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2019 (1) TMI 1688 - AT - Income TaxTDS u/s 195 - Addition of interest income earned on foreign currency loans given to Indian Corporates - HELD THAT:- Assessee reiterated the reliance on the CBDT Circular no. 789 dated 13.04.2000 (supra) whose validity, according to the learned representative, has also been upheld by the Hon'ble Supreme Court in the case of UOI vs Azadi Bachao Andolan, [2003 (10) TMI 5 - SUPREME COURT] . Furthermore, it is pointed out that the Ministry of Finance vide Press Clarification dated 01.03.2013 clarified that the CBDT Circular no. 789 dated 13.04.2000 (supra) continues to be in force. Another aspect which is brought out by the learned representative is based on the decision of Chennai Bench of the Tribunal in the case of Hyundai Motor India Ltd. Vs. DCIT [2017 (4) TMI 1193 - ITAT CHENNAI] . In this case, the interest paid by Hyundai Motor India Ltd. to the assessee was disallowed u/s 40(a)(i) of the Act on the ground that the payer therein i.e. Hyundai Motor India Ltd. had not deducted the requisite tax at source. The Tribunal in the aforesaid decision inter alia, examined the provisions of Article 11 of the India Mauritius Tax Treaty and concluded that the assessee was indeed the 'beneficial owner' of such interest income. We noticed that the claim of the assessee has also been allowed by Hon’ble ITAT in the assessee’s own case for the A.Y. 2010-11.In view of the decision of the Hon’ble ITAT in the assessee’s own case (supra) we set aside the finding of the CIT(A)on this issue and allowed the claim of the assessee. Levy of interest u/s 234B - assessee has argued that the payer is under obligation to deduct the tax at source and on account of failure of payer to deduct the tax at source, the penalty interest u/s 234B cannot be imposed on the payee - HELD THAT:- In the instant case the assessee received the payment without deduction of TDS. No doubt, the payer was liable to be deduct the TDS who failed to do so, therefore, the penalty is not leviable to be payee in view of the law settled in Director of Income Tax (International Taxation) Vs. Ngc Network Asia LLC [2009 (1) TMI 174 - BOMBAY HIGH COURT] . Therefore, in the said circumstances, it is quite clear that the interest and penalty cannot be imposed upon the payer. Accordingly, we decide this issue in favour of the assessee against the revenue.
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