THE HONGKONG AND SHANGHAI BANKING CORPORATION LTD, MUMBAI V. ADIT (IT) 3(1), MUMBAI

ITA 6994/MUM/2010

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1623 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Mumbai
• Next Hearing Date: 10-03-2016
• Assessment Year: 2002-2003
• Appeal Filed On: 08-10-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N.K.CHAND
• Assessee Lawyers: ARVIND SONDE
• Keywords: Double taxation relief; Difference of opinion; Competent authority; Change of opinion
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH K, MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NO.6994/MUM/2010 (ASSESSMENT YEAR 2002-03) THE HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED, INDIA AREA MANAGEMENT, 5 TH FLOOR, HONGKONG BANK BUILDING, 52/60, M.G.ROAD, FORT, MUMBAI 400 001. PAN: AAACT 2786P ...... APPELLANT VS. THE DEPUTY DIRECTOR INCOME-TAX (INTERNATIONAL)-3(1), SCINDIA HOUSE, 1 ST FLOOR, N.M.MARG, MUMBAI 400038. .... RESPONDENT APPELLANT BY : SHRI ARVIND SONDE RESPONDENT BY : SHRI N.K.CHAND DATE OF HEARING : 25/11/2016 DATE OF PRONOUNCEMENT : 30/11/2016 ORDER PER G.S.PANNU,A.M: THE CAPTIONED APPEAL FILED BY THE ASSESSEE PERTAINING TO ASSESSMENT YEAR 2002-03 IS DIRECTED AGAINST THE ORDER OF THE ADIT(IT) -3(1) (IN SHORT THE ASSESSING OFFICER ) PASSED UNDER SECTION 143(3) R.W.S. 147 R.W.S. 144C(13) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT) DATED 05/08/2018, WHICH IS IN 2 ITA NO.6994/MUM/2010 (ASSESSMENT YEAR 2002-03) CONFORMITY WITH THE DIRECTION OF THE DISPUTE RESOLU TION PANNEL-2, MUMBAI DATED 25/06/2010. 2. IN THIS APPEAL, ASSESSEE HAS RAISED THE FOLLOWIN G GROUNDS OF APPEAL:- GROUND OF APPEAL NO. 1 BASED ON FACTS OF THE CASE AND IN LAW, THE ADIT AND THE DRP FAILED TO APPRECIATE THAT THE RE-ASSESSMENT PROCEEDINGS ARE I LLEGAL, BAD IN LAW, VOID, IN EXCESS OF AND/OR IN WANT OF JURISDICTION AND OTHERW ISE OUGHT TO BE CANCELLED. YOUR APPELLANTS SUBMIT THAT AS PER THE PROVISO TO S ECTION 147 WHERE THE RE- OPENING IS AFTER 4 YEARS, THE RE-OPENING CANNOT BE DONE UNLESS INCOME HAS ESCAPED ASSESSMENT BY REASON OF FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTI CE UNDER SECTION 142( I) OR 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FAC TS NECESSARY FOR ADJUSTMENT. IN THE PRESENT CASE, IT IS SUBMITTED THAT THERE IS NO FAILURE ON THE PART OF THE APPELLANT EITHER TO MAKE A RETURN AS REQUIRED OR TO FULLY AND TRULY DISCLOSE THE FACTS NECESSARY FOR THE ASSESSMENT. THEREFORE, THER E IS NO INCOME ESCAPING ASSESSMENT IN THE HANDS OF THE APPELLANT. SINCE THE FACTS HAVE BEEN DISCLOSED DURING THE ASSESSMENT PROCEEDINGS, THE APPELLANTS H AVE DISCHARGED THEIR BURDEN AND THERE IS NO FAILURE ON THE PART OF THE A PPELLANT. WITHOUT PREJUDICE, IT IS SUBMITTED THAT THE RE-OPEN ING IF ANY, REPRESENTS A CHANGE OF OPINION