CLEARWATER CAPITAL PARTNERS(CYPRUS) LTD, MUMBAI V. DCIT (IT) 2(1)(1), MUMBAI

ITA 1200/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1394 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: L
• Next Hearing Date: 21-03-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 27-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Transfer pricing; International transaction
• Section: 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'L' BENCH, MUMBAI BEFORE SHRI JASON P. BOAZ, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.1200 /MUM/2015 (ASSESSMENT YEAR: 2010-11) M/S. CLEARWATER CAPITAL VS. DY. COMMISSIONER OF INCOME TAX PARTNERS (CYPRUS) LTD. C/O SRB & ASSOCIATES LLP 14 TH FLOOR, THE RUBY 20 SENAPATI BAPAT MARG DADAR (W), MUMBAI 400038 (INTERNATIOAL TAXATION) 2(1)(1) ROOM NO. 136, 1 ST FLOOR SCINDIA HOUSE, NM MARG BALLARD PIER, MUMBAI 400038 PAN AACCC9756A APPELLANT RESPONDENT APPELLANT BY: SHRI NIRAJ SHETH RESPONDENT BY: SHRI JASBIR CHOUHAN DATE OF HEARING: 21.03.2017 DATE OF PRONOUNCEMENT: 07.04.2017 O R D E R PER JASON P. BOAZ, A.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF ASSESSMENT FOR A.Y. 2010-11 PASSED UNDER SECTION 14 3(3) R.W.S. 144C(13) OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT') DA TED 30.12.2014 IN PURSUANCE TO THE DIRECTIONS ISSUED BY THE DISPUTE R ESOLUTION PANEL-III, MUMBAI (DRP) UNDER SECTION 144C(5) OF THE ACT VIDE ORDER DATED 14.11.2014. 2. THE FACTS OF THE CASE, BRIEFLY, ARE AS UNDER: - 2.1 THE ASSESSEE, A NON-RESIDENT COMPANY ENGAGED IN FINANCE BUSINESS, MAKING INVESTMENTS IN INDIA UNDER THE FDI ROUTE, FI LED ITS RETURN OF INCOME FOR A.Y. 2010-11 ON 13.10.2010 DECLARING TOTAL INC OME OF ` 21,64,82,585/-. THE CASE WAS TAKEN UP FOR SCRUTINY. A REFERENCE WAS MADE TO THE TRANSFER PRICING OFFICER (TPO) FOR COMPUTATION OF THE ARMS L ENGTH PRICE (ALP) OF INTERNATIONAL TRANSACTIONS REPORTED IN FORM 3CEB, I N RESPECT OF WHICH NO ADJUSTMENT THERETO WAS PROPOSED BY THE TPO IN HIS O RDER UNDER SECTION ITA NO. 1200/MUM/2015 CLEARWATER CAPITAL PARTNERS (CYPRUS) LTD. 2 92CA(3) OF THE ACT DATED 31.12.2013. THE DRAFT ORDE R OF ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) R.W.S. 144C(1) OF TH E ACT VIDE ORDER DATED 28.02.2014, WHEREIN THE ASSESSEES INCOME WAS DETER MINED AT ` 31,04,66,470/- IN VIEW OF THE ADDITION OF ` 9,39,83,884/- ON ACCOUNT OF INTEREST ON FOREIGN CURRENCY CONVERTIBLE BONDS (FCC BS) UNDER THE HEAD INCOME FROM OTHER SOURCES. 