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TMI Blog2016 (3) TMI 735X X X X Extracts X X X X X X X X Extracts X X X X ..... tances of the case and law, the Tribunal has erred in holding that interest earned on NOSTRO a/c is taxable when in fact assessee withdrew its challenge due to the Revenue's additional ground of consequential disallowance u/s 14A ?" "(2) Without prejudice, if this Court decides that the interest earned on NOSTRO A/c is not taxable, then, consequential disallowance u/s 14A may be directed ?" "(3) Whether on the facts and circumstances of the case and law, the Tribunal was correct in holding that the provisions of section 40(a)(i) were not applicable as the assessee was not obliged to withhold taxes u/s 195 of the I.T. Act, 1961 ?" "(4) Whether on the facts and circumstances of the case and in law, the Tribunal was right in holding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... long term deposit of Rs. 617.9 crore for a period of 5 years. Besides, the Respondent - Assessee received a sum of Rs. 22.19 crores from SBI as Arranger fees and commission. It in turn paid an amount of Rs. 37.07 crores to the sub-arrangers by way of sub-arranger fees and commission. An amount of Rs. 26.75 crores out of Rs. 37.07 crores was paid by way of sub-arranger fees and commission to non-residents. However, the Respondent - Assessee had failed to deduct tax at source on Rs. 26.75 crores paid to non-residents as sub-arranger fees and commission. Therefore, the Assessing Officer invoked section 40(a)(i) of the Act for failing to deduct tax under section 195 to disallow the expenditure to the extent of Rs. 26.75 crores by Assessment Ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e services rendered by the non-resident sub-arrangers were not in the nature of consultancy services. So far as technical services were concerned, the Revenue was not able to establish before the Tribunal from the services being rendered by the sub-arrangers as to what sort of technical expertise was required of a sub-arranger. Thus, the services could not be technical. So far as the managerial services are concerned, the impugned order relies on the decision of the Apex Court in the case of R. Dalmia v/s CIT, New Delhi, reported in 106 ITR 895 wherein the Apex Court has held that the words "person concerned in the management of the business" would mean a person not only directly participates or engages in the management of the business but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dmittedly rendered by the non-resident sub-arrangers outside India. In such a case, there is no occasion for any income accruing or arising to the non-resident in India. The services of the non-resident sub-arrangers of attracting deposit to IMDS Scheme is carried out entirely outside India. As held by the Apex Court in the case of CIT, A.P. v/s Toshoku Ltd., reported in 125 ITR 525, no income can be said to accrue or arise in India where payment is made for service by non-resident outside India. The CBDT had issued a Circular No.786 of 2000 dated 7th February 2000 reiterating the view of the Apex Court in Toshoku Ltd.'s case (supra). No change in law has been shown to us which would warrant taking a view different from the view taken b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Assessee was appointed as arranger by SBI for mobilizing deposit by for its IMD Scheme. The Respondent - Assessee received a sum of Rs. 22.19 crores as fees and commission from SBI for services rendered as arranger. The Respondent - Assessee had in turn paid an amount of Rs. 37.07 crores by way of sub-arranger fes and commission to the subarrangers appointed. In the above view, the Respondent - Assessee claimed as expenditure an amount of Rs. 14.87 crores to determine its taxable income for the subject Assessment Year. However, in its books of account, the Respondent - Assessee amortized the above expenditure of Rs. 14.87 crores over a period of five years and for the subject Assessment Year, only debited Rs. 99.16 lakhs to its profit an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... event which was post getting deposits under the Scheme. (d) We find that the issue is no longer res integra in view of the decision of the Apex Court in Taparia Tools Ltd. v/s Joint CIT, reported in 372 ITR 605 (SC). In the aforesaid case, the issue for consideration was whether the liability to pay interest is allowable as deduction in the first year itself or it be spread over for a period of five years. This Court had on application of the principle of matching concept upheld the view of the Assessing Officer to spread the interest paid in the very first year over a period of five years because the term of the debt was five years and the Assessee therein had itself in its books of account amortized the interest over a period of five y ..... X X X X Extracts X X X X X X X X Extracts X X X X
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