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TMI Blog2019 (4) TMI 2099X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the claim that the rate of tax applicable to domestic companies and/or co-operative banks for AY 2013-14 is also applicable to the Appellant, in accordance with the provisions of Article 26 (Non-discrimination) of the India-France tax treaty. 3. The Ld. counsel of the appellant fairly agrees that the above issue is covered against the assessee by a series of orders passed by various Co-ordinate Benches in assessee's own case. We find that while deciding the appeal for AY 1996-97 (ITA No. 2760/Mum/2008 dated 28.08.2013), the Tribunal has decided the issue as under: "4.The third issue is relating to tax rate. The assessee has submitted that the tax levied at higher rate in the case of foreign companies is discriminatory in nature and, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO has erred in subjecting to tax, the data processing fees paid by Indian Branch offices of the Appellant to its Singapore branch, as income of the Appellant to the tune of Rs.325,963.282/- under Article 13 (Royalty and fees for technical services) of the India-France tax treaty. 5. Before us, the Ld. counsel of the assessee submits that the above issue has been decided in favour of the assessee by the Tribunal in assessee's own case from AY 2005-06 to AY 2010-11. Further, it is stated by him that the High Court has not admitted the Department's appeal on this ground for AYs 2006-07 and 2007-08. On the other hand, the Ld. DR supports the order passed by the Ld. CIT(A). 6. We have heard the rival submissions and perused the relevant m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh its eight branches situated at Mumbai, New Delhi, Kolkata, Bangalore, Pune, Ahmedabad, Chennai and Hyderabad. During the previous year relevant to A.Y. 2002-03, the Indian Branches of the assessee bank have paid total interest of Rs.1,48,30,613/- to its Head office and overseas branches and the same was claimed as a deduction while determining the profits attributable to Indian Branches, which was chargeable to tax in India. The said interest was treated by the A.O. as income of the assessee's Head office/overseas branches chargeable to tax in India. This decision of the A.O. was challenged by the assessee in the appeal filed before the Ld. CIT(A) and the contention raised before the Ld. CIT (A) in this regard was that the Head offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ian Income tax Act as well as treaty, that interest paid to the head office of the assessee bank as well as its overseas branches by the Indian branch cannot be taxed in India being payment to self which does not give rise to income that is taxable in India as per the domestic law or even as per the relevant 'tax treaty'. Respectfully following the said decision of Special Bench of the ITAT I which is directly applicable in the present case, we delete the addition of Rs.1,48,30,613/- made by the A.O. and confirmed by the Ld. CIT (A) on this issue and allow the appeal of the assessee. 5.1 The issue has also been dealt by the Special Bench of the Tribunal in the case of Sumitomo Mitsui Banking Corporation (supra),wherein the observa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y separate submissions on this aspect of the matter specifically. Having held that the interest paid by the Indian branch of the assessee bank to its head office and other branches outside India is not chargeable to tax in India, it follows that the provisions of s. 195 would not be attracted and there being no failure to deduct tax at source from the said payment of interest made by the PE, the question of disallowance of the said interest by invoking the provisions of s. 40 (a)(i) does not arise, Accordingly we answer question No. 1 referred to this Special Bench in the negative i.e. in favour of the assessee and question No. 2 in affirmative i.e. again in favour of the assessee." As the facts and circumstances of the case during the ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned disallowance of Rs.18,53,83,446/-. The assessee gets the relief accordingly." Also, the above order has been followed by ITAT 'L' Bench, Mumbai in assessee's own case in A.Y.2010-11 (ITA No. 1182/Mum/2015). Further, the Hon'ble Bombay High Court has not admitted the Department's appeal on this ground for AYs 2006-07 and 2007-08. Facts being identical, we follow the above orders of the Coordinate Bench and allow the 2nd ground of appeal. 7. The 3rd ground of appeal Without prejudice to Ground No. 2 above, the AO has erred in levying surcharge of 2 percent and education cess of 3 percent on the tax computed under Article 13 of the India-France tax treaty. The 4th ground of appeal Without prejudice to Ground 2 above, the AO has er ..... X X X X Extracts X X X X X X X X Extracts X X X X
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