2.2 AGGRIEVED BY THE DRAFT ORDER OF ASSESSMENT DATE D 28.02.2014 FOR A.Y. 2010-11, THE ASSESSEE FILED ITS OBJECTIONS THERETO BEFORE THE DRP-III, MUMBAI. THE DRP ISSUED ITS DIRECTIONS UNDER SECTION 144C(5) OF THE ACT VIDE ORDER DATED 14.11.2014. IN PURSUANCE THEREOF, THE ASSESSING OFFICER (AO) THEN PASSED THE IMPUGNED ORDER DATED 30.12.201 4 UNDER SECTION 143(3) R.W.S. 144C(13) OF THE ACT DETERMINING THE A SSESSEES TOTAL INCOME AT ` 30,99,25,696/-, BY ALLOWING THE ASSESSEE RELIEF OF ` 5,40,777/- ON ACCOUNT OF INTEREST ON FCCBS RECEIVED FROM SUZLON ENERGY LT D. AS PER THE DIRECTIONS OF THE DRP. 3. AGGRIEVED BY THE ORDER OF ASSESSMENT DATED 30.12.20 14 PASSED UNDER SECTION 143(3) R.W.S. 144C(13) OF THE ACT FOR Y 2010-11, THE ASSESSEE HAS PREFERRED THIS APPEAL RAISING THE FOLLOWING GRO UNDS: - 1. GROUND OF OBJECTION NO. 1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LE ARNED AO ERRED IN NOT GRANTING THE CREDIT FOR TAXES DEDUCTED AT SOURC E (TDS) IN RESPECT OF INCOME EARNED BY THE APPELLANT DESPITE FURNISHIN G EXTENSIVE DETAILS TO THE LEARNED AO EVIDENCING THE DEDUCTION OF TAX AT SOURCE. 2. GROUND OF OBJECTION NO. 2 ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LE ARNED AO ERRED IN TAXING THE AMOUNT OF RS.2,097,704 (USD 39,005) A S THE INCOME OF THE APPELLANT AGAINST RS.1,056,603 (USD 2 1,943), BEING INTEREST EARNED IN RESPECT OF INVESTMENTS MAD E N FCCBS ISSUED BY DOLPHIN OFFSHORE ENTERPRISES (INDIA) LIMI TED. APART FROM ORAL SUBMISSIONS, WRITTEN SUBMISSIONS WE RE ALSO FILED BY BOTH THE LEARNED A.R. OF THE ASSESSEE AND THE LEARNED D. R. FOR REVENUE. 4. GROUND NO. 1(A) NON GRANT OF CREDIT OF TDS ON INT EREST EARNED ON FCCBS 4.1.1 IN WRITTEN SUBMISSIONS, THE LEARNED A.R. OF T HE ASSESSEE PUT FORTH THE FOLLOWING FACTS AND ARGUMENTS: - ITA NO. 1200/MUM/2015 CLEARWATER CAPITAL PARTNERS (CYPRUS) LTD. 3 1. DURING THE YEAR ENDED 31ST MARCH, 2010, THE APP ELLANT RECEIVED INTEREST INCOME IN RESPECT OF INVESTMENTS MADE IN F CCBS ISSUED BY CERTAIN INDIAN CORPORATE. THE DETAILS OF INTEREST RECEIVED ON FCCBS BY THE APPELLANT IS TABULATED BELOW: NAME OF THE ISSUER OF FCCBS INTEREST RECEIVED ON FCCBS IN USD EQUIVALENT AMOUNT IN INR (AS PER THE ASSESSMENT ORDER) CONF IRMATION/ EVIDENCE OF TDS DEDUCTED REFERENCE TO PAPER BOOK FILED ON 14 TH FEBRUARY, 2017 SAYAJI HOTELS LIMITED 37,500 19,77,210 PAGES 64 TO 66 KAMAT HOTELS INDIA LIMITED 9,95,500 5,24,98,831 PAGES67 TO 75 DOLPHIN OFFSHORE ENTERPRISES (I) LTD 39,005 20,97,704 PAGE 76 TO 80 VIDEOCON INDUSTRIES LTD. (4.5%) 3,76,600 1,69,57,244 - VIDEOCON INDUSTRIES LTD. (5%) 4,42,222 1,99,12,018 - ISSUANCE MECHANISM OF FCCBS AS PER THE SCHEME 2. THE FCCB GUIDELINES WERE ISSUED IN 1993 BY THE MINISTRY OF FINANCE UNDER THE ISSUE OF FOREIGN CURRENCY CONVERTIBLE BON DS AND ORDINARY SHARES (THROUGH DEPOSITORY RECEIPT MECHANISM) SCHEM E, 1993 (THE SCHEME) (PAGES 1-16 OF THE PAPER BOOK). 