ITO, NEW DELHI vs. M/S BLUE STAMPING & FORGINGS LTD., FARIDABAD

Assessee by : Sh. Ravi Jain, CIT DR Revenue by: Sh. KC Singhal, Adv Date of Hearing 12/01/2016 Date of pronouncement 16/01/2017 O R D E R PER BENCH. These are the appeal filed by the revenue and cross objections filed by the 1. assessee against the order of the ld XXIX, New Delhi dated 04.01.2011 for the Assessment Year 2008-09 and 2009-10. The assessee raised the following grounds of appeal in ITA NO. 2. 2180/Del/2011 for the Assessment Year 2008-09:-

1. On the facts and circumstances of the case the ld CIT(A) has erred in holding that SCB India were carrying out their commercial banking activities in the normal course of their business and not as dependent agent PE of SCB Mauritius.” The assessee raised the following grounds of appeal in ITA NO. 3. 2181/Del/2011 for the Assessment Year 2009-10:-

1. On the facts and circumstances of the case the ld CIT(A) has erred in holding that SCB India were carrying out their commercial banking activities in the normal course of their business and not as dependent agent PE of SCB Mauritius.”

Page 2 of 3 The revenue raised the following grounds of appeal in CO No. 4. 187/Del/2011 for the Assessment Year 2008-09:- “1 That the interest income received by the non-resident SCB Mauritius from the assessee was not chargeable to tax under the IT Act, 1961 since interest paid was in respect of debt incurred, or money borrowed and unsed for the purpose of business carried on by the assessee outside India or for the purpose of earning income from investment made outside India. Or for the purpose of earning income from investment made outside India. Hence, the interest paid by the assessee was not income of the non- resident chargeable to tax in India.

2. That the CIT(A) was not justified in observing that no evidence was filed by the assessee to prove that the borrowings were used by the assessee outside India for the purposes mentioned in the exception to section 9(1)(b) of the Act. In fact, there were sufficient evidence on record to prove the same. Even if any other evidence was required, the tax authorities should have given adequate opportunity to assessee.” The assessee raised the following grounds of appeal in CO No. 5. 188/Del/2011 for the Assessment Year 2009-10:- “1. That the interest income received by the non-resident SCB Mauritius from the assessee was not chargeable to tax under the IT Act, 1961 since interest paid was in respect of debt incurred, or money borrowed and unsed for the purpose of business carried on by the assessee outside India or for the purpose of earning income from investment made outside India. Or for the purpose of earning income from investment made outside India. Hence, the interest paid by the assessee was not income of the non- resident chargeable to tax in India.

2. That the CIT(A) was not justified in observing that no evidence was filed by the assessee to prove that the borrowings were used by the assessee outside India for the purposes mentioned in the exception to section 9(1)(b) of the Act. In fact, there were sufficient evidence on record to prove the same. Even if any other evidence was required, the tax authorities should have given adequate opportunity to assessee.”

6. At the outset of the hearing itself, the ld. DR brought to our attention that CBDT vide Circular No.21/2015 dated 10th December, 2015 has decided that the revenue would not prefer these appeals before the Tribunal if the tax effect is less than Rs.10 lakhs. Therefore, he pleaded that the appeals of the revenue be decided as per the instruction of the CBDT. Ld AR also reiterated same facts.

7. We have heard both the parties and perused the material. We find that the CBDT vide circular dated 10.12.2015 has revised the monetary limit for filing the appeal by the department before Income Tax Appellate Tribunal, Hon’ble High Courts and Hon’ble Supreme Court. The relevant para of the aforesaid circular is reproduced as under :-