CADENCE DESIGN SYSTEMS (INDIA) PRIVATE LIMITED,NOIDA vs. DCIT, CIRCLE 4(2), DELHI

ITA 1489/DEL/2023Status: DisposedITAT Delhi12 March 2024AY 2018-19Bench: SHRI M. BALAGANESH (Accountant Member), SHRI YOGESH KUMAR US (Judicial Member)7 pages
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What did the Tribunal hold?

The Tribunal allowed the appeal regarding the Section 40(a)(ia) disallowance, ruling that a mere technical error in mentioning the TDS section should not lead to disallowance when TDS was actually deducted and remitted. However, the claim for DDT refund was dismissed, relying on a Special Bench decision that DTAA benefits do not automatically apply to DDT paid under Section 115O. The Tribunal also held that interest charges were consequential and penalty proceedings premature for adjudication.

What were the facts?

The assessee, Cadence Design System (India) Pvt. Ltd., challenged a disallowance under Section 40(a)(ia) for alleged non-deduction of TDS on rental expenditure, arguing that TDS was duly deducted and remitted, and the disallowance was based on a technical error in citing Section 194IB instead of 194I in the tax audit report. The assessee also sought a refund of excess Dividend Distribution Tax (DDT) by claiming Double Taxation Avoidance Agreement (DTAA) benefits for a lower tax rate. Additionally, interest charges under Sections 234B and 234C and the initiation of penalty proceedings under Section 270A were contested.

What were the issues?

1. Whether disallowance under Section 40(a)(ia) for non-deduction of TDS on rental expenditure is justified when TDS was deducted but a wrong section (194IB instead of 194I) was cited. 2. Whether DTAA benefits apply to claim a refund of excess Dividend Distribution Tax (DDT) paid under Section 115O. 3. Validity of interest charges under Sections 234B/234C and premature penalty initiation under Section 270A.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 250,Section 40(a)(ia),Section 194I,Section 194IB,Section 197,Section 115O,Section 234B,Section 234C,Section 274,Section 270A

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Income Tax Appellate Tribunal, DELHI BENCH “B”: NEW DELHI

For Appellant: Shri Salil Kapoor, Adv, Shri Vibhu Jain, Adv
For Respondent: Shri Vivek Kumar Upadhyay, Sr. DR
Hearing: 18/12/2023Pronounced: 12/03/2024

PER M. BALAGANESH, A. M.:

1.

The appeal in ITA No.1489/Del/2023 for AY 2018-19, arises out of the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as „ld. CIT(A)‟, in short] in Appeal No. ITBA/NFAC/S/250/2022-23/1050832602(1) dated 16.03.2023 against the order of assessment passed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟) dated 29.09.2021 by the Assessing Officer, National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as „ld. AO‟).

2.

The assessee has raised the following grounds of appeal before us:-

“1. That, in view of the facts and circumstances of the case and in law, the order passed by the National Faceless Ass

The order continues below.

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