Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2023 (6) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (6) TMI 29 - ITAT HYDERABADTP Adjustment - TPO / AO in proposing the interest rate on fully compulsory convertible debentures at LIBOR+200 basis points - HELD THAT:- As already held that the currency involved herein is not “Euro” only. The alleged “safe harbor” rules also do not pertain to these four assessment years. We thus affirm the TPO’s identical action in all these four assessment years adopting “LIBOR + 200” interest rate coming to 2.9% as against that claimed @ 11% at assessee’s behest. Ground no. 2 dismissed. Benefit of section 11(7) of India Cyprus DTAA - whether only 10% of the gross amount of the interest is required to be taxed in the hands of the assessee and the remaining interest amount cannot be taxed as per clause 7 of Article 11 of the DTAA or not ? - HELD THAT:- In our view, the conjoint reading of Clauses 2 and 7 of Article 11 of DTAA made it abundantly clear that interest paid over and above the interest mentioned in clause 7 of Article 11 of DTAA, shall be chargeable at Income Tax rate as applicable in Contracting State namely, India, as mentioned in Article 11(7) of DTAA. No error in the order passed by the lower authorities. AR argued that excess amount of the interest paid / received by the assessee shall be chargeable under the head “Income from business” and thereafter, it may be taxed under the other provisions of DTAA - AO/CIT(A) cannot be changed the characteristics of “head of income” when the assessee itself has admitted that the amount received by it was in the nature of interest only and hence, it would be improper either on the part of the AO or the assessee to change or recharacterize the amount received by it as ‘business income’ within the meaning of DTAA. Once the assessee itself admits that the amounts received by it on the FCCDs were in the nature of “Interest income”, then the same cannot be converted into “income from business” and therefore, the submissions of the ld. AR are without any basis and hence, the same are rejected. Accordingly, the appeal of the assessee is dismissed.
|