IN. GENIUS SOLUTIONS- FZCO,DUBAI vs. CIRCLE (INTL TAX), JAIPUR, JAIPUR

IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, “SMC” BENCH, JAIPUR BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA No. 1304/JPR/2025 (Assessment Year:2023-24) In. Genius Solutions- Vs. Circle FZCO (Intl Tax) Kalani & Co LLP, Jaipur Chartered Accountants, 5th Floor, Milestone Building, Gandhinagar Turn, Tonk Road, Jaipur �थायीलेखासं./जीआइआरसं./PAN/GIR No:AAGCI 8736 E Appellant .. Respondent Appellant by : Sh. P.C. Parwal, CA (Thr. V.C.) Respondent by : Mrs. Aarti Rawat, Addl. CIT Date of Hearing 23.06.2026 Date of Pronouncement 30.06.2026 O R D E R The present appeal has been filed by the assessee against the order passed by the Income Tax Department, CIT(A), Delhi 42 (hereinafter referred to as “Ld. CIT(A)”), under Section 154 r.w.s. 154 r.w.s. 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”).

P a g e | 2 ITA No. 1304/JPR/2025 In. Genius Solutions FZCO 2. The assessee in this appeal has taken following grounds of appeal:- 1. The Ld. CIT(A) has erred on facts and in law in upholding the action of AO(CPC) in denying the credit of TDS of Rs.9,01,972/- on the ground that assessee has not declared the corresponding income of Rs.86,72,806/- in its return of incomeneither as taxable nor as exempt OR not chargeable to tax under DTAA ignoring that when consultancy services income is not chargeable to tax in terms of DTAA with UAE r.w.s. 9, 90(2) & 195 of IT Act, only because it is not reflected in the return by inadvertence should not lead to denying the credit of TDS in processing the return u/s 143(1). 2 The appellant craves to alter, amend and modify any ground of appeal. 3 Necessary cost be awarded to the assessee. 3. The solitary issue in the present appeal pertains to denial of grant of TDS credited to the assessee amounting to Rs.9,01,972/-,in the intimation made u/s 143(1)(a) of the Act on the processing of return filed by the assessee for the impugned assessment year. 4. I have heard both the parties. The facts on record reveal that the assessee had disclosed no income for the impugned year in the return of income filed, but had claimed TDS credit of Rs.9,01,972/-. The return was filed on 23.10.2023. Thereafter, on 23.11.2023, the assessee was served with a defect notice u/s 139(9) of the Act, pointing out that the gross receipts shown in Form 26AS on which credit for TDS had been claimed by the assessee exceeded the receipts shown under all heads of income, in the return of income filed, and therefore, while credit for TDS was being claimed, the corresponding receipts were not offered in the respective income schedules, to arrive at the taxable total income. Hence, the return of income filed by the assessee was therefore, regarded as defective, in terms of Explanation (a) u/s 139(9) of the Act.

P a g e | 3 ITA No. 1304/JPR/2025 In. Genius Solutions FZCO The assessee was asked to correct the defect by filing a correct return and disclosing the complete receipts as per Form 26AS. Alternatively, the claim of TDS was asked to be made corresponding to the extent of income/receipts disclosed in the return. It was pointed out, that the credit for the TDS is allowable to the person in whose hands the income is assessable and in the year in which such income is assessable as per Rule 37BA of Income Tax Rules, 1962. The assessee responded to the same by contending that it was a foreign company based in Dubai and as per DTAA with UAE its entire income was taxable in UAE and no income was taxable in India as the assessee company is providing services outside India and no income was attributable to India. The assessee further pointed out that the service receiver had wrongly deducted the TDS u/s 195 of the Act and hence income was shown at NIL and TDS claimed as refund by the assessee. The response of the assessee to the defect notice so issued was filed before me and is reproduced as hereunder:-

P a g e | 4 ITA No. 1304/JPR/2025 In. Genius Solutions FZCO

P a g e | 5 ITA No. 1304/JPR/2025 In. Genius Solutions FZCO adjustment was made to the NIL income returned by the assessee. Copy of the intimation was also filed before me. 6. Ld. DR was asked at bar to point out, whether the reason for denial of TDS credit to the assessee was mentioned in the intimation made u/s 143(1) (a) of the Act. To this Ld. DR produced before me, from the records of the case, the copy of the intimation made, which clearly contained no reason for denying the grant of TDS credit. 7. Aggrieved by the same, the assessee carried the matter before Ld. CIT(A), who confirmed the denial of grant of TDS in the intimation made u/s 143(1)(a) of the Act, stating that, the assessee had not declared the income in the return of income against which TDS was deducted ,either as taxable or as not chargeable to tax, and therefore, the CPC could not be faulted with denying grant of TDS claimed ,which was in accordance with Rule 37BA of the Income Tax Rules. 8. I am not in agreement with the order passed by the Ld. CIT(A) in this regard, as the chronology of events in this case, as demonstrated before me, and which is reproduced above also demonstrate that prior to the return of income of the assessee being processed u/s 143(1)(a) of the Act, the assessee was intimated of this very defect of the income pertaining to the TDS deducted and reflected in Form No.26AS not being disclosed in the return of income filed by the assessee, and the assessee had fairly explained the reason for the same as the said income not being taxable as per DTAA and hence not disclosed. After the response filed by the assessee to the defect notice, the AO , I have noted, apparently accepted assessee’s explanation and did not treat the

P a g e | 6 ITA No. 1304/JPR/2025 In. Genius Solutions FZCO return as invalid. This is further strengthened by the fact that in the intimation made u/s 143(1)(a) of the Act, while processing the return of income, the AO accepted NIL income of the assessee. Having accepted no income taxable in India, the entire TDS corresponding to that income deducted at source, therefore, I hold, was rightly claimed by the assessee even in terms of Rule 37BA of the Income Tax Rules. As per Section 119 of the Act read with Rule 37BA of the Rules the assessee is entitled to claim TDS credit to the extent of income to which the TDS relates for the relevant year. 9. In the facts of the present case, the TDS pertained to the income of the assessee for the impugned year, which was not liable to tax in India, and which fact was accepted by the AO also. Therefore, as per law, the assessee was entitled to claim the credit of impugned TDS which it had rightfully claimed. The denial of grant of TDS, therefore, to the assessee in the facts of the present case is completely against law, I therefore, hold that, the assessee be granted a credit of TDS of Rs.9,01,972/-. 10. In the result, the appeal of the assessee is therefore, allowed. Order pronounced in the open court on 30.06.2026.

Sd/- (Annapurna Gupta) ACCOUNTANT MEMBER Dated 30.06.2026 Mittali, Sr. PS

P a g e | 7 ITA No. 1304/JPR/2025 In. Genius Solutions FZCO Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT By Order, Asst. Registrar ITAT, Jaipur