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2018 (9) TMI 58 - AT - Income TaxWithholding tax credit deducted by US based subsidiary of the assessee company in USA on payment of interest loan - Indo-US DTAA - tax deduction by source state - credit has been denied by the Revenue authorities on the ground that assessee has not filed its return of income in US for claiming the refund of the withholding tax if the said amount is not taxable in US - there is no scheme under the DTAA for the resident to give credit of the tax withheld in the source country if the same is not taxable in the source country - interest paid by the US company who is a deductor is actually an expenditure for that company and therefore, there is no question of same being taxable in USA and it has not been shown as to under which provision the TDS was made by the deductor in USA Held that:- It is not in dispute that tax has been deducted by the source state, i.e., USA on the interest income of the resident of India, however, it is not clear under which provision such amount of interest paid by the US Company to the Indian Company is liable for tax under the US laws. The TDS certificate perhaps will give the clarity in this regard, because there might be mention of provision or code under which the tax has been withheld. Thus, for the limited purpose the matter is remanded back to the Assessing Officer to examine the TDS certificates which shall be submitted by the assessee; or assessee can provide any other documents to show that withholding of the tax by the US Company is in accordance with the law of the US State. If the TDS certificate is produced by the assessee, then such tax which has been withheld, Assessing Officer has to give credit of such withholding tax by the US Company which is the mandate of Article 25. Accordingly, with this direction the matter is restored back to the file of the Assessing Officer - Decided in favour of assessee partly for statistical purposes.
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