SCHINDLER CHINA ELEVATOR COMPANY LIMITED,MUMBAI vs. CIT (APPEALS)-58, MUMBAI

This appeal is filed by the assessee against the appellate order passed by the Ld. Commissioner of Income Tax (Appeals) -58, Mumbai (hereinafter ”the CIT(A)”) for assessment year 2017-18 on 19-01-2023.

The assessee has raised the following two grounds of appeal as under:

Brief facts of the case are that the assessee is a company incorporated in china and also tax resident of china. It is engaged in the business of design, manufacturing and supply of elevators. It filed its return of income on 31.10.17 declaring nil income. The return was processed u/s 143(1) of the Income Tax Act (hereinafter “the Act”) on 24.03.2019. In the return of income the assessee claimed refund of Rs 3,93,375/- and did not have any income. The CPC did not grant any refund and accordingly refund has been computed at Rs Nil. The assessee has also filed rectification application on 22.04.2019 stating that in form no 26 AS tax credit of 03,93,395/- is reflected

Assessee submitted before the Ld. CIT(A) that assessee is eligible for tax deduction at source credit of Rs 03,93,375/-. Ld CIT(A) held that tax credit is allowed in the assessment year in which the corresponding income has been offered to tax. He further noted that the corresponding income of Rs 182,92,865/- as reflected in form no 26AS has not been offered to tax and therefore for this year tax credit is not allowable. He further held that income of Rs 1,82,09,865 is received from Bangalore Metro Rail corporation Ltd. for which the above tax credit has been claimed. Income has not been offered in this year, assessee is not eligible in tax credit of Rs 03,93,375/-. Thus , appeal of the assessee is dismissed.

Aggrieved by the appellate order assessee is in appeal before us.

At the time of hearing, the assessee has filed request of adjournment stating that they would like to file the paper book. However looking at the grounds of appeal we find that assessee has challenged the violation of principles of natural justice and only issue involved in this appeal is non-grant of TDS credit. This is the only grievance. In view of the above, we reject the request for the adjournment by the assessee. Therefore, we proceed to decide the appeal on merits of the case.

The learned departmental representative vehemently supported the order of the learned CIT – A stating that tax deduction at source credit is required to be granted in the year in which the income related to that TDS is offered for taxation.

We have carefully considered the rival contention. The simple facts show that assessee is a company Incorporated in China and resident of China. It is engaged in the business of design and manufacture and supply of elevators. The return of income filed by the assessee declaring nil income claiming credit of tax deduction at source of ₹ 3 93 375. Looking at the provisions of section 199 of the income tax act which provides about credit for tax deducted at source stating that any tax deduction made in accordance with the provisions of tax deduction at source and which is paid to the central government shall be treated as payment of tax on behalf of the assessee from whose income the deduction was made. Corresponding rule 37BA also deals with the procedural manner in which credit for tax deducted at source is required to be given. Rule (3) (i) provides that credit for tax deducted at source and paid to the central government

Accordingly, appeal of the assessee is allowed for statistical purposes.