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6. The Appellan t prays that the order of the l d. DRP on the above grounds be set aside and that of the Assessing Officer restored.

7. The Appellant craves leave to amend or alter any ground or add a new ground which may be necessary."

12. Briefly stated, the issue involved in the appeal of the revenue lies in a narrow compass. The assessee had during the year under consideration received interest of Rs.1,15,27,370/- and incentive fee of Rs.1,04,28,063/- from Suzlon Energy Limited, an Indian company in India in the business of P a g e | 11 ITA Nos. 1025 & 843/Mum/2016 A.Y. 2011-12 Clearwater Capital Partners Vs. DCIT (International Taxation) wind power generation, carrying on business both in India and abroad. The entire proceeds of the funds borrowed by way of issuing the FCCB's, as mentioned in the Offering Circular, were utilized by Suzlon Energy limited in repayment of Acquisition facility through a credit agreement between ABN Amro Bank NV and Suzlon Energy Limited in order to assist with the financing of REpower Systems AG. Based on the above facts, it was claimed by the assessee that the interest on FCCB's received by the assessee from Suzlon Energy Limited was not chargeable to tax by virtue of the exception carved in Sec. 9(1)(v)(b) of the Act. Still further, it was submitted by the assessee that the incentive fee earned on the FCCB's was not chargeable to tax, as the monies were raised and utilized by Suzlon Energy Limited outside India, therefore, the income emanating from sources outside India would not accrue or arise in India. It was thus the claim of the assessee before the A.O that once the income falls within the exclusions carved out in Sec. 9(1)(v)(b) of Act, it would fall beyond the sweep of income that had accrued or arisen in India under Sec. 5(2) of the Act. However, the contentions of the assessee did not find favour with the A.O, who by his draft assessment order dated 25.03.2015, passed under Sec. 144(C)(1) r.w.s. 143(3) observed that explanation of the assessee could not be accepted for the following reasons:-

13. The assessee objecting to the draft assessment order carried the matter before the Dispute Resolution Panel-1, Mumbai (for short 'DRP'). The DRP after deliberating on the contentions of the assessee observed that an identical issue as regards chargeability of income in respect of the same FCCB of Suzlon Energy Limited had came up for consideration before the DRP in the immediately preceding year, viz. A.Y 2010-11, wherein it was observed as under:-

"We have considered facts of the case, the written submissions and the oral arguments of the assessee as against the observations/findings of the AO in his draft order. It is noticed that the assessee has received interest income in respect of investment made in FCCBs issued by certain Indian corporate which inter alia included interest of Rs. 5,40,777/- (USD 12,010) on FCCBs issued by Suzlon. It was noticed that the entire proceeds of the funds borrowed by way of issuance of FCCN's were utilized by Suzlon in repayment of Acquisition facility which is understood to be a credit agreement between ABN Amro Bank NV and Suzlon in order to assist with the financing of Repower offer. Thus interest received was in respect of debt incurred or money borrowed and used by Suzlon for the purpose of making or earning an income from a source outside India. It cannot be said that interest income has accrued or arisen in India in all cases where the payer is an Indian resident because if that be so, then the provisions of section 9(1)(v)(b) would become redundant. In clause (b) of section 9(1)(v), an exception has been carved out in respect of interest payable by a person in respect of his debt incurred and money borrowed that was used for the purposes of a business carried on outside India. It may be noted that as per Offering Circular, the interest of Rs. 5,40,777/- on FCCB's received from Suzlon was in respect of debt incurred or moneys borrowed and used by Suzlon for making or earning an income from a source outside India. This is also substantiated with audited annual report of financial year 2007-08 and 2009-10 of Suzlon wherein it was evident that the entire proceeds of the funds borrowed by way of issuance of FCCB's were utilized by Suzlon in repayment of Acquisition Facility through a credit arrangement between ABN Amro Bank NV and Suzlon in order to assist with the financing of Repower offer. The assessee has also placed reliance in the case of ADIT(IT) vs. Adani Enterprises Limited (ITA 3072/Ahd/2009), wherein it was held that once income falls within the exclusion clause of section 9(1)(v)(b) of the Act, it cannot fall within the ambit of accrued or arise n in India under section 5(2) of the Act. Therefore, the case of the assessee has been fully covered by the decision. In the light of above facts, discussion and judicial precedents, the AO is directed to exclude the interest income received by the assessee from FCCB's investment pertaining to Suzlon, after due verification. The Objection is disposed off accordingly."

