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TMI Blog2021 (1) TMI 1296X X X X Extracts X X X X X X X X Extracts X X X X ..... llow the view therein taken. Accordingly, we herein direct the A.O to delete the impugned addition. Income chargeable to tax - Interest payable/paid by the Indian branch offices of the Appellant to the head office and its other overseas branches - HELD THAT:- The issue as to whether or not interest payable/paid by the Indian branch offices of the assessee to its head office and its other overseas branches would be chargeable to tax had been looked into by the various benches of the Tribunal in the assessee‟s own case for the aforementioned years. On a perusal of the order passed by the Tribunal in the assessee‟s own case for A.Y. 2012-13 [ 2019 (7) TMI 1076 - ITAT MUMBAI] the Tribunal following the order in the case of Sumitomo Mitsui Banking Corporation [ 2012 (4) TMI 80 - ITAT MUMBAI] and the orders of the coordinate benches of the Tribunal in the assessee's own case for the preceding years, had concluded, that the interest income received by the assessee from its Indian branch being a payment made to self was thus not taxable in the hands of the assessee Accordingly, we herein hold that the interest income received by the assessee from its Indian branch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2018, under section 143(3) read with section 144C(13) of the Act, pursuant to the directions of the Hon'ble Dispute Resolution Panel - I ('DRP'), Mumbai, BNP Paribas ('the Appellant') respectfully submits that the learned AO has erred in passing the order on the following grounds: 1. The learned AO has erred in not accepting the claim that the rate of tax applicable to domestic companies and/ or co-operative banks for AY 2014-15 is also applicable to the Appellant, in accordance with the provisions of Article 26 (Non-discrimination) of the India-France tax treaty. 2. The learned AO has erred in subjecting to tax, the data processing fees paid by Indian branch offices of the Appellant to its Singapore branch, as income of the Appellant to the tune of Rs.40,78,10,733. 3. Without prejudice to Ground 2 above, the learned AO has erred in levying surcharge of 5 percent and education cess of 3 percent on the tax computed under Article 13 of the India-France tax treaty. 4. The learned AO has erred in proposing to hold that interest payable/ paid by the Indian branch offices of the Appellant to the head office and its other overseas branches amounting to Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ec. 143(3) r.w.s.144C(1), dated 29.12.2017 wherein he proposed to assess the income of the assessee company at Rs.446,33,19,200/-. 5. Objecting to the additions which were proposed by the A.O vide his draft assessment order passed under Sec. 143(3) r.w.s 144C(1), dated 29.12.2017, the assessee approached the Dispute Resolution Panel-1 (WZ), Mumbai (for short DRP‟). The DRP after deliberating on the contentions advanced by the assessee therein passed its order on 04.09.2018. The A.O after receiving the order passed by the DRP under Sec. 144C(5), dated 04.09.2018 framed the assessment vide his order passed under Sec.143(3) r.w.s 144C(13) of the Act, dated 30.10.2017 and assessed the income of the assessee company at an amount of Rs.446,33,19,200/-. 6. Aggrieved, the assessee has assailed the assessment framed by the A.O under Sec. 143(3) r.w.s 144C(13), dated 30.10.2017 in appeal before us. We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as the judicial pronouncements that have been pressed into service by them to drive home their contentions in context of the afo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x rate. The assessee has submitted that the tax levied at higher rate in the case of foreign companies is discriminatory in nature and, accordingly, relief has been sought on this account. The claim has been rejected by the authorities below. 4.1 We have heard both the parties in the matter. We find that this issue has already been examined by the Tribunal in the case of M/s BNP Paribas, decided in ITA Nos. 4601 4602/M/ 2004,vide order dated 1-7-2013. In that case also the tax rate applied in the case of the assessee, a foreign company was 48% compared to 38% applied in case of domestic companies. The assessee had argued that it was discriminatory and not in accordance with law. Reference was made to non-discrimination clause in the Treaty, as per which there should not be any discrimination between the domestic and the non-resident company. The Tribunal, however, referred to the Explanation in the Section 90, inserted in the IT Act with retrospective effect from 01-04- 1962 as per which the higher tax rate in case of foreign company, should not be regarded as violation of non-discrimination clause. The Tribunal also referred to the judgment of the Hon‟ble Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h to the tune of Rs.325,963,282/- under Article 13 of the India-France treaty. We find that while deciding the appeal for AY 2009-10 (ITA No. 3541/Mum/2014 dated 31.03.2016), the Tribunal has decided the issue as under: 5. Ground No.3 pertains to subjecting the data processing charges paid to the Singapore branch of the assessee amounting to Rs.132,335,594/- applying the provisions of Article 13(Royalties, fees for technical services and payments for use of equipment) of the India-France Tax Treaty. This issue is also covered by the order of the Tribunal in assessee‟s own case for AY 2001-02 to 2003-04 wherein interest paid by assessee to Head Office/overseas branches was held to be not liable to tax, following was the precise observation of the Tribunal in its order dated 20-6-2012 for AY 2002- 03:- 3. The solitary issue involved in the appeal of the assessee for, the A.Y. 2002-03 relates to the addition of Rs.1,48,30,613/- made by the A.O. and confirmed by the Ld. CIT (A) on account of interest paid by the Indian Branches of the assessee bank to its head office and other overseas branches. 