WP2796&group_19.odt IN HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.2796 OF 2019 Aberdeen Asia Pacific Including Japan Equity Fund ... Petitioner Vs. Deputy Commissioner of Income Tax (International Taxation)-1(1)(1), Mumbai and another Respondents WITH WRIT PETITION NO.2803 OF 2019 Aberdeen Emerging Markets Equity Fund ... Petitioner Vs. Deputy Commissioner of Income Tax (International Taxation)-1(1)(1), Mumbai and another Respondents WITH WRIT PETITION NO.3525 OF 2019 Aberdeen Asia Pacific Excluding Japan Equity Fund ... Petitioner Vs. Deputy Commissioner of Income Tax (International Taxation)-1(1)(1), Mumbai and another ... Respondents Mr. Porus Kaka, Senior Advocate a/w. Mr. Manish Kanth, Mr. Anandu Unnikrishnan and Ms. Shipra Padhi i/b. Nishith Desai Associates for Petitioner in all Petitions. Mr. Charanjit Chanderpal a/w Mr. S. B. Shenoy, Ms. Vaibhavi Gala and Ms. Shaista Hadi for Respondents. CORAM : UJJAL BHUYAN & MILIND N. JADHAV, JJ. Reserved on : MARCH 06, 2020 Pronounced on : JUNE 12, 2020 P.C.: 1. Heard Mr. Porus Kaka, learned senior counsel along with Mr. Manish Kanth, Mr. Anandu Unnikrishnan and Ms. Shipra Padhi instructed by Nishith Desai Asssociates for petitioners; and Mr. Charanjit Chanderpal, learned 1/19 ::: Uploaded on - 12/06/2020 ::: Downloaded on - 13/06/2020 11:13:57 ::: WP2796&group_19.odt standing counsel, Revenue along with Mr. S. B. Shenoy, Ms. Vaibhavi Gala and Ms. Shaista Hadi, leanred counsel for respondents. 2. Facts and reliefs sought for in all three writ petitions being identical, those were heard together and are being disposed of by this common order. In fact, status of petitioners in all three writ petitions are identical. 3. Since learned counsel for petitioners had argued Writ Petition No.2796 of 2019 as lead case, facts of that case are adverted to hereunder for adjudication of lis covering all writ petitions. 4. Petitioner is Aberdeen Asia Pacific Including Japan Equity Fund. Petitioner is sub-fund or series of Aberdeen Institutional Commingled Funds, LLC (AICFL), Delaware (USA) based Limited Liability Company. AICFL has been organised for purpose of investing and dealing in all securities and instruments across world. AICFL has set up various investment schemes in form of sub-funds or 'series' with different sets of investors for investing in specific strategies. 5. Petitioners in three writ petitions are sub-funds or 'series' of AICFL and have obtained necessary sub-account registration of Foreign Institutional Investors with Securities Exchange Board of India (SEBI). 6. Originally AICFL was set up as Trust under laws of State of Delaware, USA, to be precise on 09.12.1996, known as Aberdeen Delaware Business Trust with three sub-trusts. Petitioner was constituted as one of sub- trusts under Aberdeen Delaware Business Trust, other two sub-trusts being other two writ petitioners. 7. Because of popularity of LLC regime i.e., Limited Liability Company 2/19 ::: Uploaded on - 12/06/2020 ::: Downloaded on - 13/06/2020 11:13:57 ::: WP2796&group_19.odt across investment funds industry, AICFL was re-organized / converted from Trust into Limited Liability Company (LLC) on 19.04.2010 in accordance with provisions of Trust Act and LLC Act in State of Delaware, USA. It is stated that Section 3821 of Trust Act and Section 214 of LLC Act in Delaware, USA provide that when statutory trust is converted into LLC, for purposes of law in State of Delaware, USA, LLC would be deemed to be same entity as trust. Therefore, such conversion would not constitute creation of new entity. 8. As consequence of such conversion of AICFL from trust to LLC, petitioner was also converted from sub-trust to sub-fund or 'series' of AICFL. Petitioner has highlighted following salient aspects of such re-organization / conversion:- (i) AICFL which previously existed as trust was continued as LLC without dissolution and was deemed by law to be same entity as erstwhile trust; (ii) Upon such conversion of AICFL, each sub-trust, including petitioner, continued as corresponding sub-fund or 'series' of AICFL without dissolution; (iii) Each investor's interest in sub-trust issued and outstanding immediately prior to conversion was automatically converted into LLC interest in corresponding sub-fund or 'series' of AICFL; (iv) All rights, privileges and powers of each sub-trust including petitioner and all property and debs due to such sub-trust vested in corresponding sub-fund of LLC and became property of such sub-fund; (v) There was no change in beneficial ownership of beneficiaries of sub-trusts including petitioner upon conversion; and (vi) Conversion did not lead to taxable event for United States income tax purposes or for Delaware State income tax purposes. 