TMI Blog2017 (10) TMI 623X X X X Extracts X X X X X X X X Extracts X X X X ..... of the view that the Ld CIT(A) was justified in holding that the deduction of tax at source at wrong rate would constitute mistake apparent from record. We also notice that the AO has not given any reason or authority to show that the rate of tax of 42.024% was correct in accordance with the law. Whereas, the assessee is taking support of the provisions of DTAA to contend that the rate of tax applicable is only 10%. Hence application of wrong law would also result in mistake apparent from record. In our view, the foregoing discussion would also show that this issue does not give rise to any debatable issue at all. Accordingly we are of the view that the Ld CIT(A) was justified in directing the AO to entertain the rectification application. Since the assessing officer himself was the deductor of TDS and since we have held that he can rectify the order, the question of filing of return of income by the assessee for claiming the refund, in our view, does not arise at this stage and the same cannot be a ground for entertaining the rectification application. Assessee has claimed that the tax is required to be deducted at source @ 10% as per the provisions of DTAA. CIT(A) has, whil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 154 on the issue of availability of beneficial tax treatment for interest received by the assessee from the department by categorising the same as being covered under Article 11(2) of the DTAA between India and the Netherland without appreciating the fact the amount so received by the assessee actually falls within the definition of term interest as mentioned in Article 11(6) of the DTAA was itself debatable. Further, no discussion whatsoever has been made by the Ld. CIT(A) to hold that the conditions of Article 11(6) of the DTAA were satisfied in the case. The Ld CIT(A) should have appreciated that the amount of ₹ 2500 Crores deposited by VIHBV on which interest of ₹ 118.85 Crores was paid to it by the department on direction of Hon'ble Supreme Court was not at all in nature of any debt claim so as to qualify as interest under Article 11(6) of the DTAA. (3) Without prejudice to above grounds, Ld. CIT(A) erred in adjudicating appeal of the assessee against the order u/s. 154 on a highly debatable issue, which was not a mistake apparent from record rectifiable u/s. 154. (4) The Appellant prays that the order of the Ld. CIT(A) be set aside on the abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 90. The interest component in such figure was ₹ 118,85,24,590 and tax was found to be deductible at source by the AO on such payment of interest to the assessee at 42.024 percent. After deducting TDS so computed amounting to ₹ 49,94,65,574 the balance refund of ₹ 2568,90,59,016 was paid to the assessee. 4. Through its letter dated 03.04.2012 filed on 09.04.2012 before the AO the assessee company requested the AO to rectify the order dated 20.03.2012 issued by the AO quantifying the amount refundable to the assessee. The assessee in this letter had contended that the tax deducted at source from the interest amount payable to it was at 42.024 percent whereas the assessee being a resident of Netherlands, the applicable rate of deduction of tax at source on interest under the India-Netherlands Double Tax avoidance Agreement could only be a maximum of 10 percent. Reliance was placed by the assessee company on the Mumbai Tribunal decision in the case of Bechtel International Inc. in ITA Nos. 5198 6998/2010 and the Special Bench decision of the Delhi Tribunal in the case of Clough Engineering (138 TTJ 385) to contend that the application of the rate of TDS at 42. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee herein) can claim refund of tax, only by filing return of income. In our view, the above said procedure is required to be followed only if the deductor and the deductee are different assessees. In the instant case, the deductor is the assessing officer himself and he is the authority to grant refund to the assessee also. Hence, the assessee can go to no other person than the assessing officer seeking rectification of the order as well as the refund. Since the assessee has taken the view that the AO has deducted tax at a wrong rate, it has filed a petition before him to correct the same. If one agree for a moment that the deductor alone can claim refund of TDS amount, in the instant case, the assessing officer alone can claim refund since the AO was the deductor of tax at source. Assuming for a moment that the AO grants refund to himself, in this peculiar situation, what the AO would do with the money so refunded by him to him. He has to ultimately return the same to the assessee only. Accordingly, under this peculiar facts, we are of the view that the Ld CIT(A) was justified in holding that the deduction of tax at source at wrong rate would constitute mistake apparent from re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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