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2016 (2) TMI 342 - AT - Income TaxRectification of mistake - whether the tax is required to be deducted tax at source from payments made by a foreign bank s Indian branch to its overseas head office? - Held that - The payment is made by the non resident to himself, there is no obligation to deduct tax at source from such payments. Hon ble Calcutta High Court, in the case of ABN Amro Bank NV Vs CIT 2010 (12) TMI 340 - CALCUTTA HIGH COURT has held that there is tax deduction at source requirement, under section 195, from the payment of interest made by the Indian branch of a foreign bank to its offices abroad. It is thus clear that the impugned disallowance, even on merits, is unsustainable in law. Accordingly, the impugned disallowance, by way of rectification of mistake under section 154, is wholly unsustainable in law. The CIT(A) was indeed in error in upholding the impugned rectification order on this aspect of the matter. Interest under section 244A not admissible in respect of delay in making claim of exemption under section 10(23G) - Held that - The law is quite unambiguous on this aspect as it provides that where any question arises as to the period to be excluded, it shall be decided by Chief Commissioner or Commissioner whose decision thereon shall be final . Undoubtedly, such a decision by the Commissioner of the Chief Commissioner cannot be a subject matter of then the call about the period for exclusion of interest is to be determined by the Commissioner or the Chief Commissioner. Obviously, no such exercise was carried out at the assessment stage or even at the stage of the rectification proceedings, and it was, therefore, not open to the Assessing Officer, on his own, to decide the period for which interest under section 244A was to be declined. For this reason also, not declining the interest under section 244A for the period of 1.4.2002 to 20.1.2005, was not a mistake apparent on record. In view of the above discussions, and for more reasons than one, the Assessing Officer was in error in passing the impugned order under section 154 on this aspect of the matter as well.
Issues:
Challenge to correctness of order under section 154 r.w.s. 143(3) for assessment year 2009-10. Analysis: The appellant challenged the order dated March 29, 2010, passed by the CIT(A) regarding the order under section 154 r.w.s. 143(3) for the assessment year 2009-10. The appellant contended that the CIT(A) should have canceled the order under section 154 dated June 27, 2008, passed by the Assessing Officer. The main issues revolved around rectification of mistakes under section 154, specifically related to two points highlighted by the revenue audit party. The first point concerned the deduction of tax at source on interest payment to the head office, while the second point dealt with the delayed claim of exemption under section 10(23G) affecting the interest under section 244A. The Assessing Officer disallowed the interest payment and reduced the interest claim under section 244A, leading to the appellant's appeal before the CIT(A). The CIT(A) upheld the Assessing Officer's decision, prompting the appellant to appeal to the ITAT Mumbai. The ITAT Mumbai analyzed the case meticulously. Regarding the first point, the ITAT referred to a Special Bench decision and a High Court ruling, concluding that the disallowance was unsustainable in law. The ITAT found that the disallowance, even on merits, was not justified. Concerning the second point, the ITAT delved into the interpretation of section 244A and the attribution of delay in issuing refunds. The ITAT scrutinized the Assessing Officer's rationale and highlighted that the delay in proceedings leading to the refund, not just the delayed claim, should be considered. The ITAT emphasized that the delay in making the claim did not necessarily attribute the delay to the assessee, especially considering factors beyond their control. The ITAT determined that not declining the interest under section 244A for the period in question was not a mistake apparent on record within the limited scope of Section 154. Therefore, the Assessing Officer erred in passing the order under section 154. Consequently, the ITAT reversed the action of the Commissioner (Appeals) and quashed the impugned order under section 154. As a result, all other issues raised by the assessee were deemed academic and did not require adjudication. The appeal was allowed in favor of the appellant.
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