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Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
Before: SHRI MAHAVIR SINGH, JM & SHRI G. MANJUNATHA, AM
per the clauses of agreement dated 15.03.2017, the assessee is a borrower and ICICI Bank Ltd, Singapore branch is an arranger cum facility agent which arranged external commercial borrowings from a group of financial institutions to be assembled by the arranger. The Assessing Officer has referred a letter dated 31.01.2007 of ICICI Bank Ltd., Singapore branch addressed to the assessee. As per which, the assessee is a borrower, ICICI Bank Ltd is an arranger cum facility agent and the lender of the loan are a group of financial institutions assembled to by the arranger. According to the Assessing Officer, although the assessee claims to have made payment to a resident entity, he failed to file any evidences to justify its arguments other than the agreement dated 15.03.2007.
The Assessing Officer further observed that as per the said agreement, the various clauses in agreement as well as the letter addressed by the ICICI Bank Ltd., categorically states that ICICI Bank Ltd., Singapore branch is only the agent for arranging external commercial borrowings.
It is the contention of the assessee that the ICICI Bank Ltd., Singapore branch is a main lender and also acted as an arranger cum facility agent to facilitate external commercial borrowings at USD 20 million which is evident from the agreement dated 15.03.2007 as per which Schedule 1, clearly specifies the name of the original lender as ICICI Bank Ltd., Singapore branch. The assessee further referring to the letter addressed Bank Ltd including its offshore branches at Singapore and Hongkong are the part of the ICICI Bank Ltd., India having its registered office at Vadodra. The letter further states that ICICI Bank Ltd is an Indian resident company in terms of section 6(3) of the Act, and the global income of the ICICI Bank Ltd., including that of the offshore branches is chargeable to tax in India and is assessed to tax under the PAN: AAACI1145H in Mumbai, India. The assessee contended that as per the provisions of section 194A(3)(iii) of the Act, any payment made to a banking company are outside the purview of provisions of TDS, therefore, the Assessing Officer was erred in invoking the provision of section 195 to compute short deduction of tax and interest u/s. 201(1)/201(1A) of the Act.
There is no dispute with regard to the residential status of ICICI Bank Ltd., including its offshore branches at Singapore, Hongkong. The office of Jt. CIT(OSD)- 3(1), Mumbai has clarified vide its letter dated 24.01.2011 that ICICI Bank Ltd is an Indian resident company in terms of section 6(3)(iii) of the Act, and the global income of the ICICI Bank Ltd including the offshore branch is chargeable to tax in India and is assessed to tax in India. It is also undisputed fact that any payment made to a resident banking company does not come within the purview of TDS as per the provision of section 194A(3)(iii) of the Act. The only dispute is with regard to the residential status of lender of external commercial borrowings to the assessee and interest payment on such external commercial borrowings. The assessee claims that it has borrowed external Therefore, any interest payment to ICICI Bank Ltd., Singapore branch is not coming within the provisions of section 195 of the Act. No doubt, any payment made to a resident banking company is outside the purview of provision of section 195 of the Act.
Similarly, any payment made to a non-resident including a banking company is coming within the provision of section 195 of the Act. The primary dispute is with regard to the residential status of payee in Singapore and the lender of external commercial borrowings. As per the letter of Jt. CIT(OSD)-3(1), Mumbai, the residential status of the ICICI Bank Ltd., has been clarified. To that extent there is no dispute. The remaining dispute is with regard to the lender of external commercial borrowings. Although the assessee claims that the ICICI Bank Ltd. is the main lender for USD 20 million external commercial borrowings, the facts available on record states otherwise. The agreement between the assessee and the bank dated 15.03.2007 states that ICICI Bank Ltd is acting as an arranger cum facility agent. The said agreement further states in Schedule 1 at pg.
59 states that ICICI Bank Ltd, Singapore branch is original lender. But the letter written by the ICICI Bank Ltd., Singapore branch dated 31.01.2007 states that ICICI Bank Ltd., Singapore branch is an arranger and facility agent and the lender of the loan is a group of financial institutions to be assembled by the arranger. The facts are contradictory to each other as per the assessee’s own record. Therefore, we are of the considered opinion that the issue needs to be reexamined by the Assessing Officer in light of the claim of the assessee that ICICI Bank Ltd., Singapore branch is the main lender. The assessee is directed to substantiate its case with further evidences. In case, the Assessing Officer
19 4610 & 4611/Mum/2016 Bajaj Eco Tec Products Limited found that ICICI Bank Ltd., Singapore branch is lender of external commercial borrowing, than there is no default in deduction of tax at source u/s. 201(1)/201(1A) of the Act. Hence, we set aside the issue to the file of the Assessing Officer with a direction to consider the issue afresh in light of the evidences filed by the assessee and pass a proper order as per law.
In the result, all the appeals filed by the assessee in 4610 & 4611/Mum/2016 are allowed for statistical purpose. Order pronounced in the open court on 08.06.2018 Sd/- Sd/- (Mahavir Singh) (G. Manjunatha) �या�यक सद�य / Judicial Member लेखा सद�य / Accountant Member मुंबई Mumbai; �दनांक Dated : 08.06.2018 व.�न.स./Roshani, Sr. PS आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. ��यथ� / The Respondent 2. आयकर आयु�त(अपील) / The CIT(A) 3. आयकर आयु�त / CIT - concerned 4. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, मुंबई / DR, ITAT, Mumbai 5. गाड� फाईल / Guard File 6. आदेशानुसार/ BY ORDER,