ON THE SAME SET OF FACTS AND SUCH RE-OPENING IS BAD IN LAW. YOUR APPELLANTS SUBMIT THAT THE SUBJECT RE-ASSESSME NT OUGHT TO BE CANCELLED. GROUND OF APPEAL NO. 2. BASED ON FACTS OF THE CASE AND IN LAW, THE ADIT AND THE DRP OUGHT TO HAVE HELD THAT THE 'INTERCHANGE' INCOME RECEIVED BY THE OFFSHORE (NON-INDIA) BRANCHES/OFFICES OF THE APPELLANT IS NOT LIABLE TO TAX IN INDIA. YOUR APPELLANT PRAYS THAT THE ADIT BE DIRECTED TO NOT CONSIDER SUC H INTERCHANGE INCOME AS LIABLE TO TAX IN INDIA AND TO DELETE THE SAID ADDIT ION MADE BY THE ADIT TO THE TOTAL INCOME OF YOUR APPELLANT. GROUND OF APPEAL NO. 3. THE ADIT ERRED IN STATING THAT WHEN THE OVERSEAS C ARDHOLDERS USE THEIR CARDS IN INDIA, THE MERCHANT ESTABLISHMENT DISCOUNT IS PA ID BY INDIAN BRANCHES TO FOREIGN BANKS. 3. BEFORE PROCEEDING TO ADJUDICATE THE SPECIFIC GR OUNDS OF APPEAL RAISED BEFORE US, IT MAY BE MENTIONED THAT AT THE TIME OF HEARING, IT WAS POINTED OUT BY THE LD. REPRESENTATIVE FOR THE ASSESSEE THAT THE ISSUES INVOLVED ARE FULLY COVERED BY THE DECISION OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE FOR 3 ITA NO.6994/MUM/2010 (ASSESSMENT YEAR 2002-03) ASSESSMENT YEAR 2001-02, WHICH HAS BEEN DECIDED BY THE TRIBUNAL IN A COMBINED ORDER PASSED FOR ASSESSMENT YEAR 2000-01, 2001-02 AND 2003-04 VIDE ITA NOS. 3688/MUM/09, 3689/MUM/09,2358/MUM/14 AND OTHERS DATED 12/02/2016. IT HAS BEEN POINTED OUT THAT SO FAR AS THE INITIATION OF PROCEEDINGS BY ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT IN THIS YEAR IS CONCERNED, THE SAME IS PARI-MATERIA WITH THE FACT-SITUATION IN ASS ESSMENT YEAR 2001-02. IN ASSESSMENT YEAR 2001-02, THE TRIBUNAL HELD THE INIT IATION OF PROCEEDINGS BY ISSUANCE OF NOTICE UNDER SECTION 147/148 OF THE ACT AS INVALID AND IN THIS CONTEXT LD. REPRESENTATIVE FOR THE ASSESSEE HAD REF ERRED TO THE FOLLOWING DISCUSSION IN THE ORDER OF THE TRIBUNAL DATED 12/02 /2016(SUPRA), WHICH PERTAINS TO THE ASSESSMENT YEAR 2001-02:- 8. AS FAR AS CO.S FILED BY THE ASSESSEE ARE CONCERNED, WE WOULD LIKE TO MENTION THAT DURING THE ORIGINAL ASSESSMENT PROCEEDINGS THE AO H AD CALLED FOR THE DETAILS OF ICMED AND THE ASSESSEE HAD FILED DETAILED REPLY IN THIS REGARD(PG-166-185 OF THE PAPER BOOK). THOUGH THE AO HAD MENTIONED THAT THE A SSESSEE HAD FAILED TO DISCLOSE THE MATERIAL FACTS, YET HE HAD NOT EXPLAINED AS TO WHICH INFORMATION WAS NOT FILED. WE FURTHER FIND THAT WHILE APPROVING THE RE-OPENING PROPOSAL THE CIT HAD MENTIONED THAT HE WAS SATISFIED. THE REASONS FOR HIS SATISFAC TION ARE NOT AVAILABLE ON RECORD.IN OUR OPINION, MERE MENTIONING THAT SANCTIONING AUTHO RITY WAS SATISFIED IS NOT SUFFICIENT TO INITIATE RE-ASSESSMENT PROCEEDINGS, W HERE DURING THE ORIGINAL ASSESSMENT PROCEEDINGS AO TAKES A PARTICULAR VIEW A FTER CONSIDERING THE SUBMISSION OF THE ASSESSEE.IT IS NOT THE CASE WHERE ASSESSEE