3/19 ::: Uploaded on - 12/06/2020 ::: Downloaded on - 13/06/2020 11:13:57 ::: WP2796&group_19.odt 9. conversion was taken note of and accepted by both US Securities and Exchange Commission and by SEBI as effectively involving nothing more than change of name of entity. As matter of fact SEBI did not consider petitioner to be new entity and petitioner continued to use its existing sub- account registration with SEBI for investing in Indian public markets. 10. Notwithstanding fact that petitioner is sub-fund or 'series' of AICFL, it has been treated as independent entity for tax purposes by tax authorities in India, both before and after conversion. 11. Prior to conversion, petitioner as sub-trust had incurred and accumulated losses under head 'capital gains' to tune of Rs.5,83,56,060.00 from assessment year 2009-10 to assessment year 2010-11. Such losses were fully and properly disclosed by petitioner in returns filed for each of assessment years. After conversion, these losses were carried forward by petitioner, now organised as sub-fund or 'series' of LLC, to assessment year 2011-12 and beyond in accordance with Section 74 of Income Tax Act, 1961 (briefly 'the Act' hereinafter). 12. On 16.04.2012, AICFL filed application before Authority for Advance Rulings (AAR) seeking advance ruling on following question:- Whether on facts and in circumstances of case, Aberdeen Institutional Commingled Funds, LLC i.e., applicant was entitled to carry forward accumulated capital losses as disclosed in application to assessment year 2011-12 and thereafter, under Section 74 of Act, notwithstanding its reorganisation effective from April 19, 2010? 13. above application was registered as AAR No.1308 of 2012. By ruling dated 21.02.2018, Authority for Advance Rulings (AAR) took view 4/19 ::: Uploaded on - 12/06/2020 ::: Downloaded on - 13/06/2020 11:13:57 ::: WP2796&group_19.odt that Section 70 of Act limits claim of carry forward of loss to assessee to exclusion of everyone else. benefit of setting off of loss is available only to assessee. While acknowledging that under provisions of two statutes of State of Delaware (USA), new LLC (Aberdeen Institutional Commingled Funds, LLC) may be deemed to be same entity as that of Trust (Aberdeen Delaware Business Trust), AAR however accepted stand of Revenue that allowance of carry forward and setting off of accumulated loss has to be examined under provisions of Indian income tax law, more particularly under Sections 70 to 79 of Act, where there are no such deeming provisions. deeming fiction created by statutes of Delaware under which Trust and LLC are treated to be same entity cannot be invoked to canvass carry forward and set off of losses in India in absence of any such specific provisions in Act. It was held that LLC was never assessible entity in India; it had never filed any income tax returns in India. Trust and LLC are separate assessible entities. LLC having not filed any return cannot carry forward and cannot claim set off of losses accumulated by Trust and this cannot effect tax liability of LLC. There being no specific provision in Act allowing one assessee to carry forward and set off losses incurred by some other assesee, question was answered by AAR in negative and against applicant. 14. Thereafter respondent No.1 issued notice under Section 148 of Act dated 23.03.2018 for assessment year 2011-12 addressed to petitioner stating that he had reasons to believe that petitioner's income chargeable to tax for said assessment year had escaped assessment within meaning of Section 147 of Act. Respondent No.1 stated that he proposed to re-assess income of petitioner for said assessment year and called upon petitioner to submit return in prescribed form for said assessment year within specified period. It was further mentioned that said notice was issued after obtaining necessary satisfaction of respondent No.2. 5/19 ::: Uploaded on - 12/06/2020 ::: Downloaded on - 13/06/2020 11:13:57 ::: WP2796&group_19.odt 15. In accordance with law laid down by Supreme Court in GKN Driveshafts India Vs. ITO, 259 ITR 19, petitioner requested respondent No.1 for copy of reasons recorded prior to re-opening of assessment vide letter dated 19.04.2018. 16. In meanwhile petitioner also informed respondent No.1 on 11.06.2018 that writ petition was being filed in High Court to challenge ruling of AAR. But without prejudice to above, petitioner stated that it had discharged tax arising pursuant to ruling of AAR and provided details of taxes discharged enclosing therewith challans evidencing discharge of outstanding tax liability. 