DZ BANK INDIA REPRESENTATIVE OFFICE, MUMBAI V. DCIT (IT) 2(1)(2), MUMBAI

MA 145/MUM/2021

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 9096 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 9 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 07-11-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2014-2015
• Appeal Filed On: 28-06-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Double taxation relief; TDS
• Section: 205; 13

Judgement Text

MA No 145/Mum/2021 In ITA No.1815/Mum/2018 Assessment year: 2014-15 Page 1 of 4 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI 'I' BENCH, MUMBAI [Coram: Pramod Kumar (Vice President), and Pavan Kumar Gadale (Judicial Member)] MA No 145/Mum/2021 In ITA No.1815/Mum/2018 Assessment year: 2014-15 DZ Bank India Representative Office ............................Applicant C/o. SRBC and Associates LLP. 14th Floor, The Ruby 29 Senapathi Bapat Marg, Dadar (W), Mumbai 4000 [PAN: AABCD6455E] Vs. Deputy Commissioner of Income Tax (IT) 2(1)(2) Mumbai ........................Respondent Appearances by P J Pardiwala, Sr. Advocate for the applicant S. S. Iyengar for the respondent Date of concluding the hearing : August 27, 2021 Date of pronouncement the order : November 8, 2021 ORDER Per Pramod Kumar, VP: 1. This miscellaneous application points out certain mistakes in our order dated 4 th December 2020, and seeks rectification of these alleged mistakes apparent on record. 2. The first mistake pointed out is with regard to correction in the amounts with respect to interest income, commitment fees and agency income. On this regard, submission of the assessee is as follows:- 2. In Ground Nos. 1 to 8 of the appeal the Appellant had challenged the finding relating to existence of its permanent establishment in India and consequent assessment of interest income, commitment fees and agency fees received by it in respect of amounts lent to Indian borrowers as business income. The Tribunal has rightly held that the aforesaid streams of MA No 145/Mum/2021 In ITA No.1815/Mum/2018 Assessment year: 2014-15 Page 2 of 4 income shall be charged to tax at the rate of 10% in accordance with Article 11 of the Double Taxation Avoidance Agreement between India and Germany (the DTAA). 3. In this context, in paragraph 2 at page 1, paragraph 6 at page 8, paragraph 29 at page 19 and paragraph 30 at page 20 of the Tribunal's Order, the quantum of Interest income has been referred to as Rs.29,41,57,201, commitment fees as Rs.1,91,08,038 and agency fees as Rs.7,06,900. However, the correct amounts should be interest income of Rs. 28,34,87,399, commitment fees of Rs.5,57,48,328 and agency fees of Rs.7,85,444. In this regard reliance is placed on the order dated 13 March 2018 passed by the Assessing Officer, rectifying his order giving effect to the appellate order of the Commissioner of Income-tax (Appeals) - 56 [CIT(A)] and order giving effect to the appellate order of the CIT(A) dated 27 February 2018. The amount as taken by the Tribunal represents the amounts reflected in the final assessment order dated 27 February 2017. Pursuant to enhancement of income by the CIT(A) and rectification order passed by the Assessing Officer the correct figures are those reflected in the aforesaid orders dated 13 March 2018 and 27 February 2018. The Appellant submits that this represents a mistake apparent from the record and the Tribunal may be pleased to clarify the same. 3. Learned Departmental Representative does not dispute the above facts, and fairly agrees that the amount need to be corrected. 4. Having regard to the above submissions, and having perused the material on record, we deem it fit and proper to rectify the quantum of interest income as Rs. 28,34,87,399/-, commitment fees as Rs. 5,57,48,328/- and agency fees as Rs. 7,85,444/-. Orderd, accordingly. The impugned order dated 4 th December 2020 stands rectified accordingly. 5. The second mistake pointed out to us is that ground nos. 9 and 10 remained indisposed off. The submissions of the assessee on this point are as follows:- 3. In Ground Nos. 9 and 10 of the Appeal, it has been claimed that credit may be allowed in respect of tax deducted at source (TDS), including for such items where it could not furnish the TDS certificates, but, the income was received net of taxes. It is further claimed that raising of demands without allowing such credit for the TDS was not in consonance with section 205 of the Income-tax Act, 1961 (the Act). Though the Tribunal has reproduced the said grounds of appeal in paragraph 3 at page 2 of its Order, the said grounds have unfortunately remained un-adjudicated. The Appellant respectfully submits that non-disposal of these grounds discloses a mistake which is apparent from the record. 4. In the appeals filed by the Appellant for the assessment years 2008-09, 2009-10 and 2010-11, grounds similar to aforesaid ground nos. 9 and 10 had been also raised. Though the said order has been pronounced, the same has not been uploaded in the system or served on it. The Appellant craves leave to refer to and rely upon the findings as has been reached by the Tribunal on this particular issue for the said years. 5. Independent of the above, the Appellant states that the Indian borrowers have paid the aforesaid incomes after deducting tax at source in accordance with Article 11 of the DTAA. The amount of such income assessed in the Appellant's hands represents the grossed-up amount in view of section 198 of the Act, as the arrangement was that tax thereon was to be MA No 145/Mum/2021 In ITA No.1815/Mum/2018 Assessment year: 2014-15 Page 3 of 4 borne by the Indian borrowers. The entire liability to pay tax stands discharged by the deduction of tax at source. Once the Appellant has been assessed on grossed up basis and it has received only the net amount from the Indian borrowers i.e., after deduction of tax at source, then, in view of section 205 of the Act and Office Memorandum No. F. No. 275/29/2014-IT(B) dated 11 March 2016, the Appellant cannot be called upon to pay the tax, notwithstanding whether the payer of income/ deductor of tax has deposited the tax into the Government account. In this regard, reliance is also placed upon the following judgments where it has been held that assessee's placed in a similar position as the Appellant cannot be regarded as "assessee in default" and the amount to the extent of TDS cannot be recovered from them: Yashpal Sahni v. ACIT [2007] 293 ITR 539 (Bom HC); Devarsh Pravinbhai Patel v. ACIT [R/Special Civil Application No. 12965 & 12966 of 2018; Sumit Devendra Rajani v. ACIT (2014] 49 taxmann.com 31 (Guj.); and ACIT v. Om Prakash Gattani [2000] 242 IT 638 (Gauhati). 6. Learned Departmental Representative fairly agrees that the above grounds have remained to be disposed of, but, as for the arguments as merits his suggestion is that these submissions can only be taken up for hearing when recalled matter comes up for hearing when recalled matter comes up for hearing. Learned counsel for the assessee does not oppose the said suggestion. 7. Having regard to the rival submissions, and having perused the material on record, we are satisfied that ground nos. 9 and 10 have remained to be disposed of and the impugned order needs to be recalled accordingly. We order so. The Registry is directed to refix the matter for the limited purposes of disposing of these two grounds of appeal. 8. In the result, the miscellaneous application is allowed in the terms indicated above. Pronouncement in the open court today on the 08 th November, 2021. Sd/- Sd/- Pavan Kumar Gadale Pramod Kumar (Judicial Member) (Vice President) Mumbai, dated the 08 th November, 2021 Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) DR (6) Guard File MA No 145/Mum/2021 In ITA No.1815/Mum/2018 Assessment year: 2014-15 Page 4 of 4 By order True Copy Assistant Registrar/ Sr. PS Income Tax Appellate Tribunal Mumbai benches, Mumbai