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2022 (6) TMI 348 - ITAT MUMBAINature of income - commission income received by the assessee from HDFC Asset Management Company - offshore distribution commission income - business income or nature of other income - HELD THAT:- Revenue has sought to tax the said offshore distribution commission income only by treating the same to be having sufficient nexus / business connection with India, as the Mutual Funds distributed by the assessee were controlled and regulated by SEBI and RBI in India. In the present case, it is pertinent to note that the Revenue has sought to tax the offshore distribution commission income earned by the assessee by invoking the provisions of section 9(1)(i) of the Act and it is not the case of the Revenue that the income is taxable under any other provision of section 9 of the Act. Further, as noted above, for the purpose of treating the income as deemed to accrue or arise in India, it is relevant that the said income should be “reasonably attributable‟ to the operations carried out in India. As, in the present case, all the operations of the assessee were carried out outside India, therefore, in such circumstances offshore distribution commission income earned by the assessee cannot be treated as being “reasonably attributable‟ to any operation carried out in India. As the assessee conducts portfolio investments in Indian securities in its capacity as SEBI registered FII/FPI, conclusion of the learned CIT(A) that the offshore distribution commission income is in the nature of “business income’ of the assessee does not require any interference. Thus, in view of the above factual and legal position, we do not find any infirmity in the impugned order passed by the learned CIT(A). As a result, grounds raised by the Revenue are dismissed. Applicability of correct rate of tax on interest income - Charging of tax on interest income received on rupee denominated bonds/government securities at correct rate - HELD THAT:- As the issue pertains to applicability of correct rate of tax on interest income earned by the assessee and since the AO without recording any reasons has applied the rate of 15% under Article 11(2) of DTAA and has also not examined the basic facts regarding the nature of investment on which interest income is earned. Therefore, we deem it appropriate to remand this issue to the file of AO for de novo adjudication. The assessee is directed to furnish all the details of investments to the AO. We further direct that if it is found that the investment is made on eligible instruments specified in section 115 AD then benefit of lower rate of tax under section 115AD r.w.s. 194 LD of the Act be granted to the assessee. Thus, to this extent we endorse the findings of learned CIT(A).
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