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TMI Blog2024 (6) TMI 1139X X X X Extracts X X X X X X X X Extracts X X X X ..... A similar grievance was raised in A.Y. 2020-2021 and the co-ordinate Bench has considered this issue in ITA No.3146/Mum/2023. The relevant findings of the co-ordinate Bench read as under:- "6. Heard both the sides and perused the material on record. On perusal of the notice dated 29.06.2021 it is evident that the said notice has been issued by the ACIT/NaFAC-1(2) Delhi in the capacity of the prescribed authorities u/s 143(2) of the Income Tax Act 1961. In this regard, we have perused the provision of Sec. 143(2) of the Act as amended by the Finance Act 2016 reproduced as under: 3-1 Sub-section 143(2), as amended by Finance Act 2016 reads as under: "143(2) Where a return has been furnished under section 139, or in response to a notice under sub-section (1) of section 142, the Assessing Officer or the prescribed income tax authority, as the case may be, if, considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not under-paid the tax in any manner, shall serve on the assessee a notice requiring him, on a date to be specified therein, either to attend the office of the Assessing Officer or to prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act that the prescribed authority i.e NaFAC is only authorised to issue a notice under the said section in accordance with provision of the Act. 10. We have also perused the decision of Hon'ble Karnataka High Court in the Writ Petition No. 1109/2023 Adarsh Developers wherein the following question of law was considered by the Hon'ble High Court which is reproduced as under: "[a] Whether the Additional Commissioner of Income Tax NaFAC-1(1)(2) could have assumed jurisdiction in respect of the petitioner's case which belongs to Central Charge for issuance of notice under Section 143(2) of the Income Tax Act, 1961; and if the aforesaid officer could not have so assumed jurisdiction, whether the proceedings must fail for want of due notice 3 326 ITR 492 [GUJ] under Section 143(2) of the Income Tax Act, 1961." The Hon'ble High Court has rejected the petition of the assessee holding as under: "39. This Court must opine that there is a transition from a Scheme notified under the provisions of the IT Act to a Scheme under the IT Act incorporation all the essential without material changes insofar as assessments generally and assessments in the cases of Central Charges and Interna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 2014-15, decided a similar issue against the assessee by following the judicial precedents in assessee's own case. The relevant findings of the coordinate bench of the Tribunal, in the aforesaid decision, are as under: "10. We have perused the various orders of the coordinate benches of the Tribunal in context of the aforesaid issue under consideration and are persuaded to subscribe to the claim of the Id. A.R that the aforesaid issue had consistently been decided by the coordinate benches against the assessee. On a perusal of a recent order of the Tribunal passed in the assessee's own case for A.Y, 2013-14 in ITA No. 552/Mum/2018, dated 22.04.2019, we find, that the Tribunal by relying on its earlier order for AY. 1996-97 in ITA No. 2760/Mum/2008, dated 28.08.2013 had therein concluded that the tax levied at a higher rate in the case of a foreign company is not to be regarded as a violation of the non-discrimination clause. For the sake of clarity the view taken by the Tribunal in context of the aforesaid issue is reproduced as under: "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 un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowing the decision of the coordinate bench of the Tribunal as referred above this ground of appeal no. 2 of the assessee is dismissed." 6. Respectfully following the decision of the co-ordinate Bench (supra), this ground is dismissed. 7. The third ground relates to the taxability of data processing fees wpaid by the assessee to its overseas branch. This issue also of recurring issues coming from A.Y. 2005-2006 to A.Y.2020-2021 and the co-ordinate Bench in ITA No.3416/Mum/ 2023 for A.Y. 2020-2021 has considered this issue as under:- "15. During the course of appellate proceedings before us the ld. Counsel submitted that identical issue on similar fact has been adjudicated by the coordinate bench of the ITAT in favour of the assessee. On the other hand, the ld. D.R supported the order of lower authorities. 16. Heard both the sides and perused the material on record. With the assistance of ld. Representative we have perused the decision of coordinate bench vide ITA no.1076/Mum/2021 for A.Y.2017-2018 on this issue the relevant extract of the decision is reproduced as under: "10. The brief facts of the case pertaining to this issue are: The branch office of the assessee bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and perused the material available on record. We find that the coordinate Bench of the Tribunal in assessee's own case cited supra, for the assessment year 2014-15, decided a similar issue in favour of the assessee, by observing as under: "14. We have deliberated at length on the contentions advanced by the authorised representatives for both the parties in the backdrop of the orders of the lower authorities and have also perused the material available on record. On a perusal of the