2025 (8) TMI 1333

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....0-11. 2. Since issues raised in these appeals are similar based on the same identical facts, with the consent of the both the parties, we proceed to hear the appeals together and pass consolidated order for the sake of convenience. 3. First, we shall take up appeal in ITA No. 2855/Chny/2024 for AY 2007-08 for adjudication. 4. The assessee raised 3 grounds of appeal, amongst which, the only issue emanates for our consideration as to whether the ld. CIT(A) is justified in confirming the disallowance of interest payment in the facts and circumstances of the case. 5. The assessee is a partner in M/s. Raja Holdings, Kumbakonam in his individual capacity and paid interest to RBS Coutts Bank Ltd., Singapore, which is having its Head Office in ....

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....on'ble ITAT that the Hon'ble ITAT has taken due cognizance of article 11(1) and 11(2) of the DTAA between India and Switzerland The following finding of the Hon'ble ITAT is reproduced "In the above circumstances, in our considered view the interest in question was taxable in India though the rate of tax could not exceed 10% Therefore, in our view, the assessee was liable to deduct tax at source on the aforesaid payment of interest u/s 195 of the Act." 6.3 Hence, the Hon'ble ITAT has taken due cognizance of article 11(1) and 11(2) of the DTAA between India and Switzerland and taking cognizance of Article 11(2) the Hon'ble ITAT has given the finding that the rate of tax could not exceed 10%. The Hon'ble ITAT also examined whet....

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....ssed. 6. The ld. AR Shri R. Sivaraman, Advocate submits that as per section 195 of the I.T. Act, tax is to be deducted at source only when any payment is made by "any person" to a non-resident and such payment has an element of income embedded in it which is chargeable to tax in India. The expression "any person" referred to in section 195 should mean any person who is a resident in India. Section 195 applies only if payments are made by a resident to another non- resident and not between two non-residents. Section 195 of the Act does not apply to the present transaction because it was between two non-resident entities. The assessee is a non-resident as could be seen from the assessment order for this year where his status is shown as Non-....

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....t made to foreign bank nor filed undertaking with the remitting bank. In view of the provisions of section 9(1)(v)(c) of the Act, the Assessing Officer disallowed the entire interest expenditure under section 40(a)(i) of the Act for violation of non-deduction of tax under section 195 of the Act. We note that the ITAT in assessee's own case for AY 2008-09, wherein, the Tribunal has taken due cognizance of Article 11(1) and 11(2) of the DTAA between India and Switzerland and taking cognizance of Article 11(2), held that the rate of tax could not exceed 10% and the assessee was liable to deduct tax at source on the payment of interest under section 195 of the Act. Considering the order of the Tribunal in assessee's own case for AY 2008-09, the....