17. Respondent No.1 thereafter provided copy of reasons recorded prior to issuance of notice under Section 148 of Act vide letter dated 20.07.2018. It was mentioned in reasons recorded that application filed by AICFL before AAR was principal source of tangible information coming to possession of respondent No.1 from which he had reasons to believe that income chargeable to tax had escaped assessment in case of assessee i.e., petitioner. Relying on ruling given by AAR, it was mentioned that petitioner is person which is separate from sub-trust. Upon re-organisation legal status of Trust was converted into LLC. Presently, only LLC exist and Trust has ceased to exist. loss was incurred by different entity and it cannot be carried forward and set off by another assessee. Loss claimed as set off under Section 74 of Act amounting to Rs.3,11,39,585.00 and claim of carry forward of loss amounting to Rs.2,72,16,475.00 for assessment year 2011-12 by assesee, totalling Rs.5,83,56,060.00, are not losses incurred by assessee; rather those were losses incurred by different person. This gave reason to believe to Assessing Officer that income chargeable to tax had escaped assessment within meaning of Section 147 of Act. It was further mentioned that 6/19 ::: Uploaded on - 12/06/2020 ::: Downloaded on - 13/06/2020 11:13:57 ::: WP2796&group_19.odt present case is squarely covered by clause (b) of Explanation-2 below Section 147 of Act which provides that where return of income has been furnished by assessee and no assessment has been made but it is noticed by Assessing Officer that assessee has understated income or claimed excessive loss, deduction, allowance or relief in return, then such situation shall also be deemed to be case where income chargeable to tax has escaped assessment. 18. On 24.09.2018, petitioner submitted letter of objection before respondent No.1 against reasons recorded for initiation of re-assessment proceedings under Section 147 of Act, also seeking copy of prior sanction of respondent No.2. On 25.10.2018, respondent No.1 informed petitioner that objections raised by it were not acceptable. While calling upon petitioner to join assessment proceedings, copy of prior sanction of respondent No.2 was furnished to petitioner. 19. In meanwhile, AICFL filed Writ Petition No.9358 of 2018 before this court challenging ruling of AAR dated 21.02.2018. By order dated 24.11.2018, this Court passed interim order restraining Assessing Officer from completing re-assessment in terms of ruling of AAR. 20. By judgment and order dated 08.03.2019, this Court dismissed Writ Petition No.9358 of 2018. It may be mentioned that present petitioner had also joined AICFL as petitioner No.3 in Writ Petition No.9358 of 2018 in assailing AAR ruling. In said judgment this Court deleted present petitioner and similarly situated other two sub-funds who are presently petitioners in Writ Petition Nos.2803 and 3525 of 2019 respectively from list of petitioners in Writ Petition No.9358 of 2018 on ground that they had not approached AAR; only AICFL had approached AAR. 20.1. On substantive issue this Court held that in accordance with 7/19 ::: Uploaded on - 12/06/2020 ::: Downloaded on - 13/06/2020 11:13:57 ::: WP2796&group_19.odt principles of private international law, status of entity incorporated abroad has to be determined even in India according to law of country where entity was incorporated. It was held that in terms of law of Delaware, USA, AICFL both as Trust and as LLC continues to be same person. This position is accepted in India. Therefore, gain and loss earned by it in its earlier avatar would in law not be denied only because of change in status from Trust to LLC. However, this Court noted that AAR had answered question in negative not on above ground of change of status but on ground that AICFL was not assessee which had claimed loss in earlier assessment year. It was not possessed of any carry forward of loss from earlier assessment years to be set off in assessment year 2011-12 and subsequent assessment years in terms of Section 74 of Act. Rather, AICFL had admittedly filed no return of income and has not been allotted any Permanant Account Number (PAN). However, it was clarified that ruling of AAR would not impact case of three 'series' (funds) i.e., three writ peitioners in three present writ petitions to claim benefit of carry forward of loss under Section 74 of Act, if they are otherwise entitled to in law. 21. Following aforesaid judgment, respondent No.1 issued another notice dated 12.03.2019 under Section 142(1) of Act to petitioner for assessment year 2011-12 calling upon petitioner to comply with previous notice issued by respondent No.1. 