H AD NOT FILED DETAILS REQUIRED BY THE AO.IF THE AO DECIDED NOT TO CALL FOR PARTICULAR INF ORMATION THE ASSESSEE CANNOT HE HELD RESPONSIBLE FOR THAT OMISSION/ COMMISSION. THE REFORE, WE HOLD THAT THERE WAS NO FAILURE ON PART OF THE ASSESSEE TO DISCLOSE MATERIA L FACTS TRULY AND FULLY.CONSIDERING ALL THE FACTS CUMULATIVELY, WE ARE OF THE OPINION, THAT THE ORDER PASSED BY THE AO FOR BOTH THE AY.S WERE INVALID. C.O.S FILED BY THE ASSE SSEE ARE DECIDED IN ITS FAVOUR. 3.1 IN THIS BACKGROUND, WE MAY REFER TO THE RELEVAN T FACTS FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. THE APPELLANT BEFORE US IS A NON- RESIDENT BANKING COMPANY AND FOR ASSESSMENT YEAR 20 02-03 IT FILED A RETURN OF INCOME ON 31/10/2002 DECLARING AN INCOME OF RS.348, 12,68,683/-, WHICH WAS SUBJECT TO SCRUTINY ASSESSMENT UNDER SECTION 143(3) OF THE ACT DATED 4 ITA NO.6994/MUM/2010 (ASSESSMENT YEAR 2002-03) 31/3/2005, WHEREBY THE TOTAL INCOME WAS DETERMINED AT RS.401,27,26,700/-. SUBSEQUENTLY, THE SAID ASSESSMENT WAS REOPENED BY I SSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT DATED 31/9/2009. AT PAGES 1 0 12 OF THE PAPER BOOK, ASSESSEE HAS PLACED A COPY OF THE REASONS RECORDED BY THE ASSESSING OFFICER FOR ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT AND AT PAGES 13 14 OF THE PAPER BOOK ARE PLACED THE DOCUMENTS EVIDENCING THE APPROVAL ACCORDED BY THE DIT(IT) 3(1) MUMBAI FOR ISSUE OF NOTICE UNDER SEC TION 148 OF THE ACT. IN TERMS OF THE SAID REASONS RECORDED, THE ASSESSING OFFICER REFERRED TO THE ASSESSMENT FINALIZED FOR ASSESSMENT YEAR 2000-01 UNDER SECTION 143(3) R.W.S. 147 OF THE ACT, FOR ASSESSMENT YEAR 2005-06 UNDER SECTION 143( 3) OF THE ACT AND FOR ASSESSMENT YEAR 2001-02 FINALIZED UNDER SECTION 143 (3) R.W.S. 147 OF THE ACT, WHEREIN INTERCHANGE FEE RECEIVED BY THE ASSESSEE B ANK ON ACCOUNT OF USAGE OF NON-RESIDENT HSBC CARDS IN INDIA HAS BEEN HELD TO B E CHARGEABLE TO TAX WHICH HAD EARLIER ESCAPED ASSESSMENT. THE ASSESSING OFFI CER FURTHER RECORDS THAT SUCH ESCAPEMENT OF INCOME IS WITHIN THE SCOPE OF SE CTION 147 OF THE ACT AND EXPLANATION 2 (C)(I) OF THE ACT ON ACCOUNT OF THE F AILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. AS A CONSEQUENCE, IN THE ENSURING ASSESSMENT THE AS SESSING OFFICER HAS BROUGHT TO TAX A SUM OF RS.42,98,703/- BEING INTER CHANGE FEE RECEIVED BY THE NON-INDIA BRANCHES OF HSBC BRANCHES ON ACCOUNT OF U SE OF CREDIT CARDS IN INDIA. AGAINST SUCH A DECISION OF THE ASSESSING OF FICER, WHICH IS IN CONFORMITY WITH THE DIRECTIONS ISSUED BY THE DRP ON 25/06/2010 IN RESPONSE TO THE OBJECTIONS RAISED BY THE ASSESSEE AGAINST THE DRAF T ASSESSMENT ORDER MADE BY THE ASSESSING OFFICER, ASSESSEE IS IN FURTHER APPEA L BEFORE US. 4. AT THE TIME OF HEARING, THE LD. REPRESENTATIVE FOR THE ASSESSEE REFERRED TO THE REASONS RECORDED BY THE