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TMI Blog2016 (7) TMI 712X X X X Extracts X X X X X X X X Extracts X X X X ..... harge, over and above the cap of 10% prescribed in Article 13 as the tax rate for royalty income. In any case, the provisions of Article 13 of the India-France DTAA, prescribing a cap of 10% on the rate of tax, read with Article 2 thereof would prevail over the provisions of the domestic income-tax law and thus the tax liability on royalty income shall be capped at 10%. The aforesaid plea of the assessee, in our view, is clearly in tune with the phraseology of the India-France DTAA and is fully supported by the precedents cited before us. As a consequence, we direct the Assessing Officer to re-compute the tax liability on royalty income accordingly. - Decided in favour of assessee. - ITA No. 888/MUM/2016 - - - Dated:- 13-7-2016 - Shri G. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in levying surcharge at the rate of 5% to the tax levied on guarantee commission received by the Appellant. 6. The Assessing Officer erred in adding surcharge, education cess and secondary and higher education cess to the tax on the Royalty income charged as per the provisions of the DTAA between India and France. 7. The Assessing Officer erred in levying interest under section 234B of ₹ 10,18,290/-. 8. The Assessing Officer erred in levying interest under section 234C of ₹ 39,315/-. 3. Insofar as Ground of appeal nos. 1 to 4 are concerned, they relate to a single issue arising from the action of income-tax authorities in holding that guarantee commission earned by the assessee amounting to ₹ 33,40,34 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he plea of the assessee did not find favour even with the DRP and accordingly, the Assessing Officer held the guarantee commission of ₹ 33,40,347/- as taxable. 5. At the time of hearing, the learned representative for the assessee pointed out that an identical controversy was considered by the Mumbai Bench of the Tribunal in the assessee s own case for Assessment Year 2009-10 vide ITA No. 7198/Mum/2012 dated 28.3.2016. The relevant discussion in the order of the Tribunal dated 28.3.2016 (supra) reads as under :- 3. Rival contentions have been heard and record perused. Facts in brief are that the assessee is a resident of France and does not have a permanent establishment in India. During the year assessee has given a corporate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rthermore, as per Article 23.3, income can be taxed in India, only if it arises in India. In the instant case, the income clearly arises in France because the guarantee has been given by the assessee, a French company to BNP Paribas, a French Bank, in France and, therefore, Article 23.3 has no applicability as income does not arise in India. 6. Before us, it was a common point between the parties that the facts and circumstances of the dispute in the instant year are similar to those considered by the Tribunal in Assessment Year 2009-10 (supra). It was also a common point between the parties that decision of the Tribunal dated 28.3.2016 (supra) continues to hold the field and, therefore, following the aforesaid precedent, in the instan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been considered by the Mumbai Bench of the Tribunal in the case of Sunil V. Motiani vs. ITO (International Taxation)-4(1), 59 SOT 37 (Mum Trib) and the Kolkata Bench of the Tribunal in the case of DIC Asia Pacific Pte. Ltd. vs. DIT (IT), 52 SOT 447 (Kolkata Trib). At the time of hearing, the learned representative also furnished copy of the DTAA between India and France to point out that the treaty is similarly worded qua the impugned aspect, as were the India-UAE and India-Singapore treaties, considered by the Mumbai Bench and Kolkata Bench of the Tribunal respectively. It was, therefore, contended that surcharge and education cess could not be charged separately over and above the rate of 10% prescribed in Article 13 of the India-Fran ..... X X X X Extracts X X X X X X X X Extracts X X X X
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