TaxTMI 
TaxTMI 
TaxTMI 
2017 (4) TMI 455
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....er (TPO) for computation of the arms length price (ALP) of international transactions reported in Form 3CEB, in respect of which no adjustment thereto was proposed by the TPO in his order under section 92CA(3) of the Act dated 31.12.2013. The draft order of assessment was completed under section 143(3) r.w.s. 144C(1) of the Act vide order dated 28.02.2014, wherein the assessee's income was determined at Rs. 31,04,66,470/- in view of the addition of Rs. 9,39,83,884/- on account of interest on Foreign Currency Convertible Bonds (FCCB's) under the head 'income from other sources". 2.2 Aggrieved by the draft order of assessment dated 28.02.2014 for A.Y. 2010-11, the assessee filed its objections thereto before the DRP-III, Mumbai. The DRP issued its directions under section 144C(5) of the Act vide order dated 14.11.2014. In pursuance thereof, the Assessing Officer (AO) then passed the impugned order dated 30.12.2014 under section 143(3) r.w.s. 144C(13) of the Act determining the assessee's total income at Rs. 30,99,25,696/-, by allowing the assessee relief of Rs. 5,40,777/- on account of interest on FCCBs received from Suzlon Energy Ltd. as per the directions of the DRP. 3. Aggrieved....
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....es. 4. When an issuing company issues FCCBs under the Scheme, the issuing company delivers the bonds to a Domestic Custodian Bank who in turn instructs the Overseas Depository Bank to issue a certificate to nonresident investors against the bonds held by the Domestic Custodian Bank. 5. The identity of the subscriber to the FCCBs is generally not known to the Domestic Custodian Bank and the issuing company, as the interest in FCCBs which are subscribed by the overseas investors are issued by the Overseas Depository Bank. Taxability of interest received on FCCBs under the Income-tax Act, 1961 and as provided in the Scheme 6. The interest payments on the FCCBs are subject to tax deduction at source (TDS) at the rate of 10% (plus applicable surcharge and education cess) as per section 115AC of the Income- tax Act, 1961 (Act) as also provided in clause 8 of the Scheme and under the offering circular provided by the issuer of FCCBs. 7. Clause 10(1) of the Scheme inter alia provides that during the period of fiduciary ownership of shares in the hands of the Overseas Depository Bank, the provisions of avoidance of double taxation agreement entered into by the Government of India with a....
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....d on FCCBs in notes to the return of income [as otherwise there was no requirement to file a return of income in respect of the FCCB interest by virtue of section 115AC(4) of the Act]. 13. The lower authorities have, however, added FCCB income to the Appellant's total income and also denied TDS credit in the present case ignoring the aforesaid difficulties faced by the Appellant and also ignoring the details submitted by the Appellant, such as confirmations, evidences of the issuer companies depositing the requisite taxes, TDS certificates issued by some of the issuer companies, etc." 4.1.2 The learned A.R. prayed that in view of the above mentioned facts and circumstances of the case, this issue be restored to the file of the AO who may be directed to call for information under section 133(6) of the Act from the issuers of FCCBs about details of TDS on the interest paid on FCCBs and/or get the requisite information from the concerned Assessing Officers of issuer companies and to grant TDS credit to assessee if it is found that the issuers have appropriately deducted tax at source and deposited the same with the Central Government treasury. 4.2 The learned D.R. for Revenue s....
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....cted at source and TDS certificates for the entire amount of Rs. 2,16,48,259/- (being Rs. 1,88,98,259/- towards TDS on interest on fully convertible debentures and Rs. 27,50,000/- towards TDS on fees for technical services) were furnished before the learned AO during the course of assessment proceedings 15. The credit for the said amount has not been given even though it reflects in Form No. 26AS and/or TDS certificates have been issued by the payer." 5.1.2 The learned A.R. prayed that in view of the above, the AO be directed to grant TDS credit as reflected in 26AS and/or based on TDS certificates furnished. 5.2 The learned D.R. submitted that this issue be restored to the file of the AO for verification in accordance with law, reiterating the same arguments and requirements put forth by him herein above at para 4.2 of this order (supra). 5.3 We have heard the rival contentions and perused and carefully considered the material on record. Both parties are in agreement that this issue of the assessee's claim for grant of TDS credit on interest earned on fully convertible debenture and fees for technical services requires to be restored to the file of the AO for verification ther....