13. We have heard the rival contentions of both the parties, perused the orders of the lower authorities and the material available on record in context of the issue under consideration. We find that an identical issue in respect of chargeability of interest income received on FCCB's issued by Suzlon Energy Limited had been adjudicated upon by the DRP in the assessee's own case for A.Y. 2010-11. However, the order of the DRP was not further carried assailed by the revenue before the Tribunal, because no such right to appeal was vested with the revenue as per the law available on the statute at the relevant point of time. We however find that it is an admitted fact that the entire proceeds of the funds which were borrowed by way of issuing of FCCB's were utilized by Suzlon Energy Limited in repayment of acquisition facility being a credit agreement between ABN Amro Bank NV and Suzlon Energy Limited in order to assist with the financing of REpower offer. We further find that the contention of the assessee that the money borrowed by Suzlon Energy Limited was used by it for the purpose of making or earning of income from source outside India has neither been rebutted by the lower authorities, nor any such claim had been raised by the D.R before us during the course of the hearing of the appeal. We shall thus in the backdrop of the aforesaid factual position, adjudicate upon the chargeability of tax on the interest income of Rs.1,15,27,370/-on FCCB's issued by Suzlon Energy Limited. We find that as per Sec. 9(1)(v)(b) of the Act, where interest is payable by a resident person in respect of any debt incurred or moneys borrowed and used for the purpose of business or a profession carried on by such person outside India or for the purpose of making or earning any income from any source outside India, the same shall not be deemed to be the income that had accrued or arisen to such person in India. We are of the considered view that as observed by the DRP, since the FCCB's were issued outside India and the P a g e | 14 ITA Nos. 1025 & 843/Mum/2016 A.Y. 2011-12 Clearwater Capital Partners Vs. DCIT (International Taxation) debt incurred or moneys borrowed were utilized by Suzlon Energy Limited outside India, therefore, the interest income on such FCCBs received by the assessee from Suzlon Energy Limited were not chargeable to tax in India by virtue of the exception carved in Sec. 9(1)(v)(b) of the Act. We may herein observe that the fact that the interest income on the FCCB's issued by Suzlon Energy Limited is exempt under Sec. 9(1)(v)(b) in the hands of the payee is fortified by the observations of a coordinate bench of the Tribunal, viz. ITAT Ahmedabad bench 'C', in the case of Suzlon Energy Ltd. Vs. ACIT, Circle-8, Ahmedabad (2016) 156 ITD 7 (Ahd) for A.Ys. 2005-06, 2007- 08 and 2010-11 (Copy placed on record). The Tribunal while deliberating on the issue before them as to whether the assessee appellant had defaulted in deduction of tax at source on the interest payments on the FCCB's issued to non-residents, observed that as the interest income in the hands of the recipients fell within the sweep of the exclusions carved in Sec. 9(1)(v)(b) and hence was not covered by Sec. 5(2), therefore, there was no occasion on the part of the assessee appellant before them to have deducted tax at source on the said amount. We thus in terms of our aforesaid observations are of the considered view that no infirmity emerges from the order of the DRP, who had directed the A.O to exclude the interest income of Rs.1,15,27,370/- received by the assessee from the FCCB's issued by Suzlon Energy Limited, after making necessary verifications.

14. We further find that the DRP had concluded that the incentive fees of Rs. 1,04,28,063/- received by the assessee for revision in conversion price of the FCCB's of Suzlon Energy Limited was not liable to be brought to tax in India. The DRP while concluding as hereinabove, had observed that as the FCCB's were issued outside India and the monies were raised and utilized by Suzlon Energy Limited outside India, therefore, the income emanating from the source outside India cannot be deemed to accrue or arise in India in view of the provisions of Sec. 9(1)(i) of the Act. We have given a thoughtful consideration to the observations of the DRP and are persuaded to subscribe to the same. We find ourselves to be in agreement with the view taken by the DRP that as the monies were raised by Suzlon Energy Limited outside India, P a g e | 15 ITA Nos. 1025 & 843/Mum/2016 A.Y. 2011-12 Clearwater Capital Partners Vs. DCIT (International Taxation) therefore, as per Sec. 9(1)(i) of the Act, the income emanating on the FCCB's from the sources outside India is not to be deemed to accrue or arise in India. We thus finding no infirmity in the order of the DRP, therefore, uphold its order in context of the issue under consideration. The Grounds of appeal Nos. 1 to 7 raised by the revenue before us are dismissed in terms of our aforesaid observations.