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Facts
The assessee, a non-resident airline, reported interest income taxable at 10% as per India-Hong Kong DTAA. However, the initial intimation under Section 143(1) and the subsequent CIT(Appeals) order taxed it at higher rates. The Assessing Officer had allowed a rectification petition under Section 154, but the CIT(Appeals)'s dismissal of the appeal prevented the AO from giving effect to that order. The assessee approached ITAT, also seeking condonation for a 95-day delay in filing the appeal.
Held
The ITAT condoned the 95-day delay in filing the appeal, finding sufficient cause. It set aside the CIT(Appeals) order and remitted the matter back to the Assessing Officer with directions to dispose of the matter as per the rectification order already passed under Section 154 of the Act.
Key Issues
Whether the delay in filing the appeal before the ITAT should be condoned; and whether the matter should be remitted to the Assessing Officer to give effect to a rectification order under Section 154 concerning the taxability of interest income under DTAA.
Sections Cited
143(1), 154
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘A’ BENCH, KOLKATA
Before: Shri Duvvuru RL Reddy, Vice-(KZ) & Shri Rajesh Kumar
Per Duvvuru RL Reddy, Vice-President (KZ):- The present appeal is directed at the instance of assessee against the order of ld. Commissioner of Income Tax (Appeals), (A.Y. 2020-2021) Cathay Pacific Airways Limited Kolkata-22 dated 10th December, 2024 passed for assessment year 2020-21.
The appeal is time barred by 95 days in filing the appeal by the assessee before the Tribunal. However, Shri Rakesh Prabhacar Raicar, Regional General Manager of Cathay Pacific Airways Limited filed an affidavit before the ITAT in support of condonation of delay of 95 days mentioning that the assessee was not aware of any notices of hearing and the order passed by the ld. CIT(Appeals) and became aware of the impugned order in March, 2025 via the income tax portal. When the assessee came to know about the order passed by the ld. CIT(Appeals), the assessee approached the ld. A.R. to prefer an appeal, due to that there was a delay of 95 days in filing the appeal before the Tribunal. Therefore, he pleaded to condone the delay.
Considering the facts and circumstances of the case, we are of the view that the assessee was prevented in filing the appeal within the stipulated time. Therefore, we are inclined to condone the delay of 95 days. Hence the delay is condoned.
4. The facts in brief are that the appellant is a non-resident company. The appellant is engaged in the business of operation of aircraft in international traffic. For the year under consideration, the appellant filed the return of income within the prescribed due date declaring total Income of Rs. 1,60,62,140/- and a refund of Rs. 31,50,23,990/-. Such return has been processed under section 143(1) of the Income tax Act, 1961, the Act, vide intimation (A.Y. 2020-2021) Cathay Pacific Airways Limited dated 30th March 2021 issued by the Ld. ADIT, CPC, determining assessed total Income of Rs. 3,21,24,270/- and a refund of Rs.31,18,03,250/- after making the adjustments i.e. double addition of interest income of Rs.1,60,62,140/-, calculation of tax rates on interest income and application of surcharge and cess. During AY 2020-21, the appellant had earned interest income of Rs.1,60,62,140/- in India. The appellant is a tax resident of Hong Kong and has a valid Tax Residency Certificate for the concerned AY 2020-21. As per Article 11 of India-Hong Kong DTAA, interest income shall be taxable at the rate of 10 per cent in India. Accordingly, the company had duly reflected the interest income under 2e of Schedule OS of the income tax return as income chargeable to tax at special rates of 10 per cent as per India- Hong Kong DTAA. The ld. Assessing Officer applied 40% on Rs.1,60,62,140/- considering as income chargeable to tax at normal rates and 50% on Rs.1,60,62,140/- as income chargeable to tax at special rates. On being aggrieved, the assessee preferred an appeal before the ld. CIT(Appeals).
The ld. CIT(Appeals) partly allowed the appeal of the assessee by saying regarding double addition of interest income that the CPC was correct in computing the total income under the head ‘other sources’ at Rs.3,21,24,272/- in the intimation under section 143(1) of the Act and there was no error and confirmed the order of ld. Assessing Officer. The ld. CIT(Appeals) stated regarding calculation of tax rates on interest income that on perusal of intimation under section 143(1), tax be computed @40% on Rs.1,60,62,140/- amounting to Rs.64,24,856/- and under section (A.Y. 2020-2021) Cathay Pacific Airways Limited 115BBE amounting to Rs.80,31,068/-, which comes to Rs.1,44,55,924/- and directed the ld. Assessing OIfficer to recompute the tax afresh and partly allowed of it. Regarding application of surcharge and cess, the ld. CIT(Appeals) directed the ld. Assessing Officer to recompute the tax saying that the interest income of Rs.1,60,62,136/- offered under normal applicable rates, due surcharge and cell shall be applicable while computing the tax under normal provisions.
On being aggrieved, the assessee preferred an appeal before the ITAT. At the outset, it was the submission of the ld. Counsel for the assessee that the assessee filed rectification petition before the ld. Assessing Officer under section 154 when the matter is pending before him. The ld. Counsel also preferred an appeal before the ld. CIT(Appeals), but the ld. CIT(Appeals) dismissed the appeal without considering the submissions made by the assessee. Subsequently the ld. Assessing Officer allowed the rectification petition under section 154 of the Income Tax Act, which was filed by the assessee. Since the ld. CIT(Appeals) dismissed the appeal, the ld. Assessing Officer is not in a position to give the effect order to the assessee, therefore, the ld. Counsel preferred an appeal before the ITAT and argued that as per Article 11 of India-Hong Kong DTAA, interest income shall be taxable at the rate of 10 per cent in India. Accordingly, the company had duly reflected the interest income under 2e of Schedule OS of the income tax return as income chargeable to tax at special rates of 10 per cent as per India- Hong Kong DTAA. Therefore, the ld. Counsel pleaded to remit the matter back to the file of ld. Assessing Officer with a (A.Y. 2020-2021) Cathay Pacific Airways Limited direction to pass the appeal effect order towards 154 petition which was allowed by the ld. Assessing Officer.
On the other hand, ld. Departmental Representative has not raised any objection if the matter is remitted back to the file of ld. Assessing Officer to decide it afresh.
We have heard both the sides and perused the material available on record. By considering the totality of the facts and circumstances of the case, we set aside the order passed by the ld. CIT(Appeals) and remit the matter back to the file of ld. Assessing Officer with a direction to dispose of the matter as per rectification order passed by the Assessing Officer under section 154 of the Act. Thus, the grounds raised by the assessee in the appeal are allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 14/10/2025.