TaxTMI 
TaxTMI 
2024 (2) TMI 1591
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....fficer) 2. Ground No. 2: The learned AO has erred in law by not passing the final assessment order within the time limit prescribed under section 153 of the Act which is the outer time limit for passing the final assessment order and hence, the final assessment order dated 20 July 2023 which is passed after 30 September 2022 (being the time limit as per the provisions of Section 153 of the Act) is time barred and liable to be quashed 3. Ground No. 3: The learned AO has erred in disallowing 'Nostro Account charges paid by the Appellant to various foreign banks amounting to INR 84,007 by ignoring the fact that the foreign currency Nostro account has been maintained outside India and the said charges are not subject to tax in India in absence of the charges being attributable to the permanent establishment (PE) of the foreign banks in India. 4. Ground No. 4: The learned AO has erred in disallowing the deduction claimed by the Appellant under section 80G of the Act amounting to INR 24,53,016 5. Ground No. 5: The learned AO has erred in re-classifying the interest paid by the Appellant to its Head office (HO) am....
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.... Reserve Bank of India and other inter-bank funds, interest on loan and investment, commission, exchange and brokerage and miscellaneous income. The further facts of the case are discussed while adjudicating the ground of appeal filed by the assessee as follows: Ground No. 3: Disallowing of "Nostro Account" charges of Rs. 84,007/-: 3. During the course of assessment the assessing officer noticed that assessee has paid an amount of Rs. 84,007/- as nostral charges to Deutsche Bank AG, Frankfurt, Deutsche Bank Trust Company America's New York: National Westminster Bank PLC & Sumitomo Mitsui Banking Corporation Tokyo, Japan outside India. The assessee was asked to furnish detail of the TDS made on such payments. The assessee submitted that the aforesaid income was earned by the foreign bank from a source outside India and the said income had no economic nexus with its PE in India and this was not chargeable to tax under the provisions of the Act. However, the AO has not agreed with the submission of the assessee and observed that Sec. 40(a)(i) of the Act restrict such expenditure if no tax is deducted on the amount paid to non-resident, therefore, the sum of Rs. 84,007/- was disa....
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....rse of assessment proceedings the assessing officer noticed that assessee has disallowed CSR expenses of Rs. 1,17,46,555/- (Corporate Social Responsibility) as per explanation to Section 37 of the Act. However, the assessee has claimed part of CSR expenses of Rs. 24,53,016/- as donation and claimed deduction in chapter VIA of the Act. However, the assessing officer has disallowed the claim of deduction u/s 80G of Rs. 24,53,016/- on the ground that assessee has not spent the amount voluntarily and the same was spent as per the requirement of spending under CSR expenses. 8. The assessee filed the objection before the DRP. The DRP has dismissed the objection raised by the assessee for allowing deduction u/s 80G of the Act. 9. During the course of appellate proceedings before us the ld. Counsel submitted that assessee is eligible to claim the deduction u/s 80G of the Act amounting to Rs. 234,53,016/- being 50% of the donation amounting to Rs. 49,06,031/-. He further submitted that similar issue on identical fact has been adjudicated in favour of the assessee by the various decision of the Mumbai Tribunal and the other Tribunal as follow: 1. Marsh McLennan Global Services....
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....ce of the same under Section 80G of the Act (except for the donations made to the Swach Bharat Kosh and the Clean Ganga Fund), provided all the other conditions of Sec. 80G are fulfilled. Therefore, the DRP issued specific direction to allow deduction for INR.28,72,578/- under Section 80G of the Act after verifying whether the other conditions specified under Section 80G were fulfilled. As per mandate of Section 144C(13) of the Act, upon receipt of directions issued by DRP the Assessing Officer was required to complete the assessment in conformity with the directions issued by the DRP. We hold that the Final Assessment Order, dated 27.07.2022, passed by the Assessing Officer was not in conformity with the directions issued by the DRP and is therefore, set aside, being contrary provisions of Section 144C(13) of the Act. The issue is remanded back to the file of Assessing Officer with the directions to pass the Final Assessment Order in conformity with the directions issued by the DRP. Accordingly, Ground No. 2 raised by the Appellant is allowed while all other grounds raised by the Appellant are disposed off as being infructuous." Since the issue based on similar fact is squarely....
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....'ble Mumbai HC in ADIT v. Credit Agricole Indosuez [ITA No. 1430 of 2013] As per Section 90(2) of the Act, where an assessee is a resident of a country with whom India has entered into an agreement for avoidance of double taxation (DTAA) the provisions of the DTAA or the Act, whichever are more beneficial to the assessee shall apply. We have perused the Article 11 of the India-UAE Tax Treaty and extract of the same is reproduced as under: "ARTICLE 11- INTEREST 1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2. However, such interest may be taxed in the Contracting State in which it arises and according to the laws of that State, but if the recipient is the beneficial owner of the interest, the tax so charged shall not exceed: (a) 5 per cent of the gross amount of the interest if such interest is paid on a loan granted by a bank carrying on a bona fide banking business or by a similar financial institution; and (b) 12.5 per cent of the gross amount of the interest in all other cases. 3. ................ 4. The term interest as used ....
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....lty in bringing to tax interest paid by Indian PE as income of the GE in India as per article 11(2)." In view of the decision of the coordinate bench and considering the provision of Article 11 of India-UAE Tax Treaty and circular no. 740 dated 17.04.1996 issued by the CBDT, we find the lower authority have not brought any contrary material to disprove the claim of the assessee that impugned interest income is taxable @ 5% as per India UAE Treaty as discussed supra in this order. Therefore, this ground of appeal of the assessee is allowed. Ground No. 6: "Without prejudice to Ground No 5, the learned AO has erred in doubly computing tax on the interest paid by the Appellant to its HO amounting to INR 13,47,619, firstly at 40% (plus applicable surcharge and health and education cess) as income of the PE under the provisions of the Act and secondly, at 5% as income of the HO under Article 11 of India-UAE DTAA, thereby resulting in the same income being charged to tax twice." 15. Since, we have allowed the ground no. 5 of the assessee therefore, ground no. 6 without prejudice to ground no. 5 is not required any adjudication therefore the same stand dismissed. Groun....