3. THE SCHEME PROVIDES FOR THE ISSUANCE MECHANISM O F FCCBS WHEREIN NON-RESIDENTS SUBSCRIBE TO FCCBS ISSUED IN FOREIGN CURRENCY WHICH ARE CONVERTIBLE INTO SHARES OF THE ISSUING COMPANIES. 4. WHEN AN ISSUING COMPANY ISSUES FCCBS UNDER THE S CHEME, THE ISSUING COMPANY DELIVERS THE BONDS TO A DOMESTIC CU STODIAN BANK WHO IN TURN INSTRUCTS THE OVERSEAS DEPOSITORY BANK TO ISSU E A CERTIFICATE TO NON- RESIDENT INVESTORS AGAINST THE BONDS HELD BY THE DO MESTIC CUSTODIAN BANK. 5. THE IDENTITY OF THE SUBSCRIBER TO THE FCCBS IS G ENERALLY NOT KNOWN TO THE DOMESTIC CUSTODIAN BANK AND THE ISSUING COMPANY , AS THE INTEREST IN FCCBS WHICH ARE SUBSCRIBED BY THE OVERSEAS INVESTOR S ARE ISSUED BY THE OVERSEAS DEPOSITORY BANK. TAXABILITY OF INTEREST RECEIVED ON FCCBS UNDER THE INCOME-TAX ACT, 1961 AND AS PROVIDED IN THE SCHEME 6. THE INTEREST PAYMENTS ON THE FCCBS ARE SUBJECT T O TAX DEDUCTION AT SOURCE (TDS) AT THE RATE OF 10% (PLUS APPLICABLE SU RCHARGE AND EDUCATION CESS) AS PER SECTION 115AC OF THE INCOME- TAX ACT, 1961 (ACT) AS ALSO ITA NO. 1200/MUM/2015 CLEARWATER CAPITAL PARTNERS (CYPRUS) LTD. 4 PROVIDED IN CLAUSE 8 OF THE SCHEME AND UNDER THE OF FERING CIRCULAR PROVIDED BY THE ISSUER OF FCCBS. 7. CLAUSE 10(1) OF THE SCHEME INTER ALIA PROVIDES THAT DURING THE PERIOD OF FIDUCIARY OWNERSHIP OF SHARES IN THE HANDS OF TH E OVERSEAS DEPOSITORY BANK, THE PROVISIONS OF AVOIDANCE OF DOUBLE TAXATIO N AGREEMENT ENTERED INTO BY THE GOVERNMENT OF INDIA WITH A COUNTRY OF R ESIDENCE OF THE OVERSEAS DEPOSITORY BANK WILL BE APPLICABLE IN THE MATTER OF TAXATION OF INTEREST ON FCCBS. THIS PROVISION IS MADE TO ADDRES S THE PROBLEMS FACED BY THE ISSUER IN ISSUING A TDS CERTIFICATE IN THE N AME OF THE SUBSCRIBER IN THE AFORESAID CIRCUMSTANCES. 8. GIVEN THE ABOVE MECHANISM, AS THE IDENTITY OF TH E FCCB HOLDER MAY NOT BE KNOWN TO THE DOMESTIC CUSTODIAN BANK, THE IS SUING COMPANY WITHHOLDS TAXES AT THE RATE OF 10% PRIOR TO REMITTI NG THE INTEREST PAYMENTS AND EVEN THOUGH IN FIDUCIARY CAPACITY, THE OVERSEAS DEPOSITORY BANK'S NAME IS GENERALLY INDICATED AS THE DEDUCTEE IN THE TDS CERTIFICATE. 9. IN LIGHT OF THE ABOVE AND GIVEN THE PROCEDURAL R EQUIREMENT LAID DOWN IN THE SCHEME, THE CREDIT OF TAXES WITHHELD BY ISSU ING COMPANIES IS NOT REFLECTED IN FORM 26AS OF THE APPELLANT. 