TaxTMI 
TaxTMI 
2018 (1) TMI 1776
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....2 crores. 2. Vide its letter dated 2/02/2015, the assessee has filed additional ground of appeal, wherein an alternative ground has been raised about provision for standard advance of Rs. 24 lakhs. It was argued before us, that the additional ground raised by it involved a question of law and did not require investigation of facts. We find that the ground raised by the assessee does not require further enquiry of facts. So, we admit additional ground raised by it. 3. An application was made by the assessee on 14/05/2015 four admitting additional evidences as per rule 29 of the Income Tax Appellate Tribunal Rules, 1963. Referring to the submissions made in the application, the Authorised Representative(AR) stated, before us, that the documents submitted were relevant for ground number 7B, that the details of amalgamation and merger expenses and supporting invoices/vouchers were not considered by the departmental authorities while deciding the issue, that is documents were vital for proper adjudication of the ground raised by the assessee. The Departmental Representative (DR) left the issue to the discretion of the bench. We have gone through the application made by the assesse....
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.....s 2002-03 and 2003-04, that the Tribunal had restricted the disallowance of expenditure up to 2% of the exempt income earned by the assessee, that the honorable Bombay High Court had held that provisions of rule 8D of the Income Tax Rules, 1962 would be applicable from the AY.2008-09 only. Considering the above, we direct the AO to restrict the disallowance at the rate of 2% of the exempt income earned by the assessee during the year under consideration, while making disallowance u/s.14 A of the Act. Ground number four is decided in favour of the assessee, in part. 4.2.a. With regard to ground number eight representatives of both the sides agreed that the Tribunal, while deciding the identical issue in the earlier years, had held that judgment should be made by the AO after taking into account the fee and other charges only received by the foreign branches from the borrowers of the ECB, that the rate of 20%, estimated by the First Appellate Authority (FAA)was proper, that the honorable Bombay High Court had confirmed the view taken by the Tribunal for the AY.s.2002-03 and 2003-04.Accordingly,we direct the AO to follow the direction of the Tribunal of the earlier years. We partl....
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....r expenses. In our opinion, the issue raised by the assessee has to be decided after considering the same. Therefore, in the interest of Justice, we are restoring ground number 7B to the file of the AO for fresh adjudication. He is directed to decide the issue after considering the evidences produced before us and after affording a reasonable opportunity of hearing to the assessee. Ground 7B is decided in favour of the assessee, in part. 6. Ground no.3, raised by the assessee is about confirming the action of the AO in holding that direct expenses, amounting to Rs. 3.44 crores, towards various charges, fell within the purview of executive and general administration expenditure. The AO found that head office system implementation charges(HOSIC-49.06 lakhs),EDP recharge(HO EDP-82.92 lakhs), Regional Service Center Asia Charges(RSCAS-1.99 crores)and Asia Data Processing Center Cost (ADPCC-12.73 lakhs)fell within purview of executive and general administration expenditure under section 44C of the Act, that the charges in questions were not in the nature of 'fees for technical services' dealt with in the CBDT Circular no.649 dtd.31.03.1993. 6.1. Aggrieved by the order of t....
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.... and that same was allowable u/s.37 of (1) of the Act. He relied upon the cases of Emirates Commercial Bank Ltd (262 ITR 55),American Express Bank Ltd (138 ITD 288), American Express Bank Ltd (ITXA 1294 of 2013), British Bank of Middle East (4 SOT 122) (Mum), Bank of America NT & SA v DCIT (27 SOT 97). The DR supported the order of the FAA and stated that 6.3. We have perused the invoices, statement of expenditure received by the assessee during the year from its sister concerns (Pgs 83 to 103 and (Pgs 111 to 118) of the PB. The invoices talks of software maintenance, various-stems-items, duration etc. These documents also gives details of allocation(Pg.112 of the PB)of expenses. From the order of the departmental authorities, it is clear that they have not verified details appearing in these papers. Whether the expenditure -except cost of credit risk assistance and EDP assistance-would be covered by the provisions of section 44 C or not has to be decided after considering the details appearing in the documents and the judgment/order in assessee's own case i.e. Credit Agricole Indosuez (377 ITR 102) and Credit Agricole Indosuez [21 ITR (Trib) 345]. Therefore, we are of the o....
