ACIT, CHENNAI V. GMAC Financial Services India Ltd., CHENNAI

ITA 831/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8549 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2016
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 01-04-2016
• Court: TRIBUNAL
• Department Lawyers: PATHLAVATH PEERYA
• Assessee Lawyers: LOKESH SHAH
• Keywords: Double taxation relief

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI , . ! , ' !# $ [ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ] ./ I.T.A.NO.831/MDS/2016 / ASSESSMENT YEAR : 2007-08 THE ASSTT. COMMISSIONER OF INCOME-TAX CORPORATE CIRCLE 2(1) CHENNAI 600 034 VS. M/S GMAC FINANCIAL SERVICES INDIA LTD ARIHANT E PARK II FLOOR NO.117/1, L.B ROAD, ADYAR CHENNAI 600 020 [PAN AAACG 3844 K ] ( %& / APPELLANT) ( '(%& /RESPONDENT) / APPELLANT BY : SHRI PATHLAVATH PEERYA, CIT /RESPONDENT BY : SHRI LOKESH SHAH, ADVOCATE / DATE OF HEARING : 23 - 08 - 201 6 / DATE OF PRONOUNCEMENT : 09 - 09 - 2016 ) / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-6, CHENNA I, DATED 27.1.2016 FOR ASSESSMENT YEAR 2007-08. THE REVENUE HAS RAISED THE FOLLOWING GROUND: 2.1 THE CIT(A) ERRED IN DELETING THE DISALLOWANCE MADE U/S 40(A)(IA) ON THE PAYMENT UNDER THE HEAD GUARAN TEE FEE BY HOLDING THAT IT WOULD NOT COME UNDER THE PURVIEW OF SEC. 40(A)(IA) OF THE ACT. ITA NO.831/16 :- 2 -: 2. AFTER HEARING BOTH THE PARTIES, WE FIND THAT SIMILA R ISSUE WAS CONSIDERED BY THIS TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2004-05 TO 2007-08 IN I.T.A.NOS.1509, 1537, 1 538 & 1539/ MDS/2009 VIDE ORDER DATED 20.4.2011 WHEREIN IT WAS HELD AS UNDER: 6. IN RESPECT OF THE REMAINING THREE ASSESSMENT Y EARS, THE COMMON GROUND IS THAT THE COMMISSIONER OF INCOME TA X (APPEALS) HAS ERRED IN OBSERVING THAT THE GUARANTEE COMMISSIO N PAID BY THE ASSESSEE-COMPANY TO ITS HOLDING COMPANY M/S. GMAC, USA WAS NOT IN THE NATURE OF INTEREST. WE AGREE WITH THE FI NDING OF THE COMMISSIONER OF INCOME-TAX (APPEALS) THAT THE PAYME NT TOWARDS GUARANTEE FEE CANNOT BE REGARDED AS INCOME FROM DEB T CLAIM AS PER ARTICLE 11 OF THE DTAA ENTERED INTO BETWEEN IND IA AND USA. THE FINDING OF THE COMMISSIONER OF INCOME-TAX (APPE ALS) IS JUSTIFIED IN VIEW OF THE DECISION OF THE I.T.A.T. I N THE CASE OF VIJAY BREAKING CORPORATION (76 TTJ 169). THE RELEVANT OBS ERVATION IS EXTRACTED BELOW : THE EXPRESSION DEBT-CLAIMS REFERRED TO IN THE DEFINITION OF THE TERM INTEREST GIVEN IN DTAA HAS TO BE UNDE RSTOOD IN THE SENSE OF RAISING A LOAN AND EARNING INTEREST THEREF ROM. THE EXPRESSION DEBT CLAIMS IS FURTHER QUALIFIED AS FO LLOWS : DEBT-CLAIMS OF EVERY KIND, WHETHER OR NOT SECURED BY MORTGAGE AND WHETHER OR NOT CARRYING A RIGHT TO PARTICIPATE IN THE DEBTORS PROFIT. THE FACT THAT THE TERM DEBT-CLAIMS IS QUALIFIED BY THE EXPRESSION WHETH ER OR NOT SECURED BY MORTGAGE, IS INDICATIVE OF THE FACT THAT THE DEBT CLAIMS REFERRED TO IN THE DEFINITION OF THE TERM INTEREST MEANS A LOAN, SECURED OR UNSECURED. IF THE TERM DEBT-CLAIMS WAS TO INCLUDE ALL SORTS OF DEBT S, AS IS THE STAND OF THE DEPARTMENT, THEN, IN OUR OPINION, THERE WAS NO NEED TO QUALIFY THE SAID TERM BY THE EXPRESS ION WHETHER OR NOT SECURED BY MORTGAGE. 7. THEREFORE, WE FIND THAT THE GUARANTEE COMMISSIO N IN THE LIGHT OF DTAA CANNOT BE TREATED AS IN THE NATURE OF INTER EST OR DEBT CLAIM. ITA NO.831/16 :- 3 -: 3. IN VIEW OF THE ABOVE DECISION OF THE CO-ORDINATE BE NCH IN ASSESSEES OWN CASE, WE HAVE NO HESITATION IN CONFI RMING THE ORDER OF THE CIT(A) O THIS ISSUE. 4. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 09 TH SEPTEMBER, 2016, AT CHENNAI. SD/- SD/- ( . ! ) (G. PAVAN KUMAR) ' / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER !' / CHENNAI #$ / DATED: 9 TH SEPTEMBER, 2016 RD $%&& '(&)( / COPY TO: & 1 . / APPELLANT 4. & * / CIT 2. / RESPONDENT 5. (+,& - / DR 3. & *&./ / CIT(A) 6. ,0&1 / GF