10. HOWEVER, THE APPELLANT AFTER SIGNIFICANT EFFORT S HAS OBTAINED THE CONFIRMATION LETTER/COPY OF CHALLANS EVIDENCING THE DEDUCTION OF TAX AT SOURCE ON SUCH INTEREST ON FCCBS (RELEVANT PAGE NUM BERS OF THE PAPER BOOK ARE REFERRED TO IN THE TABLE IN PARAGRAPH 1 AB OVE). NO RETURN FILING OBLIGATION AS PER SECTION 115AC OF THE ACT 11. AS STATED ABOVE, SECTION 115AC(1)(A) OF THE AC T PROVIDES FOR TAXABILITY OF INTEREST RECEIVED ON FCCBS. FURTHER, SUB-SECTION (4) TO 115AC OF THE ACT INTER ALIA PROVIDES THAT IT SHALL NOT BE NECESSARY FOR A NON-R ESIDENT TO FURNISH RETURN OF INCOME UNDER SECTION 139(1) IF: HIS TOTAL INCOME DURING THE PREVIOUS YEAR CONSISTED ONLY OF INCOME REFERRED TO IN UNDER THE PROVISIONS OF SECTION 115A C(4) OF THE ACT, WHERE THE INCOME OF A NON-RESIDENT CONSISTS ONLY OF INTEREST ON FCCBS AS REFERRED TO SECTION 115AC(1)(A) AND SECTION 115A C(1)(A) AND THE TAX DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B H AS BEEN DEDUCTED FROM SUCH INCOME. IT IS SUBMITTED THAT THE INTENTION OF THE LEGISLATU RE BEHIND INTRODUCTION OF SUB-SECTION (4) TO SECTION 115AC OF THE ACT IS TO A VOID UNDUE HARDSHIP TO A NON-RESIDENT WHICH ARISES ON ACCOUNT OF DIFFICULTIE S IN REPORTING THE FCCB INCOME DUE TO MANNER IN WHICH THE SCHEME WORKS AND SINCE THE TAX DUE ON THE SAID INCOME IS ALREADY DEDUCTED AT SOURCE BY THE ISSUER COMPANY AND DEPOSITED IN THE GOVERNMENT TREASURY. 12. HOWEVER, SINCE THE APPELLANT HAD EARNED CERTAIN OTHER INCOMES DURING THE YEAR ENDED 31 MARCH 2010, IT WAS REQUIRED TO FI LE ITS RETURN OF INCOME. THEREFORE, THE APPELLANT DISCLOSED THE INTEREST REC EIVED ON FCCBS IN NOTES TO THE RETURN OF INCOME [AS OTHERWISE THERE WAS NO REQUIREMENT TO FILE A RETURN OF INCOME IN RESPECT OF THE FCCB INTEREST BY VIRTUE OF SECTION 115AC(4) OF THE ACT]. ITA NO. 1200/MUM/2015 CLEARWATER CAPITAL PARTNERS (CYPRUS) LTD. 5 13. THE LOWER AUTHORITIES HAVE, HOWEVER, ADDED FCCB INCOME TO THE APPELLANT'S TOTAL INCOME AND ALSO DENIED TDS CREDIT IN THE PRESENT CASE IGNORING THE AFORESAID DIFFICULTIES FACED BY THE AP PELLANT AND ALSO IGNORING THE DETAILS SUBMITTED BY THE APPELLANT, SUCH AS CON FIRMATIONS, EVIDENCES OF THE ISSUER COMPANIES DEPOSITING THE REQUISITE TAXES , TDS CERTIFICATES ISSUED BY SOME OF THE ISSUER COMPANIES, ETC. 4.1.2 THE LEARNED A.R. PRAYED THAT IN VIEW OF THE A BOVE MENTIONED FACTS AND CIRCUMSTANCES OF THE CASE, THIS ISSUE BE RESTOR ED TO THE FILE OF THE AO WHO MAY BE DIRECTED TO CALL FOR INFORMATION UNDER S ECTION 133(6) OF THE ACT FROM THE ISSUERS OF FCCBS ABOUT DETAILS OF TDS ON T HE INTEREST PAID ON FCCBS AND/OR GET THE REQUISITE INFORMATION FROM THE CONCERNED ASSESSING OFFICERS OF ISSUER COMPANIES AND TO GRANT TDS CREDI