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2018 (6) TMI 1659 - AT - Income TaxSalary paid to overseas expatriates of the assessee working in India by the Head Office - Disallowance of salary paid overseas to expatriates of the Appellant working in India by the Head Office (HO) and the Indian taxes paid thereon by the HO - Indian Permanent Establishment (‘PE’) from its HO/ overseas branches - HELD THAT:- Similar issue has already been adjudicated in assessee’s own case for the assessment year 2007-08 [2014 (10) TMI 150 - ITAT DELHI] the expatriates were working in India and salary had been subjected to tax for which form no. 16 was also issued to the expatriates - there cannot be any dispute regarding verifiability of these expenses -The expenses had been incurred wholly and exclusively for the Indian branch and no part of thee expenses could be allocated to any other branch by head office - there was no dispute amongst the members in regard to non-applicability of provisions u/s 44C - Decided in favour of assessee. Addition on account of interest accrued/received by the Indian PE on the funds lying with the HO/other overseas branches - HELD THAT:- As decided in own case authorities below we are not justified in taxing the interest received by the Indian PE / branches of the assessee from its head office / other overseas branches as no person can make profit out of its self. The Assessing Officer is, therefore, directed to delete the addition in question. Decided in favour of the assessee. Addition on account of interest received on External Commercial Borrowings given to the Indian Borrowers - HELD THAT:- As decided in own case In the present case, the Assessing Officer himself had admitted by grossing up the ECB interest by the amount of tax borne by the borrowers that tax at source has been deducted. We are thus of the view that no interest under section 234B of the Act can be levied for the tax demand on account of ECB interest and interest under section 234B is also not chargeable sicne ECB interest received by the assessee from the borrowers was subject to tax deduction at source under section 195 of the Act. The Assessing Officer is thus directed to delete the addition made on account of interest received from ECB given to Indian borrowers. Taxability of interest u/s 244A on the income tax refund - HELD THAT:- Restoring the issue to the Assessing officer to determine / adopt the rate of tax on refund in the light of the relevant clauses of IndoFrance DTAA and the decision of Special Bench in Clough Engineering [2011 (5) TMI 562 - ITAT, DELHI] Transfer pricing adjustment - main grievance of the assessee in these grounds is that the ld. DRP/AO/TPO used the erroneous comparable uncontrolled price (CUP) data obtained by issuing the notices u/s 133(6) of the Act but without providing any opportunity to the assessee, while determining the arm’s length price of the international transaction - HELD THAT:- AO/TPO collected comparable uncontrolled price (CUP) data by issuing the notices u/s 133(6) of the Act and used the said data for the purpose of determining the ALP of the international transactions entered into by the assessee with its AE. It is well settled that nobody should be condemned unheard. In the present case, it is alleged that the AO/TPO did not confront the assessee with the data obtained by issuing the notices u/s 133(6) of the Act while determining the arm’s length price. We, therefore, deem it appropriate to set aside this issue back to the file of the AO/TPO to be decided afresh after confronting the data obtained by issuing the notices u/s 133(6) of the Act to the assessee Applicability of the tax rate at 40% plus surcharge and educational cess - HELD THAT:- Tribunal while referring Explanation (1) to section 90(2) has rejected the contention of the assessee that the applicable rate of tax on the income of the assessee attributable to its PE in India cannot exceed the applicable rate of tax in the case of domestic companies. In the said Explanation (1) to section 90(2) it has been declared that the charge of tax in respect of foreign company at a rate higher than the rate at which a domestic company is chargeable, shall not be regarded as less favourable charge or levy of tax in respect of such foreign company. Thus the grievance of the assessee that the authorities below have not adjudicate the issue under the provisions of Article 24 of DTAA does not stand. - Decided against the assessee.
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