22. Pursuant to aforesaid judgment, petitioner submitted its final objection to re-opening of assessment on 19.03.2019 buttressing its claims on basis of aforesaid judgment of this Court in case of AICFL. 23. On 08.04.2019, respondent No.1 issued notice under Section 142(1) of Act calling upon petitioner to furnish accounts and documents specified in annexure to notice in justification of its claim of set off of brought forward 8/19 ::: Uploaded on - 12/06/2020 ::: Downloaded on - 13/06/2020 11:13:57 ::: WP2796&group_19.odt loss of Rs.1,03,34,976.00 and carry forward of loss of Rs.1,68,81,499.00 for assessment year 2012-13. In response thereto, petitioner filed detailed submissions dated 15.04.2019 in light of judgment in AICFL and providing information sought for. 24. Petitioner has stated that to its utter shock and surprise, respondent No.1 as Assessing Officer passed draft assessment order dated 06.05.2019 for assessment year 2011-12 under Section 143(3) read with Sections 147 and 144- C(1) of Act. By said order respondent No.1 disallowed claim of accumulated loss amounting to Rs.5,83,56,060.00 carried forward by petitioner to assessment year 2011-12 and thereafter pursuant to conversion. 25. This was followed by draft assessment order dated 07.05.2019 passed by respondent No.1 as Assessing Officer for assessment year 2012-13 under Section 143(3) read with Section 144-C(1) of Act. By said order, respondent No.1 disallowed claim of petitioner for set off of loss amounting to Rs.1,03,34,976.00, further disallowing petitioner's claim of carry forward of loss amounting to Rs.1,68,81,499.00. 26. Aggrieved by aforesaid, petitioner has preferred present writ petition under Article 226 of Constitution of India seeking following reliefs:- (i) to set aside and quash notice dated 23.03.2018 issued by respondent No.1 under Section 148 of Act for assessment year 2011-12; (ii) to set aside and quash draft assessment order dated 06.05.2019 passed by respondent No.1 for assessment year 2011-12; and, (iii) to set aside and quash draft assessment order dated 07.05.2019 passed by respondent No.1 for assessment year 2012-13. 27. Writ Petition No.3525 of 2019 was taken up for consideration on 9/19 ::: Uploaded on - 12/06/2020 ::: Downloaded on - 13/06/2020 11:13:57 ::: WP2796&group_19.odt 18.12.2019. On that day, this Court while issuing notice returnable on 13.01.2020 granted ad-interim stay to impugned notice dated 23.03.2018 issued under Section 148 of Act for assessment year 2011-12. 27.1. On 13.01.2020 this Court while adjourning case on request of learned counsel for respondents, granted liberty to petitioner to seek early date for consideration of stay in event Dispute Resolution Panel sought to proceed post passing of draft assessment orders. 27.2. Thereafter, this Court passed order on 14.02.2020 directing that ad- interim stay granted on 18.12.2019 in Writ Petition No.3525 of 2019 should continue. Further, it was directed that draft assessment orders dated 06.05.2019 and 07.05.2019 as well as proceedings before Dispute Resolution Panel would remain stayed. 28. Mr. Porus Kaka, learned senior counsel for petitioner submits that notwithstanding interim order of this Court, Dispute Resolution Panel issued directions under Section 144-C(5) of Act on 28.02.2020 in respect of draft order of assessment dated 06.05.2019 for assessment year 2011-12. This is unacceptable, he submits. Referring to ruling of AAR dated 21.02.2018 and judgment of this Court dated 08.03.2019 passed in writ petition filed by AICFL, he submits that Supreme Court in case of Technip SA Vs. SMS Holding (P) Ltd., (2005) 5 SCC 465 has settled position that ordinarily question of status of entity would have to be decided according to laws of domicile or place of incorporation. Following this position, this Court held that AICFL both as Trust and as LLC in terms of law of Delaware, USA, continues to be same person which position is accepted in India. However, on ground that AICFL had not filed any return in earlier assessment years and therefore it did not possess any loss of earlier assessment years to be carried forward and set off in assessment year 2011-12 and subsequent assessment 10/19 ::: Uploaded on - 12/06/2020 ::: Downloaded on - 13/06/2020 11:13:57 ::: WP2796&group_19.odt years, both AAR and this Court