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Facts
The assessee, Telebyte Technologies PTE Limited, filed two appeals for AY 2017-18 and 2018-19 with a delay in filing, seeking condonation. The core grievance was the non-grant of TDS credit by revenue authorities, despite the credit being reflected in Form 26AS. The assessee claimed the income was exempt from tax in India, leading to a claim for refund of the deducted tax, which the revenue denied citing Rule 37BA of the Income Tax Rules, 1962.
Held
The Tribunal condoned the delay in filing the appeals. It held that TDS credit cannot be denied if it is reflected in Form 26AS and directed the Assessing Officer to allow the tax credit for the respective assessment years. However, the assessee must also demonstrate that the income is not taxable in India, and the AO will verify this before allowing the credit.
Key Issues
Condonation of delay in filing appeals; Allowance of TDS credit when income is claimed exempt but TDS is deducted and reflected in Form 26AS, considering Rule 37BA.
Sections Cited
Rule 37BA of the Income Tax Rules, 1962
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Income Tax Appellate Tribunal, “I” BENCH, MUMBAI
Before: SHRI NARENDRA KUMAR BILLAIYA, HON’BLE & SMT. KAVITHA RAJAGOPAL, HON’BLE
O R D E R PER NARENDRA KUMAR BILLAIYA, AM: & I.T.A. No. 2170/Mum/2024, are two separate appeals by the assessee preferred against two separate orders of the ld. CIT(A)-58, Mumbai, dt. 08/06/2023 and 31/01/2024, pertaining to AY 2017-18 and 2018-19, respectively. & 2 2. The captioned appeals are filed after the expiry of period of limitation with an application for condonation of delay. We have carefully considered the reasons for delay in filing of the appeal and we are convinced that the assessee was prevented by sufficient cause for not filing the appeals on time. Hence, the delay is condoned and the appeals admitted.
Since common grievance is involved in both the appeals, they were heard together and are disposed off by this common order for the sake of convenience and brevity.
The common grievance relates to the non-grant of TDS credit, though the quantum may differ.
The quarrel revolves around Rule 37BA of the Income Tax Rules, 1962 (in short ‘the Rules’), according to which TDS credit is allowable in the year in which the assessee has offered corresponding income for taxation. Since the income of the assessee, as claimed by the ld. Counsel for the assessee, is exempt from tax in India, therefore, the same was not offered for taxation in the return of income filed by the assessee.
Since the payer has deducted tax at source out of abundant precaution, the assessee claimed refund of the tax deducted at source by filing the impugned returns of income and the said credit was denied by the revenue authorities drawing support from Rule 37BA of the Rules, though the credit is duly reflected in Form 26AS in the Income-tax portal.