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TMI Blog2024 (5) TMI 1233X X X X Extracts X X X X X X X X Extracts X X X X ..... view neither of these conditions are satisfied in the present case. FAA after perusal of the Assignment Deed dated 28.12.2017 has found on facts that the Originator in this case is neither a holder of any securitized debt instrument, securities or security receipts and thus, cannot be regarded as an investor. FAA has also visited the reasoning articulated by the AO in holding otherwise. AO has opined that the Deed of Assignment dated 28.12.2017 is itself an instrument in the nature of a securitized debt instrument which has been negatived by the FAA - We find that the Deed of Assignment cannot be seen as a securitized debt instrument as has rightly been held by the FAA. There is a clear distinction between the Originator, which is the Assi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set-out the nature of securitization process. (i) Securitization is the financial practice of pooling various types of contractual debts and selling them in the form of a financial instrument, (ii) In the process, there are various stakeholders, viz. an Originator, which is the owner of financial assets which are acquired by securitization company or securitization trust for the purposes of securitization, (iii) The Debtor, which is the retail loan borrower who had obtained financial accommodation from the Originator under a contract or otherwise and who is liable to pay interest and to discharge any other obligation in respect of the financial asset to the Originator. (iv) A Special Purpose Vehicle (SPV) (the respondent-assessee in this c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 194LBC of the Act which has not been done. As noticed earlier, this is the issue which is involved in this appeal. 4. The Income Tax Officer (TDS), Mumbai by an order dated 22.02.2019 had found the assessee to be a defaulter within the meaning of Section 201(1)/201(1A) of the Act, inasmuch as according to the ITO, the assessee had failed to deduct the tax at source under the relevant provisions. It was found that the total monetary liability towards default is Rs. 2,70,54,449/- for the relevant year under consideration in respect of which a demand was raised. 5. Feeling aggrieved, the assessee challenged the same before the CIT(A), NFAC, Delhi. Before the appellate authority, it was contended on behalf of the respondent that Section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... absence of any distinction between the two, the payment made by the securitization trust to the PTC holders and the Originator has also to be reckoned and treated at par. It is submitted that the securitization trust is admittedly deducting tax at source while making the payment to the PTC holders and there is no reason why the payment made to the Originator should be treated differently. The learned DR was at pains to point out that after the survey action in cases pertaining to Sansar Trust, various securitization trusts have started deducting TDS under Section 194LBC of the Act on the amount of EIS to the Originator, albeit under protest. In short, according to the learned DR, the payment made to the Originator is covered within the purv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ization process is subject to and is governed by the guidelines issued by the RBI, viz. (a) Guidelines on Securitization of Standard Assets dated 01.02.2006 and (b) Revision to Guidelines on Securitization Transactions dated 21.08.2012. It is a matter of record that as per the RBI guidelines, the PTC holders (investors) are entitled to committed returns arising out of loan portfolio and any surplus is paid to the Originator as Excess Interest Spread (EIS). The CIT(A) after taking note of the provisions of Section 115TCA of the Act has come to the conclusion that the assessee in this case cannot be treated as an investor within the meaning of clause (a) of Explanation to Section 115TCA of the Act, in as much as an investor in such a case, ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... securitized debt instrument, securities or security receipts and thus, cannot be regarded as an investor. 12. The First Appellate Authority has also visited the reasoning articulated by the Assessing Officer in holding otherwise. The Assessing Officer has opined that the Deed of Assignment dated 28.12.2017 is itself an instrument in the nature of a securitized debt instrument which has been negatived by the First Appellate Authority. We find that the Deed of Assignment cannot be seen as a securitized debt instrument as has rightly been held by the First Appellate Authority. There is a clear distinction between the Originator, which is the Assignor of the loan portfolio to the assessee, which is the Assignor and the PTC holders, who are the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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