held that since AICFL was not assessee possessing accumulated loss, it could not claim benefit of carry forward and setting off of loss. However, this Court had clarified that above decision would not impact case of three 'series' or funds i.e., present writ petitioners to claim benefit of carry forward and set off of loss under Section 74 of Act. In reasons recorded for re-opening of asessment, it is specifically stated that application of AICFL before AAR was principal source of tangible information on basis of which respondent No.1 had formed belief that income of petitioner chargeable to tax had escaped assessment. Reverting back to judgment of this Court, Mr. Kaka submits that this Court had clarified that while benefit of carry forward and set off of loss was not available to AICFL since it had never filed any return, it would be open to three writ petitioners. Even Revenue had admitted before this Court that it is three 'series' or funds i.e., three writ petitioners which had filed returns of income being individually recognised as assessees under Act entitled to carry forward loss and claim set off. He submits that having taken such stand by Revenue in case of AICFL, it is not open to Revenue to take contrary stand in case of present three petitioners. He therefore, submits that formation of belief by respondent No.1 being contrary to law laid down by Supreme Court in Technip SA (supra) and of this Court in case of AICFL (supra), same is wholly untenable in law and on that basis no notice of re- opening of assessment under Section 148 of Act could have been issued or can be sustained. 28.1. Referring to draft assessment order dated 06.05.2019 for assessment year 2011-12, he submits that sole ground on which re-assessment was made was that petitioner as sub-trust of Trust and as 'series' or fund of LLC are two different entities. Therefore, 'series' or fund cannot claim benefit of carry forward of loss of other entity. This is completely contrary to law laid down by Supreme Court in Technip SA (supra) and judgment of this Court 11/19 ::: Uploaded on - 12/06/2020 ::: Downloaded on - 13/06/2020 11:13:57 ::: WP2796&group_19.odt in AICFL (supra). Besides, being consequential to impugned notice, draft assessment order cannot survive independently in event impugned notice is interdicted despite directions issued by Dispute Resolution Panel which are again in violation of interim order of this Court. 28.2. In so far draft assessment order dated 07.05.2019 for assessment year 2012-13 is concerned, Mr. Kaka submits that since it is structured on same erronous principle, it also cannot be sustained. 28.3. He, therefore, submits that impugned notice as well as two draft assessment orders are liable to be set aside and quashed. 29. On other hand, Mr. Chanderpal, learned standing counsel, Revenue submits that writ petition may not be entertained by this Court as following notice under Section 148 of Act, respondent No.1 had passed draft assessment order. In fact, for assessment year 2012-13 it is not case of re-assessment but regular assessment. Petitioner has got adequate and efficacious alternative remedy provided under statute by way of several layers of appeal. Therefore, petitioner should avail alternative remedy. All writ petitions should be dismissed, he submits. 30. In response, learned counsel for petitioner submits that fact that draft assessment order has been passed would not denude right of petitioner to challenge notice of re-assessment if it is without jurisdiction. If assumption of jurisdiction is wrong, re-assessment order passed subsequently would have no legs to stand. If notice goes, so does order of re-assessment. In support of his submission learned counsel for petitioner has placed reliance on decision of Supreme Court in Calcutta Discount Company Ltd. Vs. ITO, 41 ITR 191, which has been subsequently explained and reiterated by Gujarat High Court in Garden Finance Ltd. Vs. ACIT, 268 ITR 48 and by Delhi High 12/19 ::: Uploaded on - 12/06/2020 ::: Downloaded on - 13/06/2020 11:13:57 ::: WP2796&group_19.odt Court in Techspan India (P) Ltd. Vs. ITO, 283 ITR 212. 