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TMI Blog2017 (3) TMI 674X X X X Extracts X X X X X X X X Extracts X X X X ..... iew that there was no transaction of the assessee with Standard Chartered Bank, Mauritius as the said bank according to the AO was neither recipient of the beneficial owner of the interest. It was held that the interest is taxable as per the provisions of section 115A(1)(a)(ii) of the Act in the case of the payee. The assessee was deemed to have been assessee in default as per the provisions of section 201(1) of the Act with regard, tax was not deducted. Interest under section 201(1A) was also charged raising a total demand of ₹ 7,57,32,656. The assessee challenged the order before the CIT(A) both on merits as well as on jurisdiction and the limitation grounds. However, the Ld. CIT(A) while deciding the appeal on merits and failed to address the jurisdictional issue and on the limitation issue, he failed to give any finding. Thus we find that the impugned order cannot be upheld. As per settled legal precedents the Ld. CIT(A) ought to have first decided the jurisdictional issue and only thereafter should have proceeded to decide the issue on merits if so warranted in law. It is only when the jurisdiction of the AO is held to be established that the CIT(A) was required to decid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer in passing the order and had also assailed the order passed under section 201(1)/201(1A) on the grounds of limitation. These grounds are reproduced hereunder:- 2. The Ld. Assessing Officer has erred on the facts and in law in assuming the jurisdiction for passing the order under 201(1) and 201(1A) of the Act in the appellant s case, by grossly ignoring the fact that the jurisdiction over the appellant lies with the TDS officer in Nagpur (Maharashtra). 3. On the facts and in law and in the circumstances of the case the impugned order passed by the Ld. Assessing Officer is time barred and void ab-initio since it has been passed after the expiry of the limitation period for passing the order under 201(1)/ 201(1A) of the Act as held by the special bench decision of Mumbai Tribunal in the case of Mahindra Mahindra Limited v DCIT (ITA No.2606/Mum/2000). 2.2. Inviting attention to the consolidated order, it was submitted that while dismissing the appeal of the assessee on merits, making inaccurate factual observations which are contrary to the view taken by the Assessing Officer itself, the CIT(A) has not cared to give any finding either on jurisdiction or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e fact that the application of LIBOR + 140 bps by him which figure has been offered and accepted in the re-negotiated contract by the assessee with the Standard Chartered Bank (Mauritius). Accordingly, it was his prayer that all necessary facts and evidences though for deciding the jurisdictional and the limitation issue are available on record, however, even since on facts also the impugned order does not address the shortcomings in the order of the Assessing Officer, the impugned order may be set aside back to the file of the Assessing Officer. 3. The Ld. Sr. DR though relied upon the impugned order however, had no objection if the issue is restored. 4. We have heard the rival submissions and perused the material available on record. It is seen that APR packaging Ltd (AP RPL) a company incorporated in India was engaged in the business of Manufacturer of different varieties of paper. As per loan Agreement dated 08/07/2004 AP RPL had executed a Loan Agreement with Standard Chartered Bank (ECB) Singapore Branch of ACB, UK on the following terms as per the statement of facts filed before the CIT(A):- A facility of USD 10 million by way of External Commercial Borrowings ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period of minimum 3 years The interest cost of loan was 6 months LIBOR + 140bps. As per the terms of the loan agreement, APRPL would be liable to bear the withholding tax (if any) on interest payments to SCB (Mauritius) Limited. Other terms and conditions remained the same Further, at the time of filing the ECB - 2 return with the Reserve Bank of India ( RBI ), an intimation was duly filed with the RBI, vide letter dated 3 January 2006, that the ECB has been transferred from SCB (Singapore) to SCB (Mauritius) Limited. 4.2. It has been stated that while remitting the interest payments to SCB (Mauritius) Limited in the financial years 2005-06, 2006-07 and 2007-08, the assessee did not withhold tax by relying on the provisions of Article 11(3) of the India Mauritius tax treaty which provide that where the interest income is derived and beneficially owned by a bank (which is a resident of Mauritius) carrying on a bonafide banking business, such interest income is exempt from tax in India. Ballarpur Industries Ltd (B-lLT) also a company incorporated in India, engaged in manufacturing and export of paper for the payment of interests and principal amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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