DZ BANK INDIA REPRESENTATIVE OFFICE, MUMBAI DCIT (IT) 2(1)(2), MUMBAI

This Income Tax Appellate Tribunal case concerns DZ Bank AG's India Representative Office and its tax appeal for the 2014-15 assessment year. The core issue is whether the Indian representative office constitutes a 'permanent establishment' under the India-Germany Double Taxation Avoidance Agreement. The tribunal is determining if interest and commitment fees earned from Indian clients should be taxed in India or solely in Germany.

INCOME TAX APPELLATE TRIBUNAL
MUMBAI ‘I’ BENCH, MUMBAI

[Coram: Pramod Kumar, Vice President, and,
Pavan Kumar Gadale, Judicial Member]

ITA No.: 1815/Mum/18
Assessment year: 2014-15

DZ Bank AG – India Representative Office …………………….. Appellant
c/o SRBC & Associates LLP,14th floor, The Ruby,
29 Senapati Bapat Marg, Dadar West, Mumbai 400 028
[PAN: AABCD6455E]

Vs.

Deputy Commissioner of Income Tax
International Taxation Circle 2(1)(2), Mumbai ………………….Respondent

Appearances:
P J Pardiwalla and Nitesh Joshi, for the appellant
S S Iyengar, for the respondent

Date of concluding the hearing: November 24, 2020
Date of pronouncing the order : December 04,2020

O R D E R

Per Pramod Kumar, VP:

1. By way of this appeal, the assessee appellant has called into question correctness of the order dated 20th December 2017 passed by the learned Commissioner (Appeals) in the matter of assessment under section 143(3) r.w.s. 144 C(13) of the Income Tax Act, 1961, for the assessment year 2014-15.

2. The short issue that we are required to adjudicate in this appeal, as learned representatives agree, is whether, on the facts and in the circumstances of this case, the interest income of Rs 29,41,57,201 and commitment fees etc of Rs 1,98,14,938 earned by DZ Bank from its Indian clients can be taxed in the hands of the assessee before us, under article 7 of the India German Double Taxation Avoidance Agreement [(1996) 223 ITR (Stat) 130; Indo German tax treaty, in short], or is the said income only required to be taxed in the hands of the DZ Bank AG Germany, if at all held to be taxable, under article 11 of the Indo German tax treaty. That is the issue sought to be agitated by before us, though, in the course of this hearing, many other facets of the matter came up for discussions, and, having heard parties on those aspects at length, have been adjudicated upon.

3. Grounds of appeals, as set out in the memorandum of appeal- for the sake of completeness, are as follows: 1. erred in concluding that the Appellant constitutes a permanent establishment ('PE') of DZ BANK, AG Deutsche Zentral Genossenschaftsbank ('DZ BANK AGDZ')/ overseas branches, in India as per the provisions of Article 5 of the India-Germany Double Taxation Avoidance Agreement ('IG treaty');

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