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2018 (6) TMI 448 - AT - Income TaxTDS u/s 195 - interest payment made to ICICI Bank Ltd., Singapore branch - non deduction of tds - assessee submitted that since it has made payment to a resident assessee, in terms of the provision of section 194A(3)(iii) any interest paid to a banking company does not come within the purview of section 195 - Held that - Although the assessee claims that the ICICI Bank Ltd. is the main lender for USD 20 million external commercial borrowings, the facts available on record states otherwise. The agreement between the assessee and the bank dated 15.03.2007 states that ICICI Bank Ltd is acting as an arranger cum facility agent. The said agreement further states in Schedule 1 at pg. 59 states that ICICI Bank Ltd, Singapore branch is original lender. The letter written by the ICICI Bank Ltd., Singapore branch dated 31.01.2007 states that ICICI Bank Ltd., Singapore branch is an arranger and facility agent and the lender of the loan is a group of financial institutions to be assembled by the arranger. The facts are contradictory to each other as per the assessee s own record. The issue needs to be reexamined by the Assessing Officer in light of the claim of the assessee that ICICI Bank Ltd., Singapore branch is the main lender. The assessee is directed to substantiate its case with further evidences. In case, the Assessing Officer found that ICICI Bank Ltd., Singapore branch is lender of external commercial borrowing, than there is no default in deduction of tax at source u/s. 201(1)/201(1A) - Decided in favour of assessee for statistical purpose.
Issues Involved:
1. Jurisdiction of Income-tax Officer (TDS) (International Taxation), Noida. 2. Applicability of Section 195 regarding tax deduction at source on payments to the Singapore branch of ICICI Bank Limited. Detailed Analysis: 1. Jurisdiction of Income-tax Officer (TDS) (International Taxation), Noida: The assessee contended that the order under Section 201(1)/201(1A) was passed without jurisdiction by the ITO Noida, as the records were transferred to ITO Mumbai. The CIT(A) rejected this plea, stating that the jurisdiction starts from where the statutory forms were uploaded. Since the forms were uploaded on a valid TAN registered with the Noida TDS office, the ITO(TDS), Noida had jurisdiction. The Tribunal noted that the assessee did not press this ground during the hearing, resulting in the dismissal of the jurisdictional challenge. 2. Applicability of Section 195 regarding tax deduction at source on payments to the Singapore branch of ICICI Bank Limited:The primary issue was whether the payments made to the Singapore branch of ICICI Bank Limited required tax deduction at source under Section 195 of the Income Tax Act. The assessee argued that ICICI Bank Ltd., Singapore branch is a resident entity under Section 6(3) of the Act, and hence, payments made to it do not attract TDS under Section 195. The assessee also cited a certificate from the Jt. CIT (OSD)-3(1), Mumbai, stating that the global income of ICICI Bank Ltd., including its offshore branches, is chargeable to tax in India. The Assessing Officer (AO) held that the assessee failed to deduct tax at source on interest payments made to ICICI Bank Ltd., Singapore branch, treating the assessee as in default under Sections 201(1) and 201(1A). The AO based this conclusion on the agreement and Form 15CA and 15CB, which indicated that the payments were made to a non-resident entity. The AO noted that ICICI Bank Ltd., Singapore branch acted as an arranger and agent, and the actual lenders were various financial institutions located in Singapore and/or UK. The CIT(A) upheld the AO's decision, emphasizing that the interest payments were made to various lenders through ICICI Bank Ltd., Singapore branch, and thus, the provisions of Section 195 were applicable. The CIT(A) rejected the assessee's argument that the payments were made to a resident entity, noting that the ICICI Bank Ltd., Singapore branch merely acted as an arranger and facility agent. The Tribunal observed that there was no dispute regarding the residential status of ICICI Bank Ltd., including its offshore branches, as clarified by the Jt. CIT (OSD)-3(1), Mumbai. However, the Tribunal found contradictions in the assessee's records regarding the role of ICICI Bank Ltd., Singapore branch as the main lender or merely an arranger. The Tribunal noted that the agreement and the letter from ICICI Bank Ltd., Singapore branch indicated different roles. Consequently, the Tribunal set aside the issue to the AO for re-examination, directing the assessee to substantiate its claim with further evidence. The AO was instructed to determine whether ICICI Bank Ltd., Singapore branch was the main lender and, if so, to reconsider the applicability of Section 195. Conclusion: The Tribunal allowed the appeals for statistical purposes, directing the AO to re-examine the issue of the applicability of Section 195 based on further evidence provided by the assessee. Order Pronounced: The order was pronounced in the open court on 08.06.2018.
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