Tribunal dismisses jurisdictional challenge; sets aside Section 195 applicability for re-examination

The Tribunal dismissed the jurisdictional challenge regarding the Income-tax Officer (TDS) (International Taxation), Noida, as the assessee did not press the issue during the hearing. Concerning the applicability of Section 195 on payments to the Singapore branch of ICICI Bank Limited, the Tribunal set aside the matter for re-examination by the Assessing Officer. The AO was directed to determine if ICICI Bank Ltd., Singapore branch was the main lender and reconsider the application of Section 195 based on additional evidence provided by the assessee. The appeals were allowed for statistical purposes.

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Issues Involved:
1. Jurisdiction of Income-tax Officer (TDS) (International Taxation), Noida.
2. Applicability of Section 195 regarding tax deduction at source on payments to the Singapore branch of ICICI Bank Limited.

Detailed Analysis:

1. Jurisdiction of Income-tax Officer (TDS) (International Taxation), Noida:

The assessee contended that the order under Section 201(1)/201(1A) was passed without jurisdiction by the ITO Noida, as the records were transferred to ITO Mumbai. The CIT(A) rejected this plea, stating that the jurisdiction starts from where the statutory forms were uploaded. Since the forms were uploaded on a valid TAN registered with the Noida TDS office, the ITO(TDS), Noida had jurisdiction. The Tribunal noted that the assessee did not press this ground during the hearing, resulting in the dismissal of the jurisdictional challenge.

2. Applicability of Section 195 regarding tax deduction at source on payments to the Singapore branch of ICICI Bank Limited:

The primary issue was whether the payments made to the Singapore branch of ICICI Bank Limited required tax deduction at source under Section 195 of the Income Tax Act. The assessee argued that ICICI Bank Ltd., Singapore branch is a resident entity under Section 6(3) of the Act, and hence, payments made to it do not attract TDS under Section 195. The assessee also cited a certificate from the Jt. CIT (OSD)-3(1), Mumbai, stating that the global income of ICICI Bank Ltd., including its offshore branches, is chargeable to tax in India.

The Assessing Officer (AO) held that the assessee failed to deduct tax at source on interest payments made to ICICI Bank Ltd., Singapore branch, treating the assessee as in default under Sections 201(1) and 201(1A). The AO based this conclusion on the agreement and Form 15CA and 15CB, which indicated that the payments were made to a non-resident entity. The AO noted that ICICI Bank Ltd., Singapore branch acted as an arranger and agent, and the actual lenders were various financial institutions located in Singapore and/or UK.

The CIT(A) upheld the AO's decision, emphasizing that the interest payments were made to various lenders through ICICI Bank Ltd., Singapore branch, and thus, the provisions of Section 195 were applicable. The CIT(A) rejected the assessee's argument that the payments were made to a resident entity, noting that the ICICI Bank Ltd., Singapore branch merely acted as an arranger and facility agent.

The Tribunal observed that there was no dispute regarding the residential status of ICICI Bank Ltd., including its offshore branches, as clarified by the Jt. CIT (OSD)-3(1), Mumbai. However, the Tribunal found contradictions in the assessee's records regarding the role of ICICI Bank Ltd., Singapore branch as the main lender or merely an arranger. The Tribunal noted that the agreement and the letter from ICICI Bank Ltd., Singapore branch indicated different roles. Consequently, the Tribunal set aside the issue to the AO for re-examination, directing the assessee to substantiate its claim with further evidence. The AO was instructed to determine whether ICICI Bank Ltd., Singapore branch was the main lender and, if so, to reconsider the applicability of Section 195.

Conclusion: The Tribunal allowed the appeals for statistical purposes, directing the AO to re-examine the issue of the applicability of Section 195 based on further evidence provided by the assessee.

Order Pronounced: The order was pronounced in the open court on 08.06.2018.

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