T TO ASSESSEE IF IT IS FOUND THAT THE ISSUERS HAVE APPROPRIATELY DEDUCTED TAX AT SOURCE AND DEPOSITED THE SAME WITH THE CENTRAL GOVERNMENT TREA SURY. 4.2 THE LEARNED D.R. FOR REVENUE SUBMITTED THAT THE FACT IS THAT THE 26AS STATEMENT OF THE ASSESSEE DOES NOT REFLECT CRE DIT OF TAXES DEDUCTED BY INDIAN COMPANIES ON INTEREST PAID TO THE ASSESSEE W HICH MEANS THE ASSESSEE IS NOT A DEDUCTEE AS PER RECORDS OF THE DE DUCTOR, WHEREAS IT HAS BEEN CONTENDED BY THE ASSESSEE THAT THE OVERSEAS DE POSITORY BANK HAS BEEN SHOWN AS THE DEDUCTEE BY THE DEDUCTORS. IT IS CONTENDED BY THE LEARNED D.R. THAT UNLESS IT IS ESTABLISHED BY THE A SSESSEE THAT THE ACTUAL DEDUCTEE IN RESPECT OF THE AMOUNTS OF INTEREST INCO ME SHOWN BY THE ASSESSEE IS THE ASSESSEE ITSELF AND THAT NO OTHER E NTITY HAS ALREADY CLAIMED CREDIT FOR SUCH TAXES DEDUCTED AT SOURCE AT ANY POI NT OF TIME IN FUTURE, THE AO MAY NOT BE ABLE TO ALLOW THE ASSESSEES CLAIM. I T IS FURTHER SUBMITTED THAT, AS REQUESTED BY THE ASSESSEE, THE MATTER MAY BE RESTORED TO THE FILE OF THE AO TO VERIFY THE ASSESSEES CLAIM AS PER LAW, A S PER THE SUBMISSIONS/ ARGUMENTS PUT FORTH HEREIN ABOVE. 4.3 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. BOTH PARTIES TO THIS ISSUE ARE IN AGREEMENT THAT THIS ISSUE OF THE ASSESSEES CLAIM O F GRANT OF CREDIT FOR TAXES DEDUCTED AT SOURCE ON INTEREST RECEIVED ON FCCBS RE QUIRES TO BE RESTORED TO THE FILE OF THE AO FOR VERIFICATION THEREOF IN A CCORDANCE WITH LAW, WITH WHICH PROPOSITION WE TOO ARE IN AGREEMENT. WE, THER EFORE, RESTORE THIS ITA NO. 1200/MUM/2015 CLEARWATER CAPITAL PARTNERS (CYPRUS) LTD. 6 ISSUE TO THE FILE OF THE AO WITH THE DIRECTION TO V ERIFY THE ASSESSEES CLAIM IN ACCORDANCE WITH LAW AND BEFORE GRANTING CREDIT F OR THE IMPUGNED TDS TO THE ASSESSEE, FULLY SATISFYING HIMSELF THAT THE AMO UNT OF TDS HAS BEEN DEPOSITED INTO THE GOVERNMENTS ACCOUNT; THAT THE A SSESSEE IS THE LAWFUL DEDUCTEE, THAT THE GROSS AMOUNT OF INTEREST HAS BEE N CONSIDERED AS THE ASSESSEES INCOME AND THAT NO OTHER PERSON HAS OR W ILL CLAIM CREDIT OF THE VERY SAME TAXES. WE HOLD AND DIRECT ACCORDINGLY. TH IS GROUND IS ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURP OSES. 5. GROUND NO. 1(B) NON GRANT OF TDS CREDIT ON INTERE ST EARNED ON FULLY CONVERTIBLE DEBENTURES AND FEES FOR TECHNICAL SERVICES 5.1 IN RESPECT OF THIS ISSUE THE LEARNED A.R. OF TH E ASSESSEE PUT FORTH THE FOLLOWING FACTS AND ARGUMENTS: - 14. DURING THE YEAR THE APPELLANT RECEIVED INTERES T ON FULLY CONVERTIBLE DEBENTURES AMOUNTING TO ` 18,89,82,589/- AND FEES FOR TECHNICAL SERVICES AMOUNTING TO ` 