TMI Blog2019 (7) TMI 363X X X X Extracts X X X X X X X X Extracts X X X X ..... nal has held that tax payable under DTAA is inclusive of surcharge and education cess. Respectfully following the same, we hold that the A.O. cannot charge surcharge and education cess over and above 10% of the Income Tax levied on the assessee. Appeals of the assessee are accordingly allowed and the A.O. is directed to delete the adjustments made on account of the education cess and surcharge levied on the assessee for all the four assessment years. - all the appeals of the assessee are allowed. - ITA Nos. 86, 87, 112 & 113/Hyd/18 - - - Dated:- 3-7-2019 - Smt. P. Madhavi Devi, Judicial Member And Shri S. Rifaur Rahman, Accountant Member For the Assessee : Sri S.P. Chidambaram And Shankar Kapse For the Revenue : Sri M.H. Naik, DR ORDER PER Smt. P. Madhavi Devi, J.M.: All the captioned appeals are assessee s appeals filed against different orders of the CIT (A)-10, Hyderabad dated 25/09/2017 for the assessment years 2009-10; 2010-11; 2011-12 and 2013-14. 2. Brief facts of the case are that the assessee, a foreign company registered in Netherlands, received c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pertaining to the assessment year 2009-10 and 2010-11 but since it pertained to the assessment years more than six years earlier, the relevant dispatch registers are not available and hence he is not able to prove the service of the same on the assessee. He has supplied the copies of the screen shots of the orders for the relevant assessment years and as seen therefrom, we find that the rate of tax has been modified and taken @ 10%, but education cess and surcharge and also the interest u/s 234A, 234B and 234C were levied. In the second rectification order, which is before us also, only the TDS credit has been given but the education cess and surcharge and also the interest u/s 234A, 234B and 234C were levied. When the Learned Counsel for the Assessee submitted that without being served with the copy of the order, the assessee cannot be expected to file an appeal against such order, the Ld DR fairly submitted that since the Department is not able to produce the copies of the orders dated 16/04/2013 and also the proof of service of such orders on the assessee, the matter may be disposed of on merits. 4. On merits, the Learned Counsel for the Assessee submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en accepted by the Revenue by accepting the rectification application u/s 154. The only dispute is with regard to the levy of surcharge and education cess. The DTAA clearly provided that the taxes in India means the income tax including surcharge there as pointed out by the Learned Counsel for the Assessee. Further, clause 11 of the Finance Act 2018 clearly explains that the education cess is nothing but additional surcharge. This fact has been considered by the Coordinate Bench of the Tribunal at Mumbai and Delhi in the cases cited (supra). In the case of J.P. Morgan Securities Asia (P.) Ltd, the coordinate Bench of this Tribunal was considering the provisions of DTAA between India and Singapore wherein similar adjustment was made by the A.O. and the Tribunal, after considering the decision of the Coordinate Bench decision in the case of Sunil V. Motiani vs. ITO (International Taxation) reported in [2013] 59 SOT 37 / 33 taxmann.com 253 (Mum.) has held as under:- 3. The assessee is a tax resident of Singapore and claim benefit under DTAA between India and Singapore in the return of income. The assessee offered interest income to the tax as 15% as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome i.e. Article-11, taxation of interest will be governed by the said Article-11. Secondly interest income may be taxed in contracting State in which it arises, according to law of that State but if the recipient is beneficial owner of interest, tax so charged shall not exceed 5% of gross interest if the interest is received from bank and in other cases 12.5% of gross amount of interest. In this case, the assessee is the beneficial owner of interest and tax charged cannot exceed 12.5% of gross interest. Tax has been defined in Article-2(2)(b) as per which income tax included surcharge. Therefore, tax referred to in Article 11(2) @ 12.5% also includes surcharge. Further, nature of education cess and surcharge being same as held by the Tribunal in the case of DIC Asia Pacific Pte Ltd. (supra), in our view education cess and surcharge cannot be levied separately and will be included in tax rate of 12.5%. The judgment of Hon'ble High Court of Uttarakhand in the case of Arthusa Offshore Co. (supra), is not applicable to the facts of the present case as the Hon'ble High Court was concerned with taxability of income under Article 14(2) of the DTA between India and USA. The Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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