4. The assessee, in the present case is a commercial bank having its Head ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an Income tax Act as well as treaty, that interest paid to the head office of the assessee bank as well as its overseas branches by the Indian branch cannot be taxed in India being payment to self which does not give rise to income that is taxable in India as per the domestic law or even as per the relevant 'tax treaty'. Respectfully following the said decision of Special Bench of the ITAT which is directly applicable in the present case, we delete the addition of Rs.1,48,30,613/- made by the A.O. and confirmed by the Ld. CIT (A) on this issue and allow the appeal of the assessee. 5.1 The issue has also been dealt by the Special Bench of the Tribunal in the case of Sumitomo Mitsui Banking Corporation (supra),wherein the observation of the Bench at para 88 is as under :- 88. Keeping in view all the facts of the case and the legal position emanating from the interpretation of the relevant provisions of domestic law as well as that of the treaty as discussed above, we are of the view that although interest paid to the head office of the assessee bank by its Indian branch which constitutes its PE in India is not deductible as expenditure under the domestic law being paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h has come to the conclusion that the payment on account of data processing charges paid to BNP Singapore cannot be taxed in the hands of the assessee. The conclusion arrived at by the coordinate bench, whatever may have been the path traversed by the coordinate bench to reach this point, are the same as arrived at by us. Of course, our reasons are different, as set out earlier in this order, but that does not really matter as of now. We fully agree with the conclusions arrived at by the coordinate bench. We, therefore, direct the Assessing Officer to delete the impugned disallowance of Rs 13,10,97,790. The assessee gets the relief accordingly. 14. Ground no. 2 is thus allowed. 6. We see no reasons to take any other view of the matter than the view so taken in assessee‟s own case in assessment year 2008-09. Respectfully following the same, we direct the Assessing Officer to delete the impugned disallowance of Rs.18,53,83,446/-.The assessee gets the relief accordingly. Also, the above order has been followed by ITAT L‟ Bench, Mumbai in assessee‟s own case in A.Y.2010-11 (ITA No. 1182/Mum/2015). Further, the Hon‟ble Bombay High Court has not admitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontra, the ld. D.R relied on the orders of the lower authorities. 19. We have given a thoughtful consideration to the contentions advanced by the authorized representatives for both the parties in context of the aforesaid issue under consideration. On a perusal of the records, we find, that the issue as to whether or not interest payable/paid by the Indian branch offices of the assessee to its head office and its other overseas branches would be chargeable to tax had been looked into by the various benches of the Tribunal in the assessee‟s own case for the aforementioned years. On a perusal of the order passed by the Tribunal in the assessee‟s own case for A.Y. 2012-13 in ITA No. 1232/Mum/2018, dated 17.07.2019, the Tribunal following the order of the Special bench‟ of the ITAT, Mumbai in the case of Sumitomo Mitsui Banking Corporation Vs. DDIT (2012) 163 ITD 66 (Mum) (SB) and the orders of the coordinate benches of the Tribunal in the assessee‟s own case for the preceding years, had concluded, that the interest income received by the assessee from its Indian branch being a payment made to self was thus not taxable in the hands of the assessee. For a fai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Circular explaining the object and purport of introducing such explanation, it is evident that such explanation was introduced to overcome the effect and implication of the Special Bench decision of the Tribunal in case of Sumitomo Mitsui Banking Corporation (supra). However, it has been made clear by the CBDT that such amendment by way of explanation will apply from the assessment year 2016 17 onwards. That being the case, as per the relevant statutory provisions applicable to the impugned assessment year and as per the ratio laid down by the Tribunal, Special Bench in case of Sumitomo Mitsui Banking Corporation (supra), which is applicable to the impugned assessment year, the interest income received by the assessee from its Indian Branch being a payment made to self, is not taxable at the hands of the assessee. Therefore, respectfully following the Special Bench decision of the Tribunal, Mumbai Bench, in Sumitomo Mitsui Banking Corporation (supra) and the decisions of the Co ordinate Bench in assessee‟s own case in the preceding assessment years, which we are bound to follow adhering to the norms of judicial discipline in the absence of any material difference in facts, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23;s claim for credit of tax deducted at source of Rs.5,18,11,932/-, the A.O, had while framing the assessment allowed a short credit to the extent of Rs.2,59,07,320/. As the aforesaid issue would require verification of records, we, therefore, restore the matter to the file of the A.O with a direction to verify the aforesaid claim of the assessee. In case the claim of the assessee is found to be in order then credit for the deficit amount of tax deducted at source shall be allowed by the A.O as per the extant law. Needless to say, the A.O shall in the course of the set aside proceedings afford an opportunity of being heard to the assessee who shall remain at a liberty substantiate his aforesaid claim. The Ground of appeal No. 6 is allowed for statistical purposes. 24. 7th Ground of appeal: 7. The learned AO has erred in levying interest under section 234A of the Act of Rs 29,58,846 without having regard to the fact that the return of income was filed by the Appellant within the prescribed due date for filing the return of income. 25. The assessee has assailed the interest of Rs.29,58,846/- that has been levied by the A.O under Sec. 234A of the Act. It was averred b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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