TMI Blog2019 (9) TMI 731X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the ld. counsel for the assessee that refund was adjusted against the outstanding demand vide order dated 31.10.2012. Therefore, in our considered opinion, the Revenue erred in levying interest u/s 234D of the Act for the period July 2009 to July 2016. We, accordingly, direct the Assessing Officer to delete the interest so levied. Claim of set off of brought forward business losses and unabsorbed depreciation - HELD THAT:- We direct the Assessing Officer to allow set off of brought forward business losses and unabsorbed depreciation as per provisions of law. - ITA No. 4584/DEL/2016 - - - Dated:- 16-9-2019 - Shri N.K. Billaiya, Accountant Member, And Shri Amit Shukla, Judicial Member For the Assessee : Shri Percy Pardiwala For the Department : Shri G.K. Dhall, CIT- DR [Intll. Tax] ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, This appeal by the assessee is preferred against the order dated 28.07.2016 framed u/s 143(3) r.w.s 144C of the Income-tax Act, 1961 [hereinafter referred to as 'The Act'] pertaining to assessment year 2009-10. 2. Ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brief are that the head office / other overseas branches of the assessee are in receipt of interest earned from the external commercial borrowings (ECB) given to the Indian borrowers parties. Indian branches of assessee help its Indian customers in arranging funds through its overseas branches and the dealer in India cannot lend in foreign currency except for providing export credit to its concern as per the extant Reserve Bank of India Regulations. Indian branches of the assessee but on the request of the customers pass on the lead to the overseas branches along with the credit evaluation report, terms and conditions of approval and details of security documents to be entered into. Indian branches evaluate the customer on an on-going basis and passes on the lead information to its overseas branches on activities related to credit rating, monitoring of covenants etc. On receipt of the information from the Indian branches of the assessee, the overseas branches of the bank do the booking of the loan based on the terms and conditions of the approval. The agreement and security documentations are entered between overseas branches and the borrowers. Indian branches rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed an amount of ₹ 14,58,92,297 as syndication fee from its HO/other overseas branches for the services performed by the Indian branches in relation to ECBs, which has been credited to profit loss account of the Indian branches of the assessee and offered to tax in the return of income filed by the assessee. Apart from this, the assessee has offered to tax an amount of ₹ 2,14,77,903 as transfer pricing adjustment with respect to ECB syndication fee in the return of income. Therefore, the assessee has already offered to tax an amount of ₹ 16,73,70,200 (₹ 14,58,92,297 + ₹ 2,14,77,903) as fee received by the Indian PE of the assessee from its HO/other overseas branches for the services performed in relation to ECBs, which has been accepted to be an arms length price by the Revenue. (iv) The Mumbai Tribunal in the case of Credit Lyonnais (ITA No. 1935/Mum/2007) has held that ECB interest is not attributable to the Indian branches of the assessee and only the fee is taxable in the hands of the Indian branches of the assessee for the role played by it in arranging the ECBs. (v) Without prejudice to the claim of non-taxabil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24.11.1999 has also clarified that where the payment is made of taxes i.e. tax is borne by the payer of the income, the payer is under obligation to issue TDS certificate to the payee, since such grossed up income is taxable in the hands of the payee and the payee is eligible to claim credit of such taxes with held against the income taxed in the hands of the payee. 26. After having gone through the above cited decision, we find that Mumbai Bench of the Tribunal in the case of Credit Lyonnais (supra) has held that ECB interest is not attributable to the Indian branches of the assessee and only the fee is taxable in the hands of the Indian branches of the assessee for the role played by it in arranging the ECB. The Hon ble High Court of Delhi in the case of GE Package Powerink (supra) has been pleased to hold that no interest under section 234B of the Act can be levied where the payment to nonresident payee is subject to tax deduction at source. In the present case, the Assessing Officer himself had admitted by grossing up the ECB interest by the amount of tax borne by the borrowers that tax at source has been deducted. We are thus of the view that no interest unde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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