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TMI Blog2022 (12) TMI 1350X X X X Extracts X X X X X X X X Extracts X X X X ..... (1A) of the Act on 31-07-2020 for Assessment Year (AY) 2020-21. The grounds taken by the assessee are as under: 1. The order of the learned Commissioner of Income tax International Taxation) is: - a) Contrary to law, facts and circumstances of the case b) Opposed to fair procedure and legitimate expectation c) The order of the learned Commissioner of Income tax (International taxation) is by way of review of the opinion of the Assessing officer which is not permissible in law The Assessing Officer has made all the enquiries with respect to the facts relevant to applicability of Section 194LC. The AO has examined and concluded based on the documents produced that the assessee has complied with the ECB guidelines. Thus, the jurisdicti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement, It is supported by: "Maxwell on the Interpretation of Statutes, 12th edition, page 228, states the rule thus: "Where the language of a statute, in its ordinary meaning and grammatical construction, leads to a manifest contradiction of the apparent purpose of the enactment, or to some inconvenience or absurdity which can hardly have been intended, a construction may be put upon it which modifies the meaning of the words and even the structure of the sentence. This may be done by departing from the rules of grammar, by giving an unusual meaning to particular words, or by rejecting them altogether, on the ground that the Legislature could not possibly have intended what its words signify, and that the modifications made are mer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rowing by a resident in India from a source outside India can be only in Foreign currency, as obviously the lender resident outside India (a German Company) can not possess Indian currency. The loan from a source outside India will, in all cases, be received into India only in a foreign currency and will be subsequently converted into India rupee INR for use by the Indian borrower in India. 4. The learned Commissioner of Income tax (International Taxation) in his decreetal ruling/verdict portion of the impugned order passed under section 263 of the Act directed to pass fresh order makes of the impugned proceedings as nullity. 5. The learned Commissioner of Income tax (International Taxation) ought to have appreciated the impugned order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly. The assessee remitted the same and the demand was fully satisfied. The applicable TDS rate u/s 194LC was held to be 5%. 4. Subsequently, Ld. CIT, upon perusal of case records, held that the rate of 5% was concessional rate of tax and to avail the same, the conditions as prescribed therein was to be fulfilled. The primary requirement was that the loan should have been availed in foreign currency whereas the loan was taken by the assessee in Indian currency. Accordingly, the revision of the order was sought and the assessee was put to show-cause notice. 5. The assessee submitted that the loan was in the nature of External commercial borrowings (ECB). The relevant documents were furnished by the assessee at the time of inspection and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atter in accordance with law including the terms of DTAA. Aggrieved as aforesaid, the assessee is in further appeal before us. Our findings and Adjudication 7. Upon perusal of material facts, it could be gathered that the assessee was subjected to TDS inspection and demand was raised u/s 201(1) / (1A) in terms of Sec.194LC and 195. It could be seen that no tax was deducted by the assessee and demand was raised by Ld. AO in terms of statutory provisions after examining the relevant documents including terms of ECB. The same would lead to a conclusion that Ld. AO had applied its mind that the provisions of Sec.194LC would apply to the case of the assessee and TDS would be required at rates mentioned therein. There was complete application o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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