Case Law Details
BNP Paribas Vs ACIT (ITAT Mumbai)
ITAT Mumbai held that rate of tax in case of foreign company is higher than rate of tax in case of domestic company and as per the Explanation in the Section 90, inserted in the IT Act with retrospective effect from 01-04-1962 the should not be regarded as violation of nondiscrimination clause.
Facts- The assessee is a commercial bank having its head office in France. The assessee is having 8 branches in India and is involved in normal banking activities including financing of foreign trade and foreign exchange transactions. AO noticed that the assessee has considered the rate of tax applicable to Indian companies carrying on similar business instead of the rate applicable to non-residents. AO accordingly reopened the assessment as per Explanation 2(a) to section 147.
Conclusion- Held that the tax rate applied in the case of the assessee, a foreign company was 48% compared to 38% applied in case of domestic companies. The assessee had argued that it was discriminatory and not in accordance with law Reference was made to non-discrimination clause in the Treaty, as per which there should not be any discrimination between the domestic and the non-resident company. The Tribunal, however, referred to the Explanation in the Section 90, inserted in the IT Act with retrospective effect from 01-04-1962 as per which the higher tax rate in case of foreign company, should not be regarded as violation of nondiscrimination clause. The Tribunal also referred to the judgment of the Hon’ble Supreme Court in the case of A CIT Vs. J.K. Synthetics The Tribunal accordingly, rejected the ground raised by the assessee. The facts in the present appeal are identical and, therefore, respectfully following the decision of the Tribunal in the case of M/s BNP Paribas(supra), we dismiss this ground raised by the assessee.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
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