2023 (4) TMI 967

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....gainst the order of assessment passed u/s. 143(3) r.w.s. 144C of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 29/04/2016 by the ld. Dy. Commissioner of Income Tax, International Taxation - 4(1)(1), Mumbai (hereinafter referred to as ld. AO). 2. The revenue has raised the following grounds of appeal:- "1. Whether on the facts and in the circumstances of the case and in law, the Ld CIT(A) has failed to appreciate that during the AY 2012-13, the assessee has operated through its branch Permanent Establishment unlike in previous years where the assessee was acting through subsidiary Indian company. 2. Whether on the facts and in the circumstances of the case and in law, the Ld CIT(A) has erred in deciding....

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....see branch filed return of income for the assessment year 2012-13 on 30/11/2012 declaring total income of Rs.24,03,58,720/-. The Ld. AO in the course of assessment proceedings observed from the ITS (Individual Transaction System from ITD) details of the assessee that assessee had an undisclosed TDS credit amounting to Rs.6,96,33,878/-. Accordingly, the assessee was directed to explain the reasons for difference in income appearing in Form 26AS vis-a-vis the Profit & Loss Account and the return of income filed. The assessee vide letter dated 29/03/2016 submitted that in its Form 26AS, tax credit of Rs.11,47,62,334/- is reflected, out of which assessee has claimed tax credit of Rs.4,96,90,703/- in the return of income. Further out of the afor....

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....n income could be brought to tax representing interest on external commercial borrowing amounts in the hands of the assessee at the tax rates prescribed under the Indo Netherlands Tax Treaty by specifically applying Article 11 thereon and correspondingly grant TDS credit on the same. The Ld. AO, however, brought to tax the difference of undisclosed gross receipts as per Form 26AS and the return of income in the sum of Rs.63,27,60,316/- as an addition while framing the assessment. This addition represents interest income on external commercial borrowings. The Ld. AO, however, sought to tax the said interest income as normal business receipts taxable @40% as applicable to a foreign company instead of applying the tax rate provided in Article ....