TMI Blog2018 (9) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... icate 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. - I.T.As. No.201, 202, 203, 204 And 205/DEL/2015 - - - Dated:- 2-7-2018 - SHRI J.S. REDDY, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER For The Appellant : Shri R.S. Singhvi Shri Satyajeet Goyal, C.A. For The Respondent : Shri Amit Jain, Sr.D.R. ORDER PER AMIT SHUKLA, J.M.: The aforesaid appeals have been filed by the assessee aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee in India after withholding the tax @15% in view of the Article 11 of India US DTAA. The said interest income has been duly disclosed in the return of income filed by the assessee in the Assessment Years 2007-08 to 2011-12. The details of return of income, interest income earned from US subsidiary and TDS deducted by the US Company are as under:- Sl. No. A.Y Return Income Total Interest income Interest from USA TDS in USA 1 2007-O8 22,89,44,971/- 63,49,477/- 1,57,06,146/- 26,99,165/- 2 2008- 09 28,02,32,440/- 2,81,79,606/- 1,71,85,174/- 31,61,892/- 3 2009-10 13,76,59,264/- 2,30,21,801/- 1,68,23,768/- 22,42,301/- 4 2010-11 (-) 20,26,91,934/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is only a mode of collection of tax (as a precautionary measure) and is not the ultimate test of taxability of such income, in case of any YDS or Withholding of Tax which is not due from the assessee then such tax collecting authority is bound to return the same to the assessee as the said income is not chargeable to tax at all. c. In the Instant case, assessee has itself stated that it is not taxable in USA and ha.: not filed any Return of Income in USA. Its only contention is that tax has been with held in USA on the income which has been offered for taxation in India and hence credit for such tax withheld in USA should be given and be accordingly refunded in India. Thus, it is clear that in this case, the interest income is not taxable in USA but has only been withheld. In such a situation the assessee is eligible for a refund in respect of tax so withheld in USA., which was not due in the first place, as the assessee is not taxable in that country. Thus the procedure available with the assessee is to make a claim of refund in USA on tax withheld on an income, which is not at all taxable in USA. 4. Ld. CIT (A) too has confirmed the action of the Assessing Officer in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redit which shall be allowed to the resident with the tax paid by him outside India. He further relied upon the judgment of ITAT Ahmedabad Bench in the case of Bhavin A. Shah vs. ACIT (2017) 151 DTR (Ahd) (Trib) 97. Thus, he submitted that Assessing Officer could not have denied the credit of tax paid on US on the interest income which has been shown in the return of income in India. 6. On the other hand, learned Department Representative strongly relied upon the order of the Assessing Officer and ld. CIT (A) and submitted that onus was on the assessee to show that the tax which has been withheld by the US company was actually not subjected to tax as per the domestic law of US which has been noted by the Assessing Officer and therefore, both Assessing Officer and ld. CIT (A) has rightly denied the credit to the assessee. 7. We have heard the rival submissions and also perused the relevant findings given in the impugned order. Herein these cases, only issue involved in all the appeals is allowability of claim of withholding tax credit deducted by US based subsidiary of the assessee company in USA on payment of interest loan. It is not in dispute that interest income earned by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t if the beneficial owner is the resident state then the tax was charged shall not exceed 10% as per clause (a) and 15% as per clause (b). Thus, interest can also be taxed in the source state in which it arises according to laws of the source state and then in that case the tax so charged shall not exceed 10% or 15%. It can be inferred that the taxability of the interest in the source state has to be in accordance with the laws of that state; and if such tax has been deducted, then Article 25 of the said treaty provides credit of such taxes which has to be given by the resident state which is clear from paragraph 2 of the Article 25. The relevant paragraphs 1 and 2 of Article 25 read as under:- ARTICLE 25 RELIEF FROM DOUBLE TAXATION 1. In accordance with the provisions and subject to the limitations of the law of the United States (as it may be amer.zed from time to time without changing the general principle hereof), the United States shall allow to a resident o: citizen of the United States as a credit against the United States tax on income- (a) the income-tax paid to India by or on behalf of such citizen or resident; and (b) in the case of a Un ..... X X X X Extracts X X X X X X X X Extracts X X X X
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