31. Submissions made by learned counsel for parties have been considered. Also perused and considered materials on record and cases cited at Bar. 32. In Technip SA (supra), Supreme Court held that questions as to status of corporation are to be decided according to laws of its domicile or incorporation subject to certain exceptions including exception of domestic public policy. This is because corporation is purely artificial body created by law. It can act only in accordance with law of its creation. Therefore, if it is corporation, it can be so only by virtue of law by which it was incorporated and it is to this law alone that all questions concerning creation and dissolution of corporate status are referred unless it is contrary to public policy. However, Supreme Court carved out distinction to above principle by holding that above general rule regarding determination of status will not apply when issue relates to discharge of obligations or assertion of rights by corporation in another country whether such obligation is imposed by or right arises under statute or contract which is governed by law of such other country. 33. Having noticed above, we may revert back to facts of present case. Prior to conversion, AICFL was trust by name of Aberdeen Delaware Business Trust which was set up as trust under Trust Act of Delaware State. It had three sub-trusts briefly known as Ex Japan Sub-Trust, Inc Japan Sub-Trust and Emerging Markets Sub-Trust i.e., earlier avatars of present three writ petitioners. After conversion from statutory trust to LLC, Aberdeen Delaware Business Trust came to be known as Aberdeen Institutional Commingled Funds, LLC (already referred to as AICFL). three sub-trusts as above were accordingly converted to sub-fund or 'series' of AICFL and in short came to be known as Ex Japan Series, Inc Japan Series and Emerging Markets Series i.e., present three writ petitioners. 13/19 ::: Uploaded on - 12/06/2020 ::: Downloaded on - 13/06/2020 11:13:57 ::: WP2796&group_19.odt 34. AICFL sought advance ruling from AAR on question as to whether it was entitled to carry forward accumulated capital loss as disclosed in application filed before it to assessment year 2011-12 and thereafter under Section 74 of Act notwithstanding its reorganization from statutory trust to limited liability company (LLC). Revenue's stand in proceedings before AAR was that loss was not incurred either by AICFL or by its earlier avatar Aberdeen Delaware Business Trust. loss stood in name of three trust funds which was claimed to be carried forward by three new LLC funds (i.e., present three writ petitioners), which have separate legal existence from AICFL. AAR noted that under Sections 70 to 79 of Act it is only assessee who is entitled to claim carry forward and setting off of loss. While acknowledging that under provisions of Trust Act and LLC Act of State of Delaware, USA, LLC may be deemed to be same entity as that of Trust upon re-organization / conversion but claim of carry forward and setting off of loss of applicant i.e., AICFL would have to be examined under Indian income tax law, more particularly under Sections 70 to 79 of Act. AAR found as fact that AICFL was never assessee in India and that it had never filed any income tax returns in India. Trust and LLC are separate assessible entities. Assertion of rights by AICFL of carry forward and set off of accumulated loss in India can only be governed by provisions of Act. Taking view that there was no specific provision in Act allowing one assessee to carry forward and set off loss incurred by some other assessee, AAR answered question posed before it in negative and against AICFL. 35. When above ruling of AAR was challenged by AICFL before this Court, stand taken by Revenue while opposing writ petition was that it did not dispute position in law that status of AICFL under conflict of law has to be decided by law of country in which entity was incorporated, in this case State of Delaware, USA. However, it was contended that AICFL was not 14/19 ::: Uploaded on - 12/06/2020 ::: Downloaded on - 13/06/2020 11:13:57 ::: WP2796&group_19.odt assessee under Act and consequently it did not file any return of income. Therefore, it was not entitled to claim benefit of Section 74 of Act. On other hand, returns of income were filed by its three 'series' (funds) i.e., present three writ petitioners, which have been individually assigned separate Permanent Account Numbers (PANs). It was therefore, submitted that it was three 'series' (funds) each of which is recognized as assessee under Act which would be entitled to carry forward accumulated loss of earlier years to assessment year 2011-12 and subsequent years, if otherwise permitted in law. 35.1. This Court held that there could be no dispute to proposition that AICFL both as Trust and as LLC in terms of laws of Delaware, USA continues to be same person. Noting that this position is accepted in India, this Court held that gain and loss earned by AICFL in its earlier avatar would in law not be denied