2018 (8) TMI 854

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....king company eligible to have its interest income earned on fixed deposits held with DBS Bank Mumbai taxed @ 10% u/s. 11(2)(a) of the DTAA between India and Singapore, ignoring the fact that the operations of the said banking company had been wound up in December 2003 and also that the amount on which interest was earned was in the nature of a fixed deposit and not a loan prescribed as per Article 11(2)(a) of the India-Singapore DTAA? 3. Brief facts of the case are that the assessee is foreign company, incorporated in Singapore and the scrutiny assessment was completed u/s. 143(3) of the Income Tax Act, 1961 on 27.07.2010. The total taxable income was assessed at Rs. 3, 14, 97, 084/- being the revised returned income. 4. Thereafter the as....

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...., it was found that assessee has earned only interest income from fixed deposit kept in DBS Bank Mumbai after closure of branch in India. This interest income has been offered to tax under head income from Other Source and claimed taxable at the rate of 10% as per Article 11(2) (a) of the DTAA between India & Singapore. The written submissions filed by the assessee have been perused. Since the branch of the assessee closed down and no business activity has been carried out in the instant year, there is no permanent establishment and hence, normal provisions of the IT Act 3 not applicable. The income earned will fall under the head of Income from other 'sources and as per the Article 11 of Indo- Singapore DTAA between Singapore and Ind....

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.... of the India- Singapore DTAA as discussed above. 10. Assessed accordingly u/s. 143(3) r.w.s. 147 r.w.s 144 C(3). Give credit for TDS and taxes paid, if any, after due verification. Charge interest as applicable, surcharge @2.5% and E.C. @3% is also leviable on this tax. Issue D.N/ R.O accordingly. 6. Upon the assessee's appeal, the ld. Commissioner of Income Tax (Appeals) quashed the reopening and observed as under: 3.2 I have considered AO's order as well as appellant AR's submission. Having taken note to the same, I am in complete agreement with the appellant's this submission that all the necessary documents pertaining to the income of the appellant were disclosed by the appellant in its return of income filed which was....