Foreign company challenges tax discrimination against domestic companies for assessment years; higher rates upheld based on retrospective amendment.

The appeal involved a foreign company challenging the discrimination in tax rates compared to domestic companies for assessment years 1997-98, 1998-99, and 2000-01. The CIT(A) upheld the higher tax rate for the foreign company based on a retrospective amendment and previous court decisions. The ITAT Mumbai dismissed the appeals, affirming the tax disparity and rejecting the assessee's arguments. Additionally, a ground regarding the utilization of losses incurred in the redemption of securities for the assessment year 1998-99 was dismissed as not pressed by the assessee during the hearing.

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Issues involved:
The appeal pertains to the discrimination in tax rates applied to a foreign company compared to domestic companies for the assessment years 1997-98, 1998-99, and 2000-01.

Summary:

Issue 1: Discrimination in tax rates for foreign company
The assessee contended that there was discrimination in tax rates against a foreign company compared to domestic companies. The AO applied a higher tax rate of 48% for the foreign company, whereas the tax rate for domestic companies was lower. The assessee argued that this discrimination was not in accordance with the law. The CIT(A) rejected the contention, citing the OECD Model convention and the non-discrimination clause. The Revenue argued that the issue of discrimination had been resolved by the insertion of an Explanation to section 90 with retrospective effect from 01.04.1962. The CIT(A) upheld the higher tax rate for the foreign company based on the retrospective amendment and the decision of the Hon'ble Apex Court in a previous case. The ITAT followed the decision in another case and dismissed the grounds raised by the assessee for the assessment years 1997-98 and 2000-01.

Issue 2: Utilization of loss incurred in redemption of securities
In the appeal for the assessment year 1998-99, the assessee raised a ground regarding the inability to utilize the loss incurred in the redemption of securities for set off in future years. During the hearing, the assessee's counsel indicated that the assessee was not interested in pursuing this ground as the loss could not be utilized. Consequently, this ground was dismissed as not pressed.

In conclusion, the appeals filed by the assessee were dismissed by the ITAT Mumbai based on the above considerations.

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