aforesaid ground, we find, that the issue herein involved is about taxability of data processing fees paid by the Indian branch offices of the assessee to its Singapore branch (service agent) to the tune of Rs 40.78 10,733/ under Article 13 of the India-France Tax Treaty. We find that the Tribunal while disposing off the appeal of the assessee for A.Y. 2013- 14 in ITA No. 552/Mum/2018, dated 22.04.2019 had adjudicated the said issue by relying on its earlier order passed in the assessee's own case for AY. 2009-10 in ITA No. 3541/Mum/2014, dated 31.03.2016, observing as under:- "In the above ground of appeal, the issue is about data processing fees paid by Indian Branch Office of the assessee t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his contention, reliance was placed on behalf of the assessee on the decision of Hon'ble Supreme Court in the case of Sir Kikabhai Premchand CIT (Central) 24 (TR 506 as well as the decision of Kolkata Special Bench of the ITAT in the case of ABN Amro Bank NV vs. Asst. Director of Income-tax 98 TTJ 295. The contention of the assessee, however, was not accepted by the Ld CIT (A) and relying on the decision of Mumbai Bench of the ITAT in the case of Dresdner Bank AG vs Add1. CIT 108 ITD 375, he held that the interest paid by the Indian branches of the assessee bank to its head office and overseas branches was chargeable to tax in India. Accordingly, the addition made by the A.O. on this issue was confirmed by the Ld. CIT(A). 5. We have heard the arguments of both the sides and perused the relevant material on record. As agreed by the Ld. Representatives of both the sides. the issue involved in this appeal of the assessee now stands squarely covered by the decision of Special Bench of the ITAT in the case of Sumitomo Banking Corp Mumbai wherein it was held, after elaborately discussing the legal position emanating from the interpretation of relevant provisions of Indian Income ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nches 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 ie in favour of the assessee and question No. 2 in affirmative Le again in favour of the assessee." As the facts and circumstances of the case during the year under consideration are perimateria, where payment made by assessee to Singapore Branch for data processing was brought to tax. Respectfully following the order of the Tribunal in assessee's own case as well as the order of the Special Bench of the Tribunal in the case of Sumitomo Mitsu Banking Corporation (supra), we hold that the department was not justified in taxing the data processing charges to the Singapore Branch of the assessee by applying the provisions of Article 13 of the India-France Tax Treaty." 13. In effect thus, reversing the stand of the DRP, the coordinate bench has come to the conclusion that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Assessment Year 2006-07, Revenue filed an appeal to this Court being Tax Appeal No.1192 of 2015 raising this very issue. This Court's order did not entertain this question as proposed therein on the grounds that the same in the facts of the case was academic in nature. This for the reason what was being paid by the Indian entity to its Singapore branch was only in the nature of reimbursement of expenses. This finding of fact was not challenged in the Revenue's appeal for Assessment Year 2006-07 or in these appeals for Assessment Year 2008-09 and 2009-10. The Revenue has not been able to show any difference in facts and/or in law in the subject Assessment Years to that in Assessment Year 2006- 07. Therefore, the above decision of this Court for Assessment Year 2006-07 will apply in these two Appeals. 5. Therefore in view of the reasons stated in our order dated 20 March 2018 passed in Income Tax Appeal No.1192 of 2015 relating to Assessment Year 2006-07, the identical question as proposed in the two appeals do not give rise to any substantial question of law. Thus not entertained." 14. We find that this issue is recurring in nature and has been decided in favour of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rticle 12(5) as discussed supra will lead to the conclusion that such interest received by the overseas head office is not taxable under the provision of DTAA. It is clear from the provision of DTAA that interest income of the non-resident (head office) shall be taxable under Article 12 of the DTAA only when such head office shall not having any PE in India wherein branch (PE) is established in India then the provision of Article 7 only shall apply and Article 7 deal with taxability of only profit attributable to the PE branches of such overseas head office. Further, the debt regarding claim mean the some money due from one person to another. Since, in the case of the assessee branch has borrowed from the overseas head office, therefore, debt claim of the head office is connected to the PE branch in India, therefore, in the present case interest received by head office from its branches in India is not taxable in the hands of the head office in view of the provision of DTAA as discussed above." 11. Respectfully following the decision of the co-ordinate Bench (supra), this ground is decided in favour of the assessee. Since ground No.5 has been decided in favour of the assessee, Gro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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