TaxTMI 
TaxTMI 
2020 (1) TMI 612
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....rred in holding that income tax refund under section 244A of the Income-tax Act ("the Act") is not a debt - claim and therefore interest thereon is not covered under Article 11 of the India-USA Double tax Avoidance Agreement ("the DTAA") for concessional tax treatment and hence normal rates apply. 2. The CIT(A) erred in holding that the Deputy Commissioner of Income-tax (International Taxation) - 2(1)(1), Mumbai ("the Assessing Officer" / "the AO") has rightly applied the rate of tax being 16.2225% [i.e. 15% (as per Article 11 of the India US DTAA) + 5% (surcharge) + 3% (education cess)] on the interest income of Rs. 20,83,836 received on the Income-tax refund, as against the tax rate of 15% applicable per Article 11 of the DTAA. Re. Relief No. 2 3. The CIT(A) erred in directing the AO to verify the reason for failure on part of the payer to deduct tax at source for deciding whether interest under section 234B is leviable notwithstanding that for the year under consideration advance tax was not payable because tax was deductible on the entire income of the Appellant, being a non-resident. Re. Relief No. 3 4. The CIT(A) erred in directing....
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....sed by the assessee. He submitted that it was also observed by the Hon'ble Supreme Court that even the department has understood the object behind insertion of section 244A of the Act as that the assessee is entitled to payment of interest for money remaining with the government which would be refund. Refund due and payable to the assessee is debt owed and payable by the revenue. Therefore, Ld. Counsel for the assessee contended that income tax refund is taxable under Article 11 of the DTAA and reliance was placed on the following decisions: - (i) ADIT (IT) v. Credit Agricole Indosuez [33 taxmann.com 441)[2013]. (ii) M/s. DHL Operations B.V., The Netherlands (Now Post Merger, DHL International GMBH) v. DDIT (IT) (183/Mum/2010) (iii) ACIT v. Clough Engineering Ltd (Delhi ITAT - SB) (11 taxmann.com 70) [2011] (iv) Platinum Investment Management Ltd. v. DDIT(IT) (Mumbai Tribunal) (ITA No. 4770/Mum/2015) (v) Bechtel International Inc. v. ADIT(IT) (Mumbai ITAT) (19 taxmann.com 179) [2012] (vi) DDIT(IT) v. Principal Life - International Emerging Markets Separate Account (Mumbai ITAT) (53 taxmann.com 101) [2015]. 6. Ld. DR ve....
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....lowing the said decision, we restore this issue to the file of the Assessing Officer to adopt the tax rate as specified in India-USA DTAA in the light of the decision of the Hon'ble Special Bench in the case of ACIT v. Clough Engineering Ltd (supra) and the decision of the Hon'ble Jurisdictional High Court in the case of the DIT(IT) v. Credit Agricole Indosuez (supra). 9. Ground No. 3 of grounds of appeal relates to charging of interest u/s.234B of the Act. 10. Briefly stated the facts are that, the Assessing Officer while computing the tax payable by the assessee charged interest u/s. 234B of the Act at Rs..63,44,480/- as against NIL interest as calculated by the assessee, since according to Assessee no interest u/s. 234B of the Act is liable to be charged. Ld. CIT(A) directed the Assessing Officer to examine the facts and the reasons for the failure on the part of the payer to deduct tax at source and take a decision. 11. Ld. Counsel for the assessee before us, submitted that for the year under consideration advance tax was not payable by the assessee being the non-resident company because tax was fully deductible on the entire income earned by the assessee. It is su....
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....n of charging interest under Section 234B of the Act by relying upon the decision in the case of Motorola Inc. rendered by Hon'ble Special Bench of ITAT, "A" Bench, Delhi, reported in (2005) 95 ITD 269." 2. Our attention is invited to the following findings recorded by the Tribunal in its order dated 12th December, 2007: "Thus, in the given case, though assessee is assessable in respect of the income (though of course and it would not be if its quantum appeal is successful), it is not liable to pay advance tax, since tax is deductible by the payer M/s.NTIL, though not actually deducted by it." 3. The submission on behalf of the revenue is that, on failure of the payer to deduct the advance tax, it is the liability of the assessee to pay the advance tax even on the amount which had not been deducted under Section 195 of the Income Tax Act. 4. Our attention also has been invited to the observations of the Full Bench of this Court under the Indian Income Tax Act, 1922 in the case of Commissioner of Income Tax, Bombay City-I v/s Daimler Benz A.G. reported in (1977) 108 ITR 961). One of the issues considered was the consequence of failure to pay advan....
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....terest under Section 215. In that case, the assessee had not paid advance tax on interest income. The payer of interest had not deducted the tax. The learned Bench of the Madras High Court was of the view that levy of interest under Section 215 on assessee was not justified. 8. We are in respectful agreement with the view taken in the case of Commissioner of Income-Tax & anr. v/s Sedco Forex International Drilling Co. Ltd., by the Uttaranchal High Court. We are clearly of the opinion that when a duty is cast on the payer to pay the tax at source, on failure, no interest can be imposed on the payee-assessee." 15. This decision squarely applies to the facts of the assessee's case. Thus, following the decision of the Hon'ble Jurisdictional High Court we direct the Assessing Officer to delete the interest levied u/s. 234B of the Act. 16. The last ground of grounds of appeal is in respect of charging interest u/s. 234C of the Act. 17. Ld. Counsel for the assessee submitted that as per section 234C of the Act, interest is chargeable on the tax due on the returned income and there was no tax due as per the return of income and therefore interest u/s.234C of the Ac....
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....o. 6510/Mum/2016 (A.Y. 2011-12) dated 16.11.2018. (vi) ITA.No. 831/Mum/2018 (A.Y. 2013-14) dated 16.07.2019 20. Ld. DR vehemently supported the orders of the Assessing Officer. 21. We have heard the rival submissions and perused the orders of the authorities below and the orders of the Tribunal. We observe that Ld. CIT(A) following the order of the Tribunal for various assessment years for 2001-02, 2006-07 and 2007-08 decided this issue holding that the gain arising from roleover of foreign exchange contracts is assessable as capital gains/losses observing as under: - "4. I find that the matter has been adjudicated by Hon'ble ITAT in case of assessee itself for earlier AYs as taxable income under head capital gains. For A.Y. 2009-10, the Hon ITAT in their order in ITA.No 5479/Mum/2014 r.w CO No.19/Mum/2016 dated 15.03.2017 has given their findings in paragraph 4 based on their earlier decisions for AY 2001-02,2006-07 and 2007-08. The Assessing officer in assessment order has not accepted same in view of departmental appeal before Bombay High Court. 5. The concluding part of written submission of appellant against ground 4 is as under: "....