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Income Tax Appellate Tribunal, DELHI BENCH “D”: NEW DELHI
Before: SHRI ANIL CHATURVEDI & SHRI NARENDER KUMAR CHOUDHRY
PER N.K. CHOUDHRY, JM:
The Assessee has preferred the instant appeal against the order dated 07.01.2022 impugned herein, passed by the Ld. Commissioner of Income tax (Appeals)-42, New Delhi, (in short “Ld. Commissioner”) u/s 250 of the Income Tax Act, 1961 (in short “the Act”), pertaining to the assessment year 2018-19.
Brief facts relevant for the adjudication of the instant appeal are that the Assessee being a foreign company, incorporated in Singapore had filed its Return of Income for the Assessment Year 2018- 2019 on 23rd November, 2018 by declaring a total income of Rs. 34,64,76,9600/-under the regular provisions of the Income Tax Act, 1961 and claimed TDS credit of Rs.7,31,61,839/-.
Somehow, in the intimation under section 143(1) dated 23rd February, 2.1 2020, TDS credit has been restricted to Rs.1,22,76,233/-. Thus, short TDS credit was granted to the extent of Rs.6,08,85,606/- and a demand payable of Rs.7,08,40,350/- was raised on account of short grant of TDS credit and consequential levy of interest under sections 234B and 234C of the Act.
2.2 The Assessee being aggrieved preferred first appeal before the Ld. Commissioner, who vide impugned order dismissed the Assessee’s appeal against which the Assessee is in appeal before this Tribunal.
Learned counsel for the Assessee arguing the appeal on merit also submitted before us that the Assessee has duly filed rectification application dated 12th May, 2020, u/s 154 of the Act to the jurisdictional assessing officer i.e. Asstt. Commissioner of Income-tax (Intl. Taxation)-1(3)(1), New Delhi. In support, the learned counsel has also filed a certified true copy of the rectification application. He submitted that the said application has not yet been disposed of by the Assessing Officer and the Assessee was compelled to file appeal before the Ld. Commissioner.
3.1 On the other hand, learned Sr. Departmental Representative supported the order of the learned CIT(Appeals) and submitted that since the Assessee had not exhausted the remedy available to it, the Ld. Commissioner was fully justified to advise the Assessee to exhaust the remedy available.
Heard the parties and perused the material available on record. We observe that the ld. Commissioner, inter alia, by observing that the CPC had identified the reason of short credit of TDS as mismatch of Rs. 60885606/-; in communication the CPC has advised the Assessee to file online rectification by correcting the details of TDS and to check tax credit with the information available in Form 26AS. The Ld. Commissioner further observed that apparently the Assessee has not made efforts to resolve the reasons of TDS mismatch and instead chosen to file appeal. The Ld. Commissioner also advised the Assessee to approach the CPC as suggested in the intimation u/s 143(1) by filing rectification application online with the CPC after taking necessary steps.
Though prima facie, we do not find any infirmity in the impugned order, however in order to resolve the controversy, we are adverting to the factual matrix and other aspects of the case. In its compilation the Assessee has filed copy of rectification application dated 12th May, 2020. For the sake of ready reference, the application is reproduced here-in-below:
“KALYANIWALLA & MISTRY LLP CHARTERED ACCOUNTANTS 12th May, 2020 Asst. Commissioner of Income-tax (Intl. Taxation) - 1(3)(1), 4th Floor, Room No. 410, E-2 Block, Dr. S.P. Mukherjee Civic Centre, Minto Road, New Delhi - 110002.
Dear Sir/Madam, Re: Greatship Global Services Pte. Ltd. PAN: AADCG7036Q Sub: Application for rectification under section154 of the Income-tax Act and application for stay of demand Assessment Year 2018-2019
We are writing this letter under instructions from our above mentioned clients for the captioned assessment year. This is with reference to the Intimation under section 143(1) dated 23rd February, 2020 passed by the Assistant Director of Income Tax, CPC Bangalore (copy enclosed marked Annexure 1) raising an erroneous demand payable of Rs.7,08,40,350/- for the captioned assessment year. Under the instructions from our above clients, we submit that the following mistakes have crept into the order, which are apparent from the records: 1) SHORT GRANT OF TPS CREDIT a) The assessee company is a foreign company incorporated in Singapore. b) During the financial year relevant to the assessment Year 2018-2019, the assessee company has earned income from hire of rigs on bareboat charter basis of Rs.7,49,81,024/- (computed as per provisions of section 44BB) and interest income of Rs.27,14,95,936/-, aggregating to Rs.34,64,76,960/-.
