TaxTMI 
TaxTMI 
2016 (7) TMI 712
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....irections issued by the Disputes Resolution Panel-I, Mumbai under section 144C(5) of the Act dated 23.11.2015. 2. In this appeal, assessee has raised the following Grounds of appeal : "1. The Assessing Officer/Dispute Resolution Panel erred in holding that guarantee commission received by the Appellant amounting to Rs. 33,40,347/- was liable to tax in India. 2. The Assessing Officer/Dispute Resolution Panel erred in holding that guarantee commission was liable to tax under section 9 of the Income Tax Act, 1961. 3. The Assessing Officer/Dispute Resolution Panel erred in holding that income on account of providing corporate guarantee was taxable in India under Article 23 of the Double Taxation Avoidance Agreement....
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.... India, viz., Capgemini India Pvt. Ltd and Capgemini Business Services India Pvt. Ltd. In the return of income filed by the assessee for the assessment year under consideration it declared an income of Rs. 9,52,52,240/- on account of such royalty income. In the course of assessment proceedings, the Assessing Officer noticed that assessee had received guarantee commission of Rs. 33,40,347/- from the two associate Indian concerns in return for assessee having extended corporate guarantee to BNP Paribas, France for the credit facilities extended by BNP Paribas, France to the associate concerns in India. Before the Assessing Officer the plea of the assessee was that such guarantee commission was not chargeable to tax in India either under the d....
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....corporate guarantee given by the assessee. The assessee has charged guarantee commission @ 0.5% per annum for the corporate guarantees given on behalf of its subsidiaries in India. The AO has taxed the same by holding it to be "Other Income" under Article 23 of the DTAA between India and France. 4. The assessee is before us against the said addition. 5. We have considered rival contentions and found that the AO taxed the guarantee commission on the plea that guarantee has been provided for the purpose of raising finance by an India company. As per the AO finance was raised in India. The AO further observed that finance requirement is met by a Indian branch of the bank, the benefits of guarantee are shared by the Indian ent....
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.... arises from the action of the income-tax authorities in holding that the surcharge and education cess is payable in addition to tax of 10% payable on royalty income. On this aspect, there is no dispute between the assessee and the Revenue that the royalty income earned by the assessee is to be taxed @ 10% in view of the DTAA between India and France. The dispute is whether the assessee is liable to pay surcharge and education cess in addition to the tax leviable @ 10%. 9. As noted earlier, assessee is a foreign company which is a tax resident of France. The royalty income earned by the assessee is liable to be taxed in India @ 10% in terms of Article 13 of DTAA between India and France. While calculating such liability, the Assessing Of....
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.... surcharge thereon. Clause (2) of Article 2 further prescribes that the treaty shall also apply to any "identical or substantially similar taxes" which may be imposed by either of the two countries after the signing of the treaty. In the present context, it is not in dispute that 'education cess' introduced by the Finance Act, 2004 is akin to surcharge and the Kolkata Bench of the Tribunal in the case of DIC Asia Pacific Pte. Ltd. (supra) held the same to be in the nature of an additional surcharge. Now, since clause (1) of Article 2 provides that the taxes governed would include taxes and surcharge thereon, we find no reason for the Revenue to levy the surcharge and education cess, which is also in the nature of surcharge, over and above t....