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Facts
The assessee, a Non-Resident, filed a return of income for AY 2019-20, claiming TDS credit of Rs. 3,26,380. The CPC processed the return u/s. 143(1) and allowed TDS credit of Rs. 1,17,264, leading to a grievance of short grant of credit amounting to Rs. 2,06,116.
Held
The Tribunal condoned the delay in filing the appeal. It noted that the CIT(A) had already restored the issue of Foreign Tax Credit to the Assessing Officer for verification. The Tribunal, while allowing the appeal for statistical purposes, acknowledged that the matter was restored to the AO for proper examination of exemption claims under the India-UAE DTAA and TDS credit.
Key Issues
Whether the short grant of TDS credit in the intimation under Section 143(1) is permissible when the total TDS claimed was reflected in Form 26AS, and whether the assessee is eligible for exemption of income as per the India-UAE DTAA.
Sections Cited
143(1), 143(1)(a), 250, 6, 15(1), 90
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Income Tax Appellate Tribunal, PUNE BENCHES “SMC”, PUNE
Before: DR.MANISH BORAD
आदेश / ORDER The captioned appeal at the instance of assessee pertaining to A.Y. 2019-20 is directed against the order dated 28.11.2023 of Addl/JCIT(A)-5 Kolkata passed u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) arising out of Intimation Order dated 24.04.2020 passed u/s.143(1) of the Act.
At the outset, I find that the appeal before this Tribunal is delayed by 457 days. Assessee has filed condonation petition stating the reasons which led to delay in filing the appeal.
After hearing the ld. Departmental Representative and going through the averments made in the condonation petition by the assessee, I find that due to ‘reasonable cause’ assessee failed to file the appeal within the stipulated time limit. Having regard to the facts of the instant case, I condone the delay in filing the Yogesh Hanumantrao Joshi appeal and admit the appeal for adjudication in light of judgments of Hon’ble Supreme Court in the case of Collector, Land Acquisition, Anantnag & Anr. Vs. Mst. Katiji & Ors. reported in (1987) 2 SCC 107 and in the case of Inder Singh Vs. State of Madhya Pradesh judgment dated 21.03.2025 (2025 INSC 382).
None appeared on behalf of the assessee when the case was called for despite due service of notice of hearing. However, assessee has filed written submission along with paper book stating that based on written submissions and the paper book, issues raised in the instant appeal may be decided by this Tribunal.
With the assistance of ld. Departmental Representative and the perusal of record, I observe that the only issue raised in the instant appeal is that the assessee has been denied benefit of Foreign Tax Credit of Rs.2,06,116/-. Ld. Departmental Representative stated that ld. CIT(A) has already restored the issue to the file of Assessing Officer for necessary verification.
I have heard the Ld. Departmental Representative and perused the record. I observe that the assessee who is Non- Resident filed return of income for A.Y.2019-20 on 20.08.2019 and the same was processed u/s.143(1)(a) of the Act on 24.04.2024. In the said order processing the return, claim of prepaid taxes was not allowed to the extent of Rs.2,06,116/-. Assessee made following written submissions before the ld. CIT(A):
“I was Non-Resident (NR) in India during the impugned year My status as Non-resident is accepted in the intimation. In my return of income (ROI), I had claimed TDS credit of Rs. 3,26,380/- as reflected in Form 26AS. In the intimation under Section 143(1) of the Act, the Ld. CPC accepted the Returned Income However, the Ld. CPC Yogesh Hanumantrao Joshi allowed credit for TDS of Rs. 1,17,264 only as against TDS of Rs 3,23,380 which was claimed in the ROI as reflected in my Form 26AS. The only grievance in this appeal is about short grant of credit for TDS of Rs 2,06,116 (Rs 3,23,380 less Rs. 1,17,264/-)
The action of the Ld. CPC of short grant of TDS in the Intimation is not in accordance with the following judicial pronouncements: In the case of PILCOM CIT 425 ITR 312(SC)
As mentioned earlier, I was a NR in India as per Section 6 of the Act. Further, I was a Resident of the UAE for the CY 2018 as per the domestic tax laws of UAE As per Article 15(1) of the India-UAE Double Taxation Avoidance Agreement (DTAA), income of a Resident of UAE, for services rendered in UAE is taxable only in UAE. As I was a Resident of UAE for the CY 2018, in my ROI, I had not offered to tax salary income of Rs. 13,38,426/-for services rendered in the UAE during the period 01 April 2018 to 31 December 2018. As my returned income has been accepted in the Intimation (i.e. the case made out by me of not offering salary income for services rendered in the UAE to tax in view of Article 15(1) of India UAE DTAA read with section 90 of the Act and read with CBDT circular 333 dated 2 April 1982 has been accepted in the Intimation), short grant of TDS in the Intimation is not in accordance with the decision of Hon'ble Apex Court in PILCOM (supra)
In DCIT v. Escorts Ltd (2007)15 SOT 368 (Del), the Delhi Bench of the Hon'ble Tribunal, in the context of granting credit for TDS.
Therefore, short grant of TDS credit of Rs. 2,06,116 (Rs. 3,23,380 less Rs. 1,17,264) in the Intimation is not even a permissible adjustment under section 143(1) of the Act as TDS of Rs. 3,23,380 claimed in the ROI was also reflected in Form 26AS.
In view of the above submission, I request your Honour to direct the Ld. AO to grant credit for TDS of Rs. 3,23,380 instead of only Rs. 1,17,264 allowed in the Intimation I would also like to press into service the following decisions of Hon'ble Income-tax Appellate Tribunal (ITAT), wherein the Hon'ble ITAT has held that Intimation under Section 143(1) of the Act passed by the CPC is appealable:
Kelavani Mandel Thorkan vs ACIT (CPC) (ITA. N0.378/RJT/2016)
M/s Dixit Rice Mill vs DCIT (CPC), Bengaluru (I.T.A No. 373/Agra/2018)
I crave leave to add, alter, amend, modify, or withdraw any of the above facts or documents referred to in the above paras before or during the hearing of appeal to enable the Hon'ble Commissioner of Income-tax (Appeals) to dispose of this appeal according to law."”
Yogesh Hanumantrao Joshi 7. Going through the above submissions of the assessee and also considering the details and the case laws furnished in the paper book and also going through Form 26AS, I observe that total tax of Rs.3,23,380/- has been deducted and deposited by the Emerson Electric Company (India) Private Limited on the total amount of Rs.20,43,043/- paid/credited to the account of the assessee. I also note that in the return of income in Schedule EI Assessee has claimed exemption under Article 15(1) of the Act of the India-United Arab Emirates Double Taxation Avoidance Agreement (DTAA) Treaty for the exemption of income at Rs.13,38,426/-. However all these details failed to be examined by the CPC before processing the return and therefore ld. CIT(A) has rightly restored the matter to the file of ld. Jurisdictional Assessing Officer (JAO) before whom assessee shall furnish all the requisite details of income which is taxable in India as well as the income which is exempt as per DTAA between India and UAE and also consider the tax deducted at source appearing in Form 26AS and then give due credit of TDS. Needless to mention that ld.JAO in the course of set-aside proceedings shall afford a reasonable opportunity of being heard to the assessee. Grounds of the appeal raised by the assessee are allowed for statistical purposes.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced on this 16th day of July, 2025.