ASSESSING OFFICER FO R ASSESSMENT YEAR 2001-02, 5 ITA NO.6994/MUM/2010 (ASSESSMENT YEAR 2002-03) WHICH ARE PLACED AT PAGES 14 15 OF THE PAPER BOOK TO POINT OUT THAT THE SAME ARE IDENTICAL TO THE REASONS RECORDED FOR THE INSTA NT ASSESSMENT YEAR, COPY OF WHICH HAS BEEN PLACED AT PAGES 10 -12 OF THE PAPER BOOK. IT IS ALSO POINTED OUT THAT THE MANNER IN WHICH THE APPROVAL HAS BEEN ACCO RDED BY THE DIT(IT), MUMBAI IS ALSO IDENTICAL TO THAT IN ASSESSMENT YEAR 2001-02. UNDER THESE CIRCUMSTANCES, IT IS SOUGHT TO BE POINTED OUT THAT FOLLOWING THE DECISION OF THE TRIBUNAL FOR ASSESSMENT YEAR 2001-02 DATED 12/2/201 6(SUPRA), WHICH CONTINUES TO HOLD THE FIELD, THE INITIATION OF PROC EEDINGS UNDER SECTION 147/148 OF THE ACT ARE INVALID AND DESERVE TO BE SET-ASIDE. 5. IN THE CONTEXT OF THE AFORESAID SIMILARITY IN FA CTS BROUGHT OUT BY THE LD. REPRESENTATIVE FOR THE ASSESSEE, THERE IS NO CONTRO VERSION BY THE LD. DEPARTMENTAL REPRESENTATIVE. THE LD. DEPARTMENTAL REPRESENTATIVE HAS MERELY REFERRED TO THE DISCUSSION MADE BY THE TRIBU NAL IN ITS ORDER DATED 12/02/2016(SUPRA) IN RELATION TO THE INITIATION OF PROCEEDINGS UNDER SECTION 147/148 OF THE ACT FOR ASSESSMENT YEAR 2003-04, WHI CH WERE SET-ASIDE ON THE GROUND THAT THERE WAS NO APPROVAL OF THE COMPETENT AUTHORITY. NOTABLY, SUCH A FACT-SITUATION DOES NOT PREVAIL IN THE INSTANT YE AR, AND THE APPELLANT HAS NOT RELIED UPON THE DECISION OF THE TRIBUNAL FOR ASSESS MENT YEAR 2003-04(SUPRA) BUT FOR ASSESSMENT YEAR 2001-02(SUPRA). 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. IN OUR CONSIDERED OPINION, THE AFORESAID ASPECT OF THE ORDER OF THE T RIBUNAL DATED 12/02/2016(SUPRA) BROUGHT OUT BY THE LD. DEPARTMENT AL REPRESENTATIVE IS NOT RELEVANT FOR THE PRESENT YEAR BECAUSE THE DISCUSSIO N MADE BY THE TRIBUNAL FOR ASSESSMENT YEAR 2001-02(SUPRA), WHICH WE HAVE REPRO DUCED ABOVE BRINGS OUT THE SIMILARITY IN FACTS. FOR ASSESSMENT YEAR 2001- 02, THE TRIBUNAL CAME TO 6 ITA NO.6994/MUM/2010 (ASSESSMENT YEAR 2002-03) CONCLUDE THAT THERE WAS NO FAILURE ON THE PART OF T HE ASSESSEE TO DISCLOSE THE MATERIAL FACTS NECESSARY FOR ASSESSMENT. SIMILAR I S THE SITUATION IN THE INSTANT YEAR ALSO. THUS, IN VIEW OF THE SIMILARITY OF FACT S, INASMUCH AS, THE REASONS FOR REOPENING IN THE INSTANT ASSESSMENT YEAR ARE IDEN TICALLY WORDED (EXCEPT FOR THE CHANGE OF FIGURES) WITH THAT FOR ASSESSMENT YE AR 2001-02, THE INITIATION OF PROCEEDINGS UNDER SECTIONS 147/148 THE ACT IN TH E INSTANT YEAR IS ALSO HELD TO BE LACKING IN JURISDICTION AND ACCORDINGLY TREAT ED AS INVALID, FOLLOWING THE DECISION OF THE TRIBUNAL FOR ASSESSMENT YEAR 2001-0 2(SUPRA). 