TaxTMI 
TaxTMI 
2016 (3) TMI 1356
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.... ('India - France tax treaty')". 3. Learned counsel fairly accepts that the issue is covered, against the assessee, by a series of orders passed by the various co-ordinate benches in assessee's own case as also in the cases of Chohung Bank vs. DDIT [(2006) 6 SOT 144 (Mum)] and JCIT vs. Sakura Bank Limited [(2006) 100 ITD 215 (Mum)].In this view of this undisputed position and the conclusions arrived at by the learned CIT(A) being in harmony with the views of the co-ordinate benches, we reject the grievance of the assessee. No interference is thus called for. 4. Ground no.1 is thus dismissed. 5. In ground no. 2, the assessee is aggrieved that the learned CIT(A) erred in "subjecting to tax, the data processing fees paid by the India branch office of the appellant to its Singapore bench, as income of the appellant to the tune of Rs. 13,10,97,790 under article 13 (royalties and fees for technical services) of the India France DTAA". 6. Briefly stated, the relevant material facts are like this. The assessee before us is a France based bank (BNP France, in short) which is carrying on business in India through a branch office (BNP India, in short). During the course of the....
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....t has, in the case of CIT Vs Hyundai Heavy Industries Co Ltd [(2007) 291 ITR 482 (SC)], has held that "a taxable unit is a foreign company and not its branch or PE in India." The very foundation of dual taxable entity is thus laid to rest. There is only one taxable unit and that is the GE, though it is taxable in respect of the profits attributable to the PE, and there is thus no question of taxability by the GE in respect of a payment received from the PE. It is, therefore, devoid of legally sustainable basis to proceed on the basis that an internal charge by the Indian PE will result in a corresponding income in the hands of the French GE. We have also noted that, in the light of the undisputed facts set out in the statement of facts before the CIT(A), the services were rendered by the BNP Singapore on a cost plus 5% mark up basis, and that BNP India has claimed deduction in respect of actual costs and not the mark up. The mark up of 5% has already been offered as a suo motu disallowance in the computation of taxable income. Effectively thus, what has been added as income by the Assessing Officer is only the actual expense incurred for rendition of these services to the BNP India....
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....er article 7, as is elementary, only such profits can be brought to tax as business profits as are attributable to the permanent establishment, and that has already been done. There is no dispute about this position. In this view of the matter also, there is no scope of further addition being made in respect of an intra GE charge for the services rendered another PE within the GE. 12. As regards the DRP's directions for the assessment year 2006-07, which have been relied upon by the authorities below, we find that these directions have since been disapproved by a coordinate bench, vide order dated 21st November 2014. This order, in turn, refers to the order dated 16th July 2014 for the same assessee. The relevant observations in the said order are as follows: 5. Ground No.3 pertains to subjecting the data processing charges paid to the Singapore branch of the assessee amounting to Rs. 132,335,594/- applying the provisions of Article 13(Royalties, fees for technical services and payments for use of equipment) of the IndiaFrance Tax Treaty. This issue is also covered by the order of the Tribunal in assessee's own case for AY 2001-02 to 2003-04 wherein interest paid by assessee t....
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....India. Accordingly, the addition made by the A.O. on this issue was confirmed by the Ld. CIT(A). 5. We have heard the arguments of both the sides and perused the relevant material on record. As agreed by the Ld. Representatives of both the sides, the issue involved in this appeal of the assessee now stands squarely covered by the decision of Special Bench of the ITAT in the case of Sumitomo Banking Corp. Mumbai wherein it was held, after elaborately discussing the legal position emanating from the interpretation of relevant provisions of Indian Income-tax Act as well as treaty, that interest paid to the head office of the assessee bank as well as its overseas branches by the Indian branch cannot be taxed in India being payment to self which does not give rise to income that is taxable in India as per the domestic law or even as per the relevant 'tax treaty'. Respectfully following the said decision of Special Bench of the ITAT I which is directly applicable in the present case, we delete the addition of Rs. 1,48,30,613/- made by the A.O. and confirmed by the Ld. CIT (A) on this issue and allow the appeal of the assessee. 5.1 The issue has also been dealt by the ....