only because of change in status from Trust to LLC. However this Court noted that AAR had answered question posed before it in negative not because of change of status of AICFL but on ground that AICFL was not assessee in India and had not filed any return of income. Therefore, question of any claim as to loss or carry forward of loss or setting off of loss by AICFL did not arise. This Court further noted that SEBI as regulatory authority has allowed 'series' (funds) i.e., present three writ petitioners to continue with their earlier registration even after change of name. But this Court took view that this would not assist AICFL because before AAR it was not 'series' (funds) which were seeking to carry forward loss but by AICFL which had admittedly filed no return of income and was not assessed under Act being not assessee. It was in that context this Court made it clear that ruling of AAR would not impact case of three 'series' (funds) i.e., present three writ petitioners to claim benefit of carry forward of loss under Section 74 of Act, if they are otherwise entitled under law. 36. Having deliberated upon above, let us now examine reasons 15/19 ::: Uploaded on - 12/06/2020 ::: Downloaded on - 13/06/2020 11:13:57 ::: WP2796&group_19.odt recorded by respondent No.1 for re-assessment because it is reasons alone which are to be examined while adjudicating as to whether Assessing Officer had reason to believe that any income of assessee chargeable to tax had escaped assessment within meaning of Section 147 of Act. 37. In reasons recorded, respondent No.1 acknowledged that application filed by AICFL before AAR was principal source of tangible information coming to his possession on basis of which he had formed belief that income chargeable to tax had escaped assessment in case of petitioner. Upon analysis of information collected / received, respondent No.1 as Assessing Officer came to finding that assessee i.e., Aberdeen Asia Pacific Including Japan Equity Fund, 'series' (fund) of AICFL, is person which is separate from Aberdeen Delaware Business Trust Asia Pacific Inc Japan Fund. latter existed as trust fund and upon re-organization its legal status was converted into 'series' (fund) of LLC. At present only LLC exist as Trust has ceased to exist. Consequently, sub-trusts do not exist. Therefore, for purpose of Act each of them is separate assessee. From AAR application it came to knowledge of Assessing Officer that loss claimed as set off under Section 74 of Act amounting to Rs.3,11,39,585.00 and claim of carry forward of loss amounting to Rs.2,72,16,475.00 by assessee for assessment year 2011-12, totalling Rs.5,83,56,060.00, are not losses incurred by assessee; rather those are losses incurred by Aberdeen Delaware Business Trust Asia Pacific Inc Japan Fund which is different person being trust fund or sub-trust. 37.1. In that context respondent No.1 observed that carry forward and set off of loss is privilege given by Act to assessee who has suffered loss. Therefore, loss incurred by one assessee cannot be claimed to be carried forward or allowed to be set off by another assessee. It was on that basis that respondent No.1 issued impugned notice under Section 148 of Act re-opening 16/19 ::: Uploaded on - 12/06/2020 ::: Downloaded on - 13/06/2020 11:13:57 ::: WP2796&group_19.odt assessment for assessment year 2011-12. 38. It is quite apparent that view taken by respondent No.1 which led to formation of belief that income of petitioner chargeable to tax has escaped assessment is totally erroneous being contrary to ruling of AAR. Further, it stood totally contradicted by judgment of this Court in AICFL. Moreover, it is also contrary to stand taken by Revenue itself in said writ proceeding. It was stand of Revenue that AICFL was not assessee under Act and it did not file return of income. Therefore, claiming of any carry forward of loss or set off of loss by AIFCL did not arise. On other hand, it was specific case of Revenue that returns of income were filed by three 'series' (funds) i.e., present three writ petitioners each of which are recognised as assessees under Act. It was admitted by Revenue that it is 'series' (funds) which would be entitled to carry forward loss declared in earlier returns of income to assessment year 2011-12 and subsequent years, if otherwise eligible. 