6.1 APART FROM THE AFORESAID, IN SO FAR AS THE MERI TS OF THE ISSUE IS CONCERNED, IN ASSESSMENT YEAR 2000-01(SUPRA) THE T RIBUNAL IN ITS ORDER DATED 12/02/2016 (SUPRA) HAS DECIDED SIMILAR ISSUE IN FAV OUR OF THE ASSESSEE, WHICH WAS FURTHER FOLLOWED BY THE TRIBUNAL IN ASSESSMENT YEAR 2001-02(SUPRA) ALSO. THE RELEVANT DISCUSSION IN THE ORDER OF THE TRIBUNA L DATED 12/2/2016(SUPRA) IS AS UNDER:- 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT IN THE MATTER OF STANDARD CHARTERED GRIND LAYS BANK LTD.(SUPRA),THE ISSUE OF TAXABILITY OF COMMISSION WITH REGARD TO CR EDIT CARDS WAS DELIBERATED UPON AND DECIDED BY THE TRIBUNAL. WE WOULD LIKE TO RE-PRODUCE THE RELEVANT PORTION OF THE ORDER THAT DEALS WITH THE FACTS AS W ELL AS THE REASONING,GIVEN BY THE FAA AND THE TRIBUNAL,FOR DECIDING THE ISSUE AGA INST THE AO.IT READS AS UNDER: 43. NEXT GROUND OF APPEAL IS AGAINST DELETION OF AD DITION OF RS. 10 CRORES BEING MADE ON ALLEGED COMMISSION EARNED BY FOREIGN BRANCHES OF ANZ GRINDLAYS BANK ON THEIR CREDIT CARD BUSINESS OVERSE AS WHERE TRANSACTIONS HAVE TAKEN PLACE IN INDIA. 44. DURING THE COURSE OF ASSESSMENT THE AO REQUIRED THE ASSESSEE TO GIVE DETAILS OF TOTAL COMMISSION RECEIVED BY THE FOREIGN BRANCHES OF THE ASSESSEE BANK ON INTERNATIONAL CREDIT CARDS ISSUED BY THEM W HERE THE TRANSACTIONS WERE COMPLETED IN INDIA BY THE CARD HOLDERS AND THE CARDS WERE HONOURED BY THE BRANCHES OF THE ASSESSEE BANK OR BRANCHES OF AN Y OTHER BANK IN INDIA. THE AO WAS OF THE VIEW THAT WHATEVER INCOME AROSE IN OR FROM INDIA TO ANY FOREIGN BRANCH OF THE ASSESSEE IS ALSO TAXABLE IN I NDIA. THE ASSESSEE COULD NOT FURNISH ANY DETAILS; AT THE SAME TIME IT DID NOT DE NY THAT NO INCOME AROSE 7 ITA NO.6994/MUM/2010 (ASSESSMENT YEAR 2002-03) FROM THE TRANSACTION IN INDIA ON CREDIT CARDS ISSUE D BY ITS FOREIGN BRANCHES. THE AO, THEREFORE, ESTIMATED THE INCOME.THE AO STAT ED THAT COMMISSION INCOME FROM CARDS ISSUED BY INDIAN BRANCHES WAS RS. 9.90 CRORES. IT WOULD BE REASONABLE TO ESTIMATE INCOME OF RS. 10 CRORES EARN ED BY FOREIGN BRANCHES FROM TRANSACTIONS ENTERED INTO INDIA. 45. XXXXXXXX THE LEARNED CIT(A) HELD THAT THE INCOME EARNED EITH ER BY WAY OF ISSUING BANK OF CREDIT CARD OR ACQUIRING BANK OF CREDIT CARD, TR ANSACTION IS ACCOUNTED FOR. HE ALSO HELD THAT UNDER S. 9 OF THE IT ACT ALL INCO MES ACCRUING OR ARISING DIRECTLY OR INDIRECTLY THROUGH OR FROM ANY BUSINESS CONNECTION IN INDIA OR THROUGH OR FROM ANY SOURCE OF INCOME IN INDIA CAN B E TAXED. AS PER S. 9(1)(V)(C), INCOME CAN BE DEEMED TO HAVE ACCRUED IN INDIA ONLY IF PAYMENT IS MADE FOR THE DEBT THAT HAS BEEN INCURRED IN INDIA B Y A NON-RESIDENT WHICH WILL NOT BE THE CASE HERE SINCE THE ISSUING BANK WHICH P ROVIDES DEBT IS OUTSIDE INDIA BEING A FOREIGN BRANCH.AS PER ART. 7 OF INDO- UK DTAA, INCOME THAT CAN BE BROUGHT TO TAX IN INDIA MUST BE DIRECTLY OR INDI RECTLY ATTRIBUTABLE TO THE PE IN INDIA. SINCE THE TRANSACTIONS WERE WITH APPELLAN T'S FOREIGN BRANCHES WHERE THE ISSUING BANK AND THE ACQUIRING BANK IN INDIA WA S SOME BANK