TaxTMI 
TaxTMI 
2025 (3) TMI 1780
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....d to as "CIT(A)"] pertaining to the order u/s. 201(1)/ 201(1A)of the Income-tax Act, 1961 [hereinafter referred to as "Act"] dated 12.03.2020 as passed by the TDS Officer - OSD, TDS Circle 1(2), Mumbai for the Assessment Year [A.Y.] 2019-20. There is delay of 48 days in filing this appeal. In this regard, vide an affidavit on record, it is submitted that appellate order was not received by it on registered e-mail. It only came to its knowledge while browsing through the portal. We notice that the assessee did not delay deliberately but on account of bonafide reasons. Accordingly, in view of the judgement of the Hon'ble Supreme Court in the case of Collector, Land Acquisition vs Mst.Katji and Ors.(1987) 167 ITR 471(SC), wherein it has been i....
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....A) of the Act. 3. Brief facts of the case are that the assessee is a Securitisation Trust. It was set up by IDBI Trusteeship Services Limited (trustee) as a special purpose vehicle to raise monies to finance the acquisition of a loan portfolio of one Indian School Finance Company Private Limited (i.e. the originator) by issuing securities ('pass through certificates' or 'PTCs') to investors. Pursuant to the assignment of loan portfolio, it became the legal owner of the receivables and received all cash flows from borrowers (i.e. principal repayment and interest). The cash received by the assessee was utilised in a pre-determined manner (known as the waterfall mechanism for utilisation of cash). The Excess Interest Spread (EIS') is th....
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.... income which is received by the Originator by virtue of being an investor with differential rights. Therefore, the contention of the appellant that the payment by way of EIS is not exigible to TDS under 194LBC does not sound to be convincing. Once it becomes determined that there is an obligation to deduct Tax, the order under section 201(1) and 201(1A) has to be upheld in its entirety. Accordingly, the order of the AO was upheld. 5. In the course of hearing before us, the ld.AR contented that the assessee was following well laid guidelines of RBI in the matter as the process of securitisation is governed by the Reserve Bank of India ('RBI'); * Guidelines on Securitisation of Standard Assets dated February 1, 2006; and ....
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....securitization trust, as in the present case. The MRR requirement was introduced by RBI for the first time in the year 2012 and prior to that there was no requirement for the originator to comply with MRR. Even then, that is, prior to 2012, EIS was paid to the originator irrespective of whether or not the originator subscribed to the PTCs. This shows that the payment of EIS to the originator is completely independent of the investment in the securitization trust. Therefore, there would be no obligation on the assessee to deduct tax at source from the payment of EIS to the originator. The ld.AR has also placed reliance on various decisions of the ITAT, Mumbai Bench claiming that the issue in hand is squarely covered in favour of the assessee....
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....enever these loans are securitized. The originator is required to retain certain interest in the loan portfolio ever collateralization, i.e. collateralizing of excess receivables etc. which has been provided in the following manner in this case 17. Ergo, once the originator, (AMPL) is not holding any PTC /SDI, it cannot be regarded as investor as per the terms defined in the aforesaid provisions elaborated above. It is only in a situation where the originator has subscribed to the PTCs of the securitization trust and then only it can be regarded as an investor. In case where minimum retention requirement commitment has met via any other permissible alternator, the originator does not have hold in instrument in the securitization tr....
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....rther corroborates that EIS cannot be regarded as income in respect of investment. Thus, here in this case second condition is also not fulfilled and accordingly we hold that the TDS liability u/s 194LBC is not applicable on EIS." 18. The other condition as provided in Section 194LBC which is required to be fulfilled is that the income in the hands of AMPL should be in respect of investment in the securitization trust. As observed by us hereinabove, the cash flow received was to be utilized in the manner provided in the water flow mechanism of the trustee, the Excess Interest Spread (EIS) is the residual amount that flows to the originator and is not pursuant to any investment in the securitization trust or return of investment so ....