the ownership of the bank account. On the basis of the solitary fact of his name mentioned in the bank account-opening form and the lack of any other evidence relating to the ownership or beneficial ownership of such account, the amount in the hands of Mehra could not have been taxed in India , ITAT ruled.
There were many complex facts involved in this case. Mehra’s name was on the account opening form of a Singapore bank along with his passport details.
However, the account belonged to a foreign company – Watergate Advisors, which was incorporated into the tax haven of the British Virgin Islands. Mehra’s son, A Non Resident Indian Since 1998, was the director and sole shareholder of this company. Under the tax laws, foreign income held by a non-resident cannot be taxed in India.
It all started when a search was conducted in the case of Rakesh Agarwal Group, Baroda and details of six trust companies came to light, including one related to the case heard by ITAT. In April 2005, a Cayman Islands-based Revocable Trust was set up by Mehra, and the beneficiaries of this trust were his two sons and a grandson.
In December 2011 the trust deed was canceled and the trust fund (Rs 5.7 crore, if converted into Indian rupees) was transferred to a Singapore bank account. This is the amount that the IT officer had sought to be taxed in Mehra’s hands by invoking the provisions of the Black Money Act.
At the first level of appeal, Commissioner Appeals was ruled in favor of taxpayer. But the IT department filed an appeal in the Tax Tribunal. ITAT found that, in response to the questions raised by the IT officer, Mehra had submitted that he did not even have a copy of the trust deed. His son, in order to show respect and respect to his father, wanted him to be a nominal settlor of the trust, without him having to invest, contribute or dispose of any amount in the trust.
Based on the full facts, as the IT Department could not provide evidence that Mehra was the owner or beneficial owner of the amount lying in the Singapore bank account, the ITAT ruled in favor of the taxpayer.
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