9911796707
TMI Blog2023 (7) TMI 1518X X X X Extracts X X X X X X X X Extracts X X X X ..... ct was deleted by the CIT(A). In our view, the order passed by the CIT(A) does not suffer from any infirmity to this extent. We do not find merit in the contention advanced by Ld. Departmental Representative that Nostro Account Maintenance Charges are in the nature of interest as defined under Section 2(28A) of the Act. The service fee and other charges included in the above definition of interest are those charged in respect of (i) moneys borrowed, or (ii) debt incurred or (iii) in respect of any credit facility (which has not been utilized). In the case before us, the Assessing Officer has not brought on record any material to establish that the Assessee has borrowed money or incurred debt or availed any credit facility, and the Nostro Account Maintenance Charges have been charged in respect of the same. - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... ts with banks outside India as well as with branch offices of the Assessee outside India. The Nostro Accounts Maintenance Charges were levied by such overseas banks/branches on the Assessee were with respect to the Nostro Accounts maintained outside India. As a common practice, the Nostro Accounts Maintenance Charges were directly debited by the overseas bank/branches to such Nostro Account and therefore, there was no remittance made by the Assessee on account of the same. The overseas bank/branches were providing services, if any, outside India which were, in any case, not in the nature of managerial, technical or consultancy services. The Nostro Account Maintenance Charges were also not in the nature of interest as defined in Section 2(28A) of the Act and therefore, the Assessee was not under obligation to deduct tax under Section 195 of the Act. 7. However, the Assessing Officer was not convinced. The Assessing Officer concluded that Nostro Accounts Maintenance Charges fell within the definition of term 'interest' as defined in Section 2(28A) of the Act. The Assessing Officer treated the Assessee as being an 'assessee in default' and vide order dated 31/03/2021, raised a demand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds of overseas banks as per the provisions of the Act. Further, attention is invited to CBDT instruction dated 27.9.1988 (enclosed as Annexure 1) where the CBDT has clarified that no tax is required to be withheld on SWIFT charges since the amount is directly debited overseas. Even otherwise, in case where tax treaty provisions are applicable, such charges being in the nature of business income are not taxable in India in the absence of permanent establishment in India of the relevant overseas bank as per Article 5 read with Article 7 of the relevant tax treaty. In view of the above, the Appellant submits that such charges are not liable to tax in India and, as such, there is no question of deduction of tax at source under section 195 of the Act. In this regard, the Appellant would like to place reliance on the decision of the Mumbai Tribunal in case of Oman International Bank SAOG vs Dy. Director of Income-tax (International Taxation) [ITA No. 6800/Mum/2010] wherein it is held as under: "...the transaction charges paid on Nostro Account were in the nature of bank charges for maintaining the accounts with banks outside India. These charges were recovered directly by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . After taking into consideration the submission made by the Assessee, the CIT(A) allowed the appeal and deleted the demand of for INR 1,72,50,730/- and INR 1,96,33,817/- raised under Section 201(1) and 201(1A) of the Act vide order dated 31/03/2021. 10. Being aggrieved, the Revenue has preferred the present appeal. 11. We have considered the rival submission and perused the material on record. 11.1. The CIT(A) has deleted the demand raised upon the Assessee under Section 201(1)/(1A) of the Act by holding as under: "4. Decision: I have considered the submission of the Appellant as well as the order under appeal. Various grounds of appeals raised are adjudicated below. 4.1 Grounds no. 1 & 2: These grounds pertain to AO's action of holding Appellant as assessee in default in respect of Nostro Account Maintenance charges paid / payable to foreign banks and subsequent raising of TDS demand, by holding that the charges are liable to tax in India and consequently, liable for tax deduction u/s 195 of the Act. In the submission, Appellant has submitted that it has not borrowed money/ debt incurred from overseas banks. As such, payment of Nostro Account Maintenance charges would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outside India. These charges were recovered directly by way of debits to the concerned accounts of the assessee with these banks and the same represented business income of those banks which accrued/arisen outside India. As held by the Tribunal, no tax therefore was required to be deducted at source from the transaction charges paid on Nostro account and the disallowance made by the A.O. u/s 40(a)(i) of the Act was not sustainable. Respectfully following the orders of the Tribunal on the similar issue involved in earlier years, we uphold the impugned order of the ld. CIT(A) deleting the disallowance made by the A.O. on account of transaction charges u/s 40(a)(i) of the Act and dismiss ground No. 3 of Revenue's appeal."(Emphasis Supplied) 11.3. Thus, the Tribunal has, in identical facts and circumstances, decided the issue in favour of the Assessee while holding that Nostro Account Maintenance Charges are in the nature of bank charges levied on transaction and the same are not subject to tax deduction at source under Section 195 of the Act. Therefore, the provisions of Section 40(a)(i) of the Act cannot be attracted in case of the deemed remittance of Nostro Account Maintenance C ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