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....ature of FTS of the HO, that payments made under various heads was taxable as FTS as pert Art.13(4) of the DTAA also, that the assessee had not produced necessary evidences to show that the expenses were not on cost basis, that disputed amounts were also taxable as per Circular no.649 issued by the CBDT. Finally, he held that Rs. 5.55 crores were taxable as the income of the HO and that same were FTS taxable under Article 13(2) of the Indo French Tax Treaty. 9.1. In the appellate proceedings, the FAA, after considering the submissions of the assessee and the assessment order held that the payments made by the Branch in India are only the reimbursement of expenses incurred by the HO/regional centers, that the AO had alleged that sufficient evidences were not produced, that he had not explained as to which evidences were not furnished, that any of the services rendered by the HO had made available technical know how, skill or it involved transfer of any technical plan or design to the Indian branch, that the disputed amount did not constitute FTS, that the same was not taxable as income arising to the HO in India. 9.2. Before us, the DR stated that the assessee had not produced....
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.... Convention, the same rate or scope as provided for in that Convention Agreement or Protocol shall also apply under this Convention. There is no warrant for the restrictive interpretation placed on clause 7 of the Protocol to the Double Taxation Avoidance Agreement between India and France in such a manner that that if a reference is made to one Convention signed after September 1, 1989 between India and another OECD member State for the purposes of ascertaining if it had a more restrictive scope or a lower rate of tax, then that Convention alone has to be referred to for both purposes or that it is not permissible for the assessee, in terms of clause 7 of the Protocol, to rely upon one Convention between India and an OECD member State for the purposes of taking advantage of a lower rate of tax and then refer to another Convention between India and another OECD member State to take advantage of a more restricted scope. The words "a rate lower or a scope more restricted" occurring therein envisage that there could be a benefit on either score, i.e., a lower rate or a more restricted scope. One did not exclude the other. The purpose of clause 7 of the Protocol is to afford to a party....
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....ined ALP of the international transactions, that circular no.5 of 2004 dtd. 28.09.2004 provided that attribution of profit to a PE would be based on arm's length principle, that PE was remunerated on arm's length basis on taking into account all the risk taking functions, that no further attribution could be made, that foreign branches were operating in different jurisdiction, that they were not separate non-resident entities. 10.2. The DR advanced the same arguments that were made for the GOA 4.The AR stated that interest income was assessed separately, that attribution, if any, was to be made about fee not qua interest, that funding was done by the overseas entity, that the Indian entity was liasoning with the borrowers. The AR contended that the Indian companies would borrow from overseas branches, that the assessee would lend them money for that purpose, that interest income arising out of said transaction are being assessed separately, that attribution had to be about fee received and not qua interest. In the appeal of the assessee the issue was about the fee, that the India PE would liaison with borrower to avail loans from outside entity, that there could not be a....
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....e AO held that the source of the income in respect of commission and commitment was in India, that the Indian borrowers were making payment of on both the counts, that the risk was associated with the loans lied in India, that there was a business connection in India, as far as assessee was concerned. He finally held that the commission earned by the Hong Kong branch of the assessee in respect of ECB loans advanced to Indian borrowers was chargeable to tax in India. 12.1. Aggrieved by the order of the AO, the assessee preferred an appeal. The FAA, after considering the available material, held that ALP of the international transactions of the PE in India was determined by the TPO, that the AO had made addition of the adjustments arrived at by the TPO, that after such adjustment it would be the position that the Indian PE of the assessee bank had been remunerated at the ALP and that the profit attributable to India PE is based on the functions undertaken, asssets employed and risks assumed. He further observed that remuneration at ALP would extinguish any further attribution of profit to the PE, that 50% of commitment fee(Rs. 5,41,43,714/-) and commission (Rs. 62,11,440/-) receiv....