2,75,00,000/- ON WHICH TAXES WERE APPROPRIATELY DED UCTED AT SOURCE AND TDS CERTIFICATES FOR THE ENTIRE AMOUN T OF ` 2,16,48,259/- (BEING ` 1,88,98,259/- TOWARDS TDS ON INTEREST ON FULLY CONV ERTIBLE DEBENTURES AND ` 27,50,000/- TOWARDS TDS ON FEES FOR TECHNICAL SERVI CES) WERE FURNISHED BEFORE THE LEARNED AO DURING THE COU RSE OF ASSESSMENT PROCEEDINGS 15. THE CREDIT FOR THE SAID AMOUNT HAS NOT BEEN GIV EN EVEN THOUGH IT REFLECTS IN FORM NO. 26AS AND/OR TDS CERTIFICATES H AVE BEEN ISSUED BY THE PAYER. 5.1.2 THE LEARNED A.R. PRAYED THAT IN VIEW OF THE A BOVE, THE AO BE DIRECTED TO GRANT TDS CREDIT AS REFLECTED IN 26AS AND/OR BAS ED ON TDS CERTIFICATES FURNISHED. 5.2 THE LEARNED D.R. SUBMITTED THAT THIS ISSUE BE R ESTORED TO THE FILE OF THE AO FOR VERIFICATION IN ACCORDANCE WITH LAW, REI TERATING THE SAME ARGUMENTS AND REQUIREMENTS PUT FORTH BY HIM HEREIN ABOVE AT PARA 4.2 OF THIS ORDER (SUPRA). 5.3 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. BOTH PARTIES ARE IN AGREEMENT THAT THIS ISSUE OF THE ASSESSEES CLAIM FOR GRANT OF TDS CRED IT ON INTEREST EARNED ON FULLY CONVERTIBLE DEBENTURE AND FEES FOR TECHNICAL SERVICES REQUIRES TO BE RESTORED TO THE FILE OF THE AO FOR VERIFICATION THE REOF IN ACCORDANCE WITH LAW; ITA NO. 1200/MUM/2015 CLEARWATER CAPITAL PARTNERS (CYPRUS) LTD. 7 WITH WHICH SUGGESTION WE ARE ALSO IN AGREEMENT. WE, THEREFORE, RESTORE THIS ISSUE TO THE FILE OF THE AO WITH THE DIRECTION TO V ERIFY THE ASSESSEES CLAIM IN ACCORDANCE WITH LAW AND BEFORE GRANTING CREDIT F OR THE IMPUGNED TDS TO THE ASSESSEE, FULLY SATISFY HIMSELF THAT THE AMOUNT OF TDS HAS BEEN DEPOSITED INTO THE GOVERNMENTS ACCOUNT; THAT THE A SSESSEE IS THE LAWFUL DEDUCTEE; THAT THE GROSS AMOUNT OF INTEREST HAS BEE N CONSIDERED AS THE ASSESSEES INCOME AND THAT NO OTHER PERSON HAS OR W ILL CLAIM CREDIT OF THE VERY SAME TAXES. WE HOLD AND DIRECT ACCORDINGLY. TH IS GROUND IS ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURP OSES. 6. GROUND NO. 2 INTEREST EARNED IN RESPECT OF INVEST MENTS MADE IN FCCBS ISSUED BY DOLPHIN OFFSHORE ENTERPRISES (IN DIA) LTD. 6.1.1 IN WRITTEN SUBMISSION, THE LEARNED A.R. OF TH E ASSESSEE PUT FORTH THE FOLLOWING FACTS AND ARGUMENTS: - 16. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A FTER SIGNIFICANT EFFORTS BY THE APPELLANT, A CONFIRMATION LETTER EVIDENCING DEDUCTION OF TAXES IN RESPECT OF INTEREST ON FCCBS WAS RECEIVED FROM DOLP HIN OFFSHORE ENTERPRISES (INDIA) LIMITED (DOLPHIN) AND WAS FILED WITH THE LEARNED AO. HOWEVER, THE CONFIRMATION LETTER ISSUED BY DOLPHIN INADVERTENTLY STATED THAT THE ENTIRE WITHHOLDING TAX ON INTEREST ON FCCB S AMOUNTING TO ` 20,97,704/- (USD 39,005) IS ATTRIBUTED TO THE APPEL LANT ALTHOUGH A PART OF THE INTEREST BELONGED TO GROUP ENTITY OF THE APP ELLANT. THE CONFIRMATION LETTER WAS ISSUED BY DOLPHIN WITH THE INTENT THAT T HE TAXES HAVE BEEN APPROPRIATELY WITHHELD ON THE INTEREST PAID ON THE TOTAL OUTSTANDING FCCBS. 