OTHER THAN THE INDIAN BRANCH OF THE ASSESSEE, IT CANNOT BE SAI D THAT INDIAN BRANCH WAS IN ANY WAY CONNECTED WITH THE TRANSACTION OR THAT INCO ME EARNED COULD IN ANY WAY BE SAID TO HAVE BEEN DIRECTLY OR INDIRECTLY THR OUGH PE IN INDIA.HE ACCORDINGLY HELD THAT THE INCOME ARISING IN INDIA F ROM TRANSACTION IN INDIA BY USING CREDIT CARDS OF FOREIGN BRANCHES SHOULD BE TA XED IN INDIA. THIS INCOME CAN ONLY BE THE INCOME RECEIVED BY THE INDIAN BRANC H AND SUCH COMMISSION INCOME BEING ALREADY INCLUDED AS AN ACQUIRING BANK. THE INCOME TO THE FOREIGN BRANCH FROM THE CREDIT GIVEN TO ITS CARD HO LDERS OUTSIDE INDIA CANNOT BE TAXED IN THE HANDS OF THE INDIAN BRANCH SINCE IT IS NOT ARISING IN INDIA AND ALSO IT CANNOT BE ATTRIBUTED TO THE ASSETS AND ACTI VITIES OF THE INDIAN BRANCH AS IS REQUIRED UNDER ART. 7 OF DTAA.THEREFORE, THERE I S NO NEED TO FURTHER ESTIMATE ANY INCOME. HE ACCORDINGLY DELETED THE ADD ITION. XXXXXXXXXX 48. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE AR E IN AGREEMENT WITH THE FINDING OF THE LEARNED CIT(A). WHERE THE FOREIGN BR ANCH HAS ISSUED CREDIT CARD AND EVEN IF THE TRANSACTION TAKES PLACE IN INDIA, T HE CREDIT IS GIVEN TO THE CUSTOMER OUTSIDE INDIA AND THE DEBT HAS ALSO ARISEN OUTSIDE INDIA. THE MERCHANT SHIPMENTS IN INDIA MAY RECEIVE THE PAYMENT BUT THE MERCHANT SHIPMENTS DO NOT INCUR ANY DEBT.THEY MERELY RECEIVE CHARGES FOR THE GOODS SOLD OR SERVICES RENDERED. HOWEVER, THE CHARGES ARE RECEIVED BY THE FOREIGN BRANCH FOR PROVIDING CREDIT TO THEIR CARD HOLDERS O UTSIDE INDIA.THE AMOUNT PAYABLE BY THE CARD HOLDERS WHO HAVE ACQUIRED THE C REDIT CARD FROM BRANCHES OUTSIDE INDIA INCURS THE DEBT OUTSIDE INDIA.THEREFO RE, THE FEES IN RESPECT OF SUCH TRANSACTION ARE NOT TAXABLE IN INDIA. WE, THER EFORE, UPHOLD THE DELETION OF ADDITION OF RS. 10 CRORES. . AS THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE ABOVE REFERRED ORDER OF THE TRIBUNAL, SO,WE HOLD THAT THE ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL OR FACTUAL INFIRMITY AS FAR AS ISSUE OF TAXAB ILITY OF ICMED IS CONSIDERED. 8 ITA NO.6994/MUM/2010 (ASSESSMENT YEAR 2002-03) CONFIRMING HIS ORDER, WE DECIDE THE EFFECTIVE GROUN D OF APPEAL AGAINST THE AO. 6.2 FOLLOWING THE AFORESAID PRECEDENT, WHICH HAS B EEN RENDERED UNDER IDENTICAL CIRCUMSTANCES, ON MERITS ALSO WE FIND NO REASON TO UPHOLD THE IMPUGNED ADDITION. IN SUM AND SUBSTANCE, IN VIEW O F THE EARLIER ORDER OF THE TRIBUNAL DATED 12/02/2016(SUPRA), THE ABOVE STATED GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE ALLOWED, AS ABOVE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED, AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 30/11/2016 SD/- SD/- (AMARJIT SINGH) (G.S.PANNU) JUDICIAL MEMBER ACCOCUNTANT MEMBER MUMBAI, DATED 30/11/2016 VM , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI