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TMI Blog2024 (6) TMI 1139X X X X Extracts X X X X X X X X Extracts X X X X ..... violation of non-discrimination clause. The Tribunal also referred to the judgment of the Hon'ble Supreme Court in the case of ACIT Vs. J.K. Synthetics [ 2001 (2) TMI 17 - SUPREME COURT ] Tribunal accordingly, rejected the ground raised by the assessee correctly. Taxability of data processing fees paid by the assessee to its overseas branch - This issue also of recurring issues coming from A.Y. 2005-2006 to A.Y.2020-2021 and the co-ordinate Bench in [ 2024 (6) TMI 673 - ITAT MUMBAI ] wherein as held that the department was not justified in taxing the data processing charges to the Singapore Branch of the assessee by applying the provisions of Article 13 of the India-France Tax Treaty. In effect thus, reversing the stand of the DRP, the coordinate bench 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. Decided in favour of assessee. Taxability of interest paid by branch office to Head Office / overseas branches ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard, we have perused the provision of Sec. 143(2) of the Act as amended by the Finance Act 2016 reproduced as under: 3-1 Sub-section 143(2), as amended by Finance Act 2016 reads as under: 143(2) Where a return has been furnished under section 139, or in response to a notice under sub-section (1) of section 142, the Assessing Officer or the prescribed income tax authority, as the case may be, if, considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not under-paid the tax in any manner, shall serve on the assessee a notice requiring him, on a date to be specified therein, either to attend the office of the Assessing Officer or to produce, or cause to be produced before the Assessing Officer any evidence on which the assessee may rely in support of the return: The amended sub-section 2 of Sec. 143 is applicable w.e.f 1.04.2016 which entitles Prescribed Income Tax Authorities (r.w Rule12E) to issue notice under subsection 2 of Sec. 143 apart from the assessing officer (officer holding PAN jurisdiction over the case). 7. Further we have perused the CBDT Notification No. 25/2021 dated 31.03.2021 which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner's case which belongs to Central Charge for issuance of notice under Section 143(2) of the Income Tax Act, 1961; and if the aforesaid officer could not have so assumed jurisdiction, whether the proceedings must fail for want of due notice 3 326 ITR 492 [GUJ] under Section 143(2) of the Income Tax Act, 1961. The Hon ble High Court has rejected the petition of the assessee holding as under: 39. This Court must opine that there is a transition from a Scheme notified under the provisions of the IT Act to a Scheme under the IT Act incorporation all the essential without material changes insofar as assessments generally and assessments in the cases of Central Charges and International Taxation Charges and there is nothing in this transition, including the provisions of Section 144B or the CBDT's Order, to infer exclusion of the operation of CBDT's order dated 13.08.2020. This Court must therefore conclude that the operation of the CBDT's order dated 13.08.2020 is saved by the application of the Section 24 of the General Clauses Act, 1897. 11. We consider that the cases referred by the ld. Counsel are entirely distinguishable from the fact of the cases of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a perusal of a recent order of the Tribunal passed in the assessee's own case for A.Y, 2013-14 in ITA No. 552/Mum/2018, dated 22.04.2019, we find, that the Tribunal by relying on its earlier order for AY. 1996-97 in ITA No. 2760/Mum/2008, dated 28.08.2013 had therein concluded that the tax levied at a higher rate in the case of a foreign company is not to be regarded as a violation of the non-discrimination clause. For the sake of clarity the view taken by the Tribunal in context of the aforesaid issue is reproduced as under: We find that while deciding the appeal for AY 1996-97 (ITA No. 2760/Mum/ 2008 dated 28.08.2013), the Tribunal has decided the issue as under: 4. The third issue is relating to tax 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 rat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the course of appellate proceedings before us the ld. Counsel submitted that identical issue on similar fact has been adjudicated by the coordinate bench of the ITAT in favour of the assessee. On the other hand, the ld. D.R supported the order of lower authorities. 16. Heard both the sides and perused the material on record. With the assistance of ld. Representative we have perused the decision of coordinate bench vide ITA no.1076/Mum/2021 for A.Y.2017-2018 on this issue the relevant extract of the decision is reproduced as under: 10. The brief facts of the case pertaining to this issue are: The branch office of the assessee bank has paid Rs. 40,70,47,265, as data processing fees to its Singapore branch. During the assessment proceedings, it was noticed that the assessee itself had added back the markup on cost amounting to Rs. 1,93,83,203, in the computation of income pertaining to the branch office. During the assessment proceedings, the assessee submitted that payment of data processing charges to the Singapore branch constitutes a transaction between branches of the same legal entity and is therefore in the nature of payment to self. The assessee further submitted that as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity of data processing fees paid by the Indian branch offices of the assessee to its Singapore branch (service agent) to the tune of Rs 40.78 10,733/ under Article 13 of the India-France Tax Treaty. We find that the Tribunal while disposing off the appeal of the assessee for A.Y. 2013- 14 in ITA No. 552/Mum/2018, dated 22.04.2019 had adjudicated the said issue by relying on its earlier order passed in the assessee's own case for AY. 2009-10 in ITA No. 3541/Mum/2014, dated 31.03.2016, observing as under: In the above ground of appeal, the issue is about data processing fees paid by Indian Branch Office of the assessee to Singapore Branch 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... head office and overseas branches was chargeable to tax in India. Accordingly, the addition made by the A.O. on this issue was confirmed by the Ld. CIT(A). 5. We have heard the arguments of both the sides and perused the relevant material on record. As agreed by the Ld. Representatives of both the sides. the issue involved in this appeal of the assessee now stands squarely covered by the decision of Special Bench of the ITAT in the case of Sumitomo Banking Corp Mumbai wherein it was held, after elaborately discussing the legal position emanating from the interpretation of relevant provisions of Indian 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 AO. and confirmed by the Ld. CIT (A) on this issue and allow the appeal of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on are perimateria, where payment made by assessee to Singapore Branch for data processing was brought to tax. Respectfully following the order of the Tribunal in assessee's own case as well as the order of the Special Bench of the Tribunal in the case of Sumitomo Mitsu Banking Corporation (supra), we hold that the department was not justified in taxing the data processing charges to the Singapore Branch of the assessee by applying the provisions of Article 13 of the India-France Tax Treaty. 13. In effect thus, reversing the stand of the DRP, the coordinate bench 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... difference in facts and/or in law in the subject Assessment Years to that in Assessment Year 2006- 07. Therefore, the above decision of this Court for Assessment Year 2006-07 will apply in these two Appeals. 5. Therefore in view of the reasons stated in our order dated 20 March 2018 passed in Income Tax Appeal No.1192 of 2015 relating to Assessment Year 2006-07, the identical question as proposed in the two appeals do not give rise to any substantial question of law. Thus not entertained. 14. We find that this issue is recurring in nature and has been decided in favour of the assessee in the preceding assessment years. The learned DR could not show us any reason to deviate from the aforesaid decision and no change in facts and law was precedents in assessee s own case cited supra, ground no.2 raised in assessee s appeal is allowed. 17. We consider that this issue is recurring in nature and same has been decided in favour of the assessee in the earlier assessment years as cited supra in this order, therefore, following the decision of ITAT as discussed supra the ground no. 3 of appeal of the assessee is allowed. 8. Respectfully following the decision of the co-ordinate Bench (supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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