Templeton Income Trust Templeton Global Bond Fund vs. DCIT, Mumbai

Parties Involved

Facts Summary

The assessee, Templeton Income Trust Templeton Global Bond Fund, a foreign trust registered in the United States of America, filed an appeal against the order passed by the Commissioner of Income Tax (A) – 58, Mumbai, which dismissed the assessee's appeal against the rectification order passed under section 154 of the Income Tax Act, 1961. The assessee contested the liability to pay interest under section 234C of the Act amounting to Rs. 1,097,402/–. The assessee claimed that the interest income of Rs. 1,712,694,350/– received from the government of India securities was liable for deduction of tax at source as per provisions of section 196D read with section 194LD of the Act, but no tax has been deducted by the payer. Therefore, the assessee argued that no interest is chargeable to tax in their hands even though tax has not been deducted by the payer. The assessee further contended that the learned CIT – A had overlooked the provisions of explanation 1 to section 234C of the Act, which requires the exclusion of any amount of income for which tax is deductible for the purpose of chargeability of interest under section 234C of the Act.…

Legal Issues

• 1. Whether the assessee is liable to pay interest under section 234C of the Act?
• 2. Whether the provisions of explanation 1 to section 234C of the Act were correctly considered by the learned CIT – A?

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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