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Facts
The Ld. PCIT initiated revisional proceedings under Section 263 of the Income Tax Act for AY 2018-19, observing that the assessee claimed a deduction for net interest on tax refund, which was allegedly offered to tax by Royal Bank of Scotland NV (Netherlands entity) at a lower DTAA rate, against the normal rate. The PCIT set aside the assessment order passed under Section 143(3) to conduct further enquiry. The assessee appealed against this revisional order.
Held
The Tribunal, following its previous decisions in the assessee's own case for AY 2020-21 and 2021-22, held that the issue was squarely covered. It ruled that since the interest income on tax refund had already been assessed in the hands of the Netherlands entity and the assessment had attained finality, taxing it again in the assessee's hands would amount to impermissible double taxation. Consequently, the Tribunal quashed the revisional order passed by the Ld. PCIT.
Key Issues
Whether the PCIT's revisional order under Section 263 was valid when the interest income on tax refund, claimed as a deduction by the assessee, had already been offered to tax and assessed in the hands of another entity (Netherlands entity), thus precluding double taxation.
Sections Cited
263, 143(3), 143(2), 142(1), 244A, 144C(13), 68, 56
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C” BENCH, KOLKATA
This is an appeal preferred by the assessee against the Revisory order passed by the ld. Pr. Commissioner of Income Tax, Kolkata (hereinafter referred to as the “Ld. PCIT”] dated 28.03.2024 for the AY 2018-19.
The appeal filed by the assessee is against the invalid exercise of jurisdiction by the ld. PCIT u/s 263 of the Income-tax Act, 1961 (the Act) and the consequent order passed u/s 263 of the Act setting aside the assessment order dated 12.04.2021, passed u/s 143(3) of the Act.
3.1. At the outset, the ld. Counsel for the assessee pointed out that the issue is squarely covered by the decision of the co-ordinate bench in its own case in for A.Y. 2020-21 vide order dated 27.11.2024 and for A.Y. 2021-22 vide order dated 31.01.2025, wherein identical issue has been decided in favour of the assessee. Therefore, the ld. Counsel for the assessee submitted that the appeal of the assessee may kindly be allowed by quashing the revisionary order as the co-ordinate bench has held that 3.2. The ld. DR on the other hand fairly agreed that in the A.Y. 2020- 21 and 2021-22, the co-ordinate benches have decided the issue in favour of the assessee, however, relied on the order of the ld. PCIT vehemently.
3.3. After hearing the rival contentions and perusing the materials available on record, we find that the issue is squarely covered by the decisions of the co-ordinate benches in assessee’s own case for A.Y. 2020-21 and 2021-22, wherein the issue has been decided in favour of the assessee. For the sake of convenience we extract the operative in for A.Y. 2021-22 as under:
“04. After hearing the rival contentions and perusing the materials available on record, we find that the issue is squarely covered by the decision of the co-ordinate Bench in assessee’s own case in for A.Y. 2020-21, vide order dated 27.11.2024, wherein similar issue has been decided in favour of the assessee. So far as the facts of the present case before us are concerned, we note from the computation of the total income, a copy of which is available at page no.1 of the Paper Book, that the assessee has reduced interest on tax refund which was belonging to and offered to tax by RBS NV amounting to ₹62,12,73,011/-. We have also examined the copy of acknowledgement for A.Y. 2021-22 dated 09.02.2022, wherein the RBS NV has declared the interest on tax refund amounting to ₹62,12,72,670/- as income and paid taxes thereon and the ld. AO has not controverted the said fact. Therefore, the said income is not assessable in the hands of the assessee as it has been offered in the hands of the RBS NV in its return of income and if the same is allowed, it would amount to double taxation of the same income which is not permissible under the Act. For the sake of ready reference, we extract the operative part of the order in assessee’s own case for A.Y. 2020-21 in as under:- “8. The ld. AO thereafter passed the final assessment order u/s 143(3) read with section 144C(13) of the Act dated 27.01.2023, wherein the ld. AO reiterated the finding given by him in the draft assessment order, save and except that he held that interest of ₹6,18,50,000/- could not be added to the assessee’s income u/s 68 of the Act but it should be added u/s 56 of the Act as income from other sources and thereafter, applied rate of 40% plus the educational cess and surcharge to bring the said amount under tax. Aggrieved assessee preferred the appeal before the Tribunal against he said final order.
In the result, the appeal of the appeal of the assessee is allowed.
Order pronounced in the open court on 26.08.2025.