17. THE APPELLANT WISHES TO SUBMIT THAT, OUT OF THE TOTAL INTEREST AMOUNTING TO ` 20,97,704/- (USD 39,005) ONLY INTEREST TO THE EXTEN T OF ` 1,056,603/- (USD 21,943) PERTAINS TO THE APPELLANT AND BALANCE PERTAINS TO OTHER GROUP ENTITY OF THE APPELLANT. HOWEVER, TH E ENTIRE AMOUNT HAS BEEN ADDED AS THE APPELLANT'S INCOME. 6.1.2 THE LEARNED A.R. OF THE ASSESSEE PRAYED THA T THE AO BE DIRECTED TO VERIFY THE EVIDENCE/DOCUMENTS AND AFTER VERIFICATIO N TO CONSIDER INTEREST ON FCCBS RECEIVED FROM M/S. DOLPHIN OFFSHORE ENTERPRIS ES (INDIA) LTD. ONLY TO THE EXTENT OF ` 10,56,603/- (USD 21,943) AND DELETE THE BALANCE IF IT IS FOUND THAT THE SAME DOES NOT PERTAIN TO THE ASSESSE E. 6.2 THE LEARNED D.R. FOR REVENUE SUBMITTED THAT AS REQUESTED BY THE ASSESSEE, THIS ISSUE MAY ALSO BE SET ASIDE TO THE F ILE OF THE AO FOR VERIFICATION IN ORDER TO CONSIDER IN THE ASSESSEES HANDS ONLY THE ACTUAL ITA NO. 1200/MUM/2015 CLEARWATER CAPITAL PARTNERS (CYPRUS) LTD. 8 AMOUNT OF INTEREST RECEIVED BY THE ASSESSEE FROM M/ S. DOLPHIN OFFSHORE ENTERPRISES (INDIA) LTD. AND NOT THE ENTIRE AMOUNT OF INTEREST PAID TO THE GROUP COMPANIES. 6.3 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. THE ASSESSEES C ONTENTION IS THAT THE AO ERRED IN CONSIDERING AND TAXING THE ENTIRE INTEREST AMOUNT OF ` 20,97,204/- RECEIVED BY THE ASSESSEES GROUP COMPANIES FROM DOL PHIN OFFSHORE ENTERPRISES (INDIA) LTD. AS AGREED TO AND SUGGESTED BY BOTH PARTIES, WE SET ASIDE THIS ISSUE ALSO TO THE FILE OF THE AO TO CONS IDER ONLY THE ACTUAL AMOUNT OF INTEREST RECEIVED BY THE ASSESSEE FROM DO LPHIN OFFSHORE ENTERPRISES (INDIA) LTD. IN THE HANDS OF THE ASSESS EE COMPANY AND NOT THE ENTIRE AMOUNT OF INTEREST PAID TO THE GROUP COMPANI ES. WE HOLD AND DIRECT ACCORDINGLY. CONSEQUENTLY, GROUND NO. 2 OF THE ASSE SSEES APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, THE ASSESSEES APPEAL FOR A.Y. 2010- 11 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH APRIL, 2017. SD/ - SD/ - (PAWAN SINGH) (JASON P. BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 7 TH APRIL, 2017 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE DRP-III, MUMBAI 4. THE CIT CONCERNED 5. THE DR, L BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.