9911796707
TMI Blog2018 (12) TMI 1564X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT (Appeals) has upheld the orders of the Assessing Officer passed u/s 201 of the Income Tax Act, 1961 (hereinafter called 'the Act') treating the assessee to be 'assessee in default' for withholding of taxes from the payments made to ABN Amro Bank, Stockholm Branch. Since the issue is common all the six appeals, the same were heard together and for the sake of convenience they are being disposed of together through this common order. 2.0 Brief facts of the case are that the assessee desired to purchase telecom equipments from a Swedish supplier M/s Ericsson which required substantial funding in foreign currency. The assessee sought foreign exchange credit facility to buy the telecom equipments from Sweden. ABN Amro Bank Stockhol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng regard to the provisions of Article 11(3) of the India Sweden Double Taxation Avoidance Agreement. However, the Assessing Officer initiated proceedings u/s 201(1) of the Act for non-withholding of tax from the payments made to ABN Amro Bank. Although, the assessee submitted before the Assessing Officer that the Swedish Tax Authorities had issued Tax Residency Certificate certifying that ABN Amro Bank was a tax resident of Sweden in terms of Double Taxation Avoidane Agreement between India and Sweden and, therefore, the payments made to ABN Amro Bank were not taxable in India, such submission did not find favour with the Assessing Officer. Alternatively, the assessee also contended before the Assessing Officer that the interest received b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en restored to the file of the Assessing Officer in assessment year 2007-08 wherein the assessee was challenging the disallowance of interest paid to ABN Amro Bank which had been disallowed u/s 40(a)(i). 3.1 On a specific query from the Bench, 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 (s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inanced this transaction. The role of the ABN-S, except to the extent of financing of its own funds in this arrangement, was confined to that of a facilitator. We have also, noted that it is an undisputed position that .subsequently these loan agreements were novated and the original lenders came into direct agreements with the assessee. Under these, circumstances, in our considered view, the interest received by the-ABN-S, except to the extent received for the financing done by itself, was not entirely in his own right but merely as a conduit for making onwards payments to identified original lenders in a transparent manner. As we take note of these facts, it is also important to bear in mind the fact that the liability under section 201(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers of such interest i.e. original lenders under the financing" arrangement - though through the ABN-S., The taxability of interest is to be examined in the light of factual findings to be so arrived at, and in the light of the applicable legal position as per the relevant provisions of the tax treaties that India has with the jurisdictions in which original lenders are resident in. Once again, we have to acknowledge the fact that learned counsel for the assessee has filed elaborate documentation in support of their stand about tax residency status of beneficial owners of the interest paid by the assessee and has also addressed the arguments on merits, but, in the absence of this aspect of the matter having been examined by the authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X
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