2018 (12) TMI 1564 - AT - Income Tax

Proceedings u/s 201(1) - TDS u/s 195 - assessee in default for withholding of taxes from the payments made to ABN Amro Bank, Stockholm Branch - Held that - both the parties before us agreed that the impugned interest in the quantum interest pertained to the same parties and the same loan for which the assessee has been held to be in default u/s 201 of the Act and against which the assessee was now in appeal before us. Both the parties fairly agreed that interest of justice would be served if these appeals were also restored to the file of the Assessing Officer in terms of the directions of the ITAT in assessee s own appeal for assessment year 2007-08 Isuue to be restored to the file of the Assessing Officer with a direction to identify the factual aspect of the issue and determine as to whether the impugned income was taxable in India or not so as to bring the assessee within the mischief of section 40(a)(i) of the Act. The determination of this issue will essentially determine the issue whether the provisions of section 201 are attracted in this case. - Decided in favour of assessee for statistical purposes.

Summary

Issues:
Assessment of withholding tax on payments made to ABN Amro Bank under the Income Tax Act, 1961 based on tax residency status and Double Taxation Avoidance Agreement (DTAA) between India and Sweden/Mauritius.

Analysis:

Issue 1: Assessment of withholding tax
The appeals involved the assessment of withholding tax on payments made to ABN Amro Bank by the assessee. The Assessing Officer held the assessee in default under section 201(1) of the Income Tax Act for not withholding tax from these payments. The assessee contended that ABN Amro Bank was a tax resident of Sweden based on the Tax Residency Certificate issued by Swedish Tax Authorities. However, the Assessing Officer relied on information from the Swedish Tax Agency stating otherwise. The assessee also argued that the interest payments were not taxable in India under the DTAA between India and Sweden/Mauritius as the recipients were tax residents of these countries. The Commissioner of Income Tax (Appeals) upheld the default status, leading to the appeals before the ITAT.

Issue 2: Restoration of appeals
During the proceedings, both parties agreed that the quantum interest in question was related to the same transactions for which the assessee was held in default. Referring to a previous ITAT order for assessment year 2007-08, it was decided to restore the appeals to the file of the Assessing Officer for further examination. The ITAT considered the consensus between the parties and deemed it appropriate to restore all six appeals to the Assessing Officer for a fresh adjudication based on the directions provided in the earlier order.

Conclusion:
The ITAT allowed all six appeals for statistical purposes and directed the restoration of the appeals to the Assessing Officer for a de novo adjudication considering the factual aspects and legal principles outlined in the previous order. The decision aimed at providing a fair opportunity for the assessee to present its case in light of the tax residency status and DTAA provisions.