38.1. This Court accepted position that in terms of laws of Delaware, AICFL earlier as Trust and presently as LLC continues to be same person which position is accepted in India. Thereafter, this Court categorically held that gain and loss earned by AICFL in its earlier avatar would in law not be denied only because of change in status from Trust to LLC. If this be so, then by extension, gain and loss earned by present petitioner in its earlier avatar would not be denied only because of change in status from sub-trust of Trust to 'series' (funds) of LLC. This Court had negated claim of AICFL not on ground of change of status from Trust to LLC but on ground that AICFL was not possessed of any carry forward of loss of earlier assessment years to be set off in assessment year 2011-12 and subsequent assessment years because AICFL was not assessee under Act and had filed no return of income previously. While upholding ruling of AAR this Court however clarified that said decision would not impact case of three 'series' (funds) i.e., present three writ 17/19 ::: Uploaded on - 12/06/2020 ::: Downloaded on - 13/06/2020 11:13:57 ::: WP2796&group_19.odt petitioners to claim benefit of carry forward and set off of loss under Section 74 of Act if otherwise entitled under law. 39. However, in reasons recorded by respondent No.1 it was precisely on ground of change of status that claim of assessee i.e., petitioner was found to be not acceptable which led to formation of belief that income of petitioner chargeable to tax had escaped assessment for assessment year 2011- 12. Therefore, very foundation for formation of such belief is erroneous, which has been contradicted by this Court. In other words, after judgment of this Court in AICFL, very basis for re-opening assessment no longer survived. This position is buttressed in draft assessment order dated 06.05.2019 passed by respondent No.1 for assessment year 2011-12 under Section 143(3) read with Sections 147 and 144-C(1) of Act. In said order passed on re- assessment it was clearly held that old trust fund and new LLC fund are separate legal entities for purpose of Act. Therefore, loss of old trust fund could not be carried forward by new LLC fund. As indicated above, this is complete misreading of judgment of this Court which has vitiated re- assessment proceeding for assessment year 2011-12 as well as assessment proceeding for subsequent assessment year 2012-13. 40. Coming to objection raised by learned standing counsel for Revenue that in view of fact that re-assessment order has been passed for assessment year 2011-12 and assessment order for assessment year 2012-13 petitioner should be relegated to alternative remedy of appellate forum as provided under statute, it is trite that if Assessing Officer had no jurisdiction to initiate re- assessment proceeding, mere fact that subsequent orders have been passed would not render challenge to jurisdiction infructuous. If very basis for re- opening assessment does not survive, orders on such re-opening would not survive too. 18/19 ::: Uploaded on - 12/06/2020 ::: Downloaded on - 13/06/2020 11:13:57 ::: WP2796&group_19.odt 41. That being position and considering matter in its entirety we are of view that impugned notice dated 23.03.2018 under Section 148 of Act issued by respondent No.1 for assessment year 2011-12 cannot be sustained. Consequential draft assessment order dated 06.05.2019 for said assessment year and all orders passed thereafter would thus also be rendered unsustainable. That apart, draft assessment order dated 07.05.2019 for assessment year 2012-13 in so far it followed principle applied in order dated 06.05.2019 while disallowing claim of petitioner to carry forward and set-off of loss would also be unsustainable to that extent. 42. Accordingly, impugned notice dated 23.03.2018 and all consequential orders pursuant thereto for assessment year 2011-12 are hereby set aside and quashed. Likewise, assessment order dated 07.05.2019 for assessment year 2012-13 would accordingly stand interfered with to above extent. 43. Petitioners in other two writ petitions i.e. Writ Petition Nos.2803 and 3525 of 2019 are similarly placed like petitioner in Writ Petition No.2796 of 2019 seeking identical reliefs, being 'series' (funds) of AICFL. In view of decision in Writ Petition No.2796 of 2019, petitioners in these two writ petitions are also granted similar relief as granted to petitioner in Writ Petition No.2796 of 2019. 44. Consequently, all three writ petitions are hereby allowed. However, there shall be no order as to costs. (MILIND N. JADHAV, J.) (UJJAL BHUYAN, J.) Minal Parab 19/19 ::: Uploaded on - 12/06/2020 ::: Downloaded on - 13/06/2020 11:13:57 ::: Aberdeen Asia Pacific Including Japan Equity Fund v. Deputy Commissioner of Income-tax (International Taxation)-1(1)(1), Mumbai and another