AI Drafter 
TaxTMI 
TaxTMI 
2022 (12) TMI 1350
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..... Assessing Officer [AO] u/s. 201(1) / 201(1A) of the Act on 31-07-2020 for Assessment Year (AY) 2020-21. The grounds taken by the assessee are as under: 1. The order of the learned Commissioner of Income tax International Taxation) is: - a) Contrary to law, facts and circumstances of the case b) Opposed to fair procedure and legitimate expectation c) The order of the learned Commissioner of Income tax (International taxation) is by way of review of the opinion of the Assessing officer which is not permissible in law The Assessing Officer has made all the enquiries with respect to the facts relevant to applicability of Section 194LC. The AO has examined and concluded based on the documents produced that t....
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....erms of section 194 LC (ia) of the income tax Act and the section itself recommends Indian currency Bond which includes agreement, It is supported by: "Maxwell on the Interpretation of Statutes, 12th edition, page 228, states the rule thus: "Where the language of a statute, in its ordinary meaning and grammatical construction, leads to a manifest contradiction of the apparent purpose of the enactment, or to some inconvenience or absurdity which can hardly have been intended, a construction may be put upon it which modifies the meaning of the words and even the structure of the sentence. This may be done by departing from the rules of grammar, by giving an unusual meaning to particular words, or by rejecting them altogether....
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....India and no person resident in India shall borrow in rupees from, or lend in rupees to, a person resident outside India" It is submitted thus, that borrowing by a resident in India from a source outside India can be only in Foreign currency, as obviously the lender resident outside India (a German Company) can not possess Indian currency. The loan from a source outside India will, in all cases, be received into India only in a foreign currency and will be subsequently converted into India rupee INR for use by the Indian borrower in India. 4. The learned Commissioner of Income tax (International Taxation) in his decreetal ruling/verdict portion of the impugned order passed under section 263 of the Act directed to pass fres....
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.... Tax deduction at source (TDS) and the amount of TDS required on interest payments u/s 194LC and management service charges u/s 195 was worked out to be Rs.23.87 Lacs & Rs.58.24 Lacs respectively. The assessee remitted the same and the demand was fully satisfied. The applicable TDS rate u/s 194LC was held to be 5%. 4. Subsequently, Ld. CIT, upon perusal of case records, held that the rate of 5% was concessional rate of tax and to avail the same, the conditions as prescribed therein was to be fulfilled. The primary requirement was that the loan should have been availed in foreign currency whereas the loan was taken by the assessee in Indian currency. Accordingly, the revision of the order was sought and the assessee was put to show-cause ....
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....rce outside India. Accordingly, the order was held to be erroneous and prejudicial to the interest of the revenue and Ld. AO was directed to pass fresh order u/s 201(1) / (IA) after considering the matter in accordance with law including the terms of DTAA. Aggrieved as aforesaid, the assessee is in further appeal before us. Our findings and Adjudication 7. Upon perusal of material facts, it could be gathered that the assessee was subjected to TDS inspection and demand was raised u/s 201(1) / (1A) in terms of Sec.194LC and 195. It could be seen that no tax was deducted by the assessee and demand was raised by Ld. AO in terms of statutory provisions after examining the relevant documents including terms of ECB. The same would lead to a ....