TaxTMI 
TaxTMI 
TaxTMI 
2016 (7) TMI 712
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....(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 (DTAA) between India and France. 4. Having regards to the facts and circumstances of the case and ....
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.... 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 domestic law or even in terms of Double Taxation Avoidance Agreement (DTAA) between India and France. The pertinent point made out by the ass....
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....f 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 entity with the assessee by making a compensatory payment. Accordingly the AO held that fees for guarantee arise in India. From the record we found that guarantee com....
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.... 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 Officer also charged surcharge and education cess in addition to tax @ 10%. The plea of the assessee before us is that the rate of tax of 10% prescribed in Article 13 of the....
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....r 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 the cap of 10% prescribed in Article 13 as the tax rate for royalty income. In any case, the provisions of Article 13 of the India-France DTAA, prescribing a cap of 10% on the ....