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2023 (9) TMI 1312 - AT - Income TaxTaxing the interest on income tax refund received u/s 244A - Non-Resident (Foreign Company) - As argued assessee is foreign company and in view of the MFN clause in the protocol to the India-Netherland DTAA the interest received u/s 244A is not taxable - HELD THAT:- We notice that the assessee is a foreign company based at Netherland. It received interest u/s 244A of the Act i.e. interest on income tax refund. Tax at source was deducted by the Revenue authorities. During the course of assessment proceedings, the assessee claimed it not to be taxable based on the finding of this Tribunal in [2023 (1) TMI 1198 - ITAT KOLKATA]. The issue of interest on income tax refund held to be not taxable in the hands of the assessee has been dealt by this Tribunal reads. Therefore, since the assessee is benefitted with the protocol to the India-Netherland treaty dated 21.01.1989 and the favorable provisions of India-Italy tax treaty are applicable on the assessee company because Netherland and Italy both are members of the Organization for Economic Cooperation and Development (OECD) and as per provisions of Article 12(3)(a) of India-Italy DTAA interest earned from Govt. of India by a resident of Italy is not taxable in India, a similar analogy has been applied to the assessee company which is a resident of Netherland. Thus,we set aside the finding of ld. AO and decide the issue in favour of the assessee holding that interest received u/s 244A of the Act by the assessee company based at Netherland from Govt. of India is not taxable. Thus, ground no. 1 raised by the assessee is allowed. Levy of interest u/s 234A - HELD THAT:- We observe that the assessee has filed the return on 08.02.2021 which was within the due date i.e. 15.02.2021. Considering these facts that the return of income has not been filed after the due date interest u/s 234A of the Act cannot be levied. Since the fact that assessee has filed return of income on 08.02.2021 is appearing in the assessment order and since the due date of filing the return was 15.02.2021 there is no delay in filing the return and therefore, interest cannot be levied u/s 234A of the Act. Thus, ground no. 4 raised by the assessee is allowed. Erroneous addition towards refund already issued it is stated that no such refund was granted to the company - HELD THAT:- This fact needs to be verified at the end of the AO to which necessary opportunity of being heard to be provided to the assessee. Thus, ground no. 6 raised by the assessee is allowed for statistical purposes.
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