BNP PARIBAS,MUMBAI vs. ASSISTANT COMMISSIONER OF INCOME TAX(INTERNATIONA TAXATION)-CIRCLE 1(3)(1), MUMBAI

ITA 3416/MUM/2023Status: DisposedITAT Mumbai13 May 2024AY 2020-2160 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

On Ground No. 1, the Tribunal held that the notice under Section 143(2) was issued by the ACIT/NaFAC-1(2) Delhi in the capacity of prescribed authority. The Tribunal noted the amendment to Section 143(2) by the Finance Act 2016, which allows for issuance by the 'prescribed income-tax authority'. The judgment does not explicitly state the final decision on this ground, but the discussion implies the notice might be valid if issued by the prescribed authority. On Ground No. 5 (related to interest income), the Tribunal held that interest paid by the Indian branches (Permanent Establishment - PE) to the head office is not taxable in the hands of the head office in view of Article 12(5) and Article 7 of the India-France Double Taxation Avoidance Agreement (DTAA). The Tribunal reasoned that when a PE exists in India, only the profits attributable to the PE are taxed as per Article 7, and interest paid by the PE to the head office falls outside this scope. On Ground No. 7 (addition of Rs. 23,88,795), the Tribunal found that the AO had not considered the assessee's submissions regarding rental income. Therefore, this issue was restored to the AO for fresh decision after verification. Ground No. 8 (short credit of TDS) was not discussed and thus dismissed. Ground No. 9 (penalty proceedings) was considered premature and dismissed. The judgment does not provide findings on Ground No. 2 (data processing fees) and Ground No. 4 (surcharge and cess on data processing fees).

What were the facts?

The assessee, M/s BNP Paribas, a commercial bank with its head office in France and eight branches in India, filed its return of income for Assessment Year 2020-21 declaring a total income of Rs. 546,63,91,110. The case was subject to scrutiny assessment, and the Assessing Officer (AO) issued a draft assessment order proposing variations. The assessee filed objections before the Dispute Resolution Panel (DRP), which dismissed them. Consequently, the AO passed a final assessment order dated 21.07.2023, assessing the total income at Rs. 600,17,43,550. The appeal before the Tribunal challenges this final assessment order passed under Section 143(3) r.w.s 144C(13) of the Income Tax Act, 1961, pursuant to directions from the DRP.

What were the issues?

1. Whether the notice issued under Section 143(2) of the Income Tax Act, 1961, by the National Faceless Assessment Centre (NaFAC) is invalid due to lack of jurisdiction, as contended by the assessee who argues that faceless assessment is not applicable to non-resident Indian cases falling under international taxation, citing cases like CIT-1, Nagpur Vs. Lalitkumar Bardia. The revenue argues that the notice was issued by the prescribed authority (ACIT, NaFAC) as per CBDT Notification No. 25/2021 and Section 143(2), with the final order to be passed by the concerned AO, referencing the Karnataka High Court decision in Adarsh Developers. 2. Whether data processing fees of Rs. 36,03,02,885 paid by Indian branch offices to the Singapore branch are taxable as income of the assessee, and if so, whether surcharge and cess are leviable on tax computed at 10% under Article 13 of the India-France tax treaty. 3. Whether interest income of Rs. 19,22,06,830 payable/paid by Indian branch offices to the head office and overseas branches is chargeable to tax, and if so, whether surcharge and cess are leviable on tax computed at 10% under Article 12 of the India-France tax treaty. 4. Whether an amount of Rs. 23,88,795 added to the income under the head 'profit and gain from business and profession' is correct. 5. Whether short credit of TDS amounting to Rs. 915 has been granted. 6. Whether penalty proceedings under Section 270A were validly initiated.

Which sections of the Income-tax Act were involved?

Section 143(2),Section 144C(13),Section 143(3),Section 9(1)(5)(c),Section 90(2),Section 270A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “I” BENCH, MUMBAI

Before: SHRI AMARJIT SINGH & MS. KAVITHA RAJAGOPAL,

Hearing: 12.03.2024Pronounced: 13.05.2024

Heard together (2 matters)

ITA No.3416/Mum/20
ITA No.3416/Mum/2023

Read from the judgment's own cause title. This page is filed under one of them.

Per Amarjit Singh (AM):

The present appeal filed by the assessee is directed against the final assessment order dated 21.07.2023 passed u/s 143(3) r.w.s 144C(13) of the Income Tax Act, 1961 pursuant to the direction issued by the ld. Dispute Resolution Panel u/s 144C(5) of the Act for the assessment year 2020-21. The assessee has raised the following

grounds before us:

“1. The Assistant

Commissioner

of Income-tax, National

Faceless

Assessment Centre-1(1)(2), Delhi (NaFAC) has erre

The order continues below.

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