The assessee company filed its Return of Income for the Assessment Year 2018- 2019 on 23rd c) November, 2018 declaring a Total income of Rs. 34,64,76,9600/-under the regular provisions of the Income Tax Act, 1961 and claimed TDS credit of Rs.7,31,61,839/-. Copy of the acknowledgment evidencing filing of Return of Income for the assessment year 2018-2019 is enclosed marked Annexure 2. d) However, in the intimation under section 143(1) dated 23rd February, 2020, TDS credit has been restricted to Rs.1,22,76,233/-. Thus, short TDS credit was granted to the extent of Rs.6,08,85,606/- and a demand payable of Rs.7,08,40,350/- has been raised on account of short grant of TDS credit and consequential levy of interest under sections 234B and 234C. e) Further, the assessee company submits that the TDS credit granted vide intimation under section 143(1) of Rs.1,22,76,233/- is lower than the TDS credit of Rs.3,24,37,449/- reflected in the Form 26AS for the Assessment Year 2018- 2019 (copy of Form 26AS for AY 2018-2019 attached marked Annexure 3). f) Details of income offered to tax by the assessee company, corresponding TDS claimed in its return of income and the 26AS wherein the TDS is reflected are as under:
Particulars of income Income (Rs.) Corresponding TDS TDS reflecting in claimed as per form 26AS of 26AS (Rs.) A.Y.
Bareboat charter 7,49,81,024/- 3,24,37,449/- A.Y 2018-19 hire income as per section 44BB
Interest income 27,14,95,936/- 4,07,24,390/- A.Y 2019-20
34,64,76,960/- 7,31,61,839/- g) The assessee company has offered to tax interest income of Rs.27,14,95,936/- on accrual basis and correspondingly claimed the TDS credit of Rs.4,07,24,390/- relating to the same which is reflected in Form 26AS for the Assessment Year 2019-2020. h) The assessee company submits that its claim of TDS credit reflected in the Assessment Year 2019-2020 but related to the interest income offered to tax for the Assessment Year 2018- 2019 is in accordance with section 199 of the Income-tax Act read with Rule 37BA of the Income tax Rules. Rule 37BA(3)(i) clearly provides that credit for TDS shall be granted for the assessment year in which the corresponding income is assessable. In other words, it is submitted, that the credit for TDS cannot be divorced or separated from the year in which the corresponding income is assessable. i) The assessee company submits that the credit for TDS and correlating assessable income is inextricably interlinked and accordingly the credit for TDS should be given when the corresponding income is assessed to tax. The assessee company submits that the Assessing Officer has vide intimation under section 143(1) accepted that the interest income is taxable in the assessment Year 2018-2019 but has not granted corresponding TDS credit which is in contravention of Rule 37BA(3)(i). j) The assessee company submits that it has not claimed double credit for TDS reflected in Form 26AS for the Assessment Year 2019-2020. k) Further, at this juncture, it is important to reconcile the TDS credit reflected in Form 26AS for the Assessment Year 2019-2020 vis-a-vis claimed in the Return of Income:
Particulars TDS credit (Rs.)
TDS credit reflected in Form 26AS for the AY 2019-20 (copy of Form 10,49,22,091 26AS for AY 2019-2020 attached marked Annexure 4)
Less: TDS credit reflected in Form 26AS for the AY 2019-2020 but 4,07,24,390 claimed in Ay 2018-19
Balance TDS credit in Form 26AS of AY 2019-2020 6,41,97,701
TDS credit claimed in Ay 2019-2020 and allowed by the Income-tax 6,41,97,698 department vide intimation under section 143(1) for AY 2019-2020 (copy of intimation under section 143(1) for AY 2019-2020 attached marked Annexure 5)
In view of the above, the assessee company submits that the TDS credit of Rs.4,07,24,390 which is reflected in AY 2019-2020 has not been allowed to them at all i.e. neither allowed in AY 2018-2019 nor in AY 2019-2020. l. The Assessing Officer has levied additional interest under sections 234B and 234C of Rs.89,37,294/- and Rs.10,18,105/- in the intimation under section 143(1) dated 23rd February, 2020. The assessee company submits that once proper TDS credit is granted to the assessee company, the interest liability under sections 234B and 234C being consequential in nature, would stand deleted.
In view of what is stated above, we request your Honour to please pass a suitable order under section 154 rectifying the above mistakes apparent from the records and oblige. On doing so, the demand raised vide intimation under section 143(1) of Rs.7,08,40,350/- would stand vacated. In the meanwhile, we request your Honour to please refrain from taking any coercive steps for recovery of erroneous outstanding demand and oblige”
Thanking You Yours faithfully For kalyaniwalla & Mistry LLP Chartered Accountants Akram Abdulla Khan Partner Encl: As above 4.1 The Assessee’s contention is that the aforesaid rectification application has not yet been disposed of by the Department. Though it clearly appears from record that the Assessee did not file proper application signed by it u/s 154 of the Act for efficacious remedy, therefore rightly not entertained by the Assessing Officer however considering the magnitude, the peculiar facts and circumstances of the case and to cut short the litigation, we deem it appropriate as the parties also agreed, to direct the Assessing Officer to verify the claim of TDS and grant the credit, if the Assessee is entitled to, suffice to say by disposing of the ‘rectification application’ referred to above filed by the Assessee within a period of 03 months and by affording reasonable opportunity of being heard to the Assessee. Order accordingly.
As we have directed the AO to dispose of the Rectification Application filed by the Assessee u/s 154 of the Act for efficacious remedy, hence in our considered view, there is no need to decide this appeal on merit.
In view of aforesaid directions, the appeal of the Assessee stands dismissed as infractous.
Order pronounced in the open court on 30.11.2022.