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Facts
The assessee company entered into a bilateral APA with the CBDT, resolving transfer pricing issues. Consequently, the assessee sought withdrawal of grounds related to transfer pricing in their appeals for Assessment Years 2016-17 and 2017-18. Other grounds related to corporate tax issues were also raised.
Held
The Tribunal noted that the transfer pricing issues were resolved due to the bilateral APA. Most of the grounds were either withdrawn by the assessee or were consequential. Specific grounds related to disallowance of deduction under Section 80G, error in computation, and non-grant of Foreign Tax Credit were considered. The Tribunal remanded the issue of Section 80G deduction for AY 2016-17 to the AO for verification. The issue of error in computation was directed to be rectified by the AO. The issue of non-grant of FTC for AY 2017-18 was also remanded to the AO for consideration.
Key Issues
Withdrawal of transfer pricing grounds due to bilateral APA; adjudication of corporate tax issues including disallowance of Section 80G deduction, error in computation, and non-grant of Foreign Tax Credit.
Sections Cited
10AA, 80G, 90, 234B, 234C, 271(1)(c), 92C, 37
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘B’ BENCH : BANGALORE
Before: SMT. BEENA PILLAI & SHRI LAXMI PRASAD SAHU
Page 2 of 12 IT(TP)A Nos. 282/Bang/2021 & 367/Bang/2022 PER BEENA PILLAI, JUDICIAL MEMBER Present appeals arises out of the final assessment order dated 30.04.2021 and 14.03.2022 by NFAC, Delhi for A.Ys. 2016-17 and 2017-18.
At the outset, the Ld.AR submitted that assessee has entered into bilateral APA with the CBDT on 26/03/2024 pursuant to which the grounds raised by the assessee in relation to the transfer pricing issues stands withdrawn. The assessee has filed the application seeking withdrawal of the grounds on 28.05.2024 which is scanned and annexed herewith.
Page 3 of 12 IT(TP)A Nos. 282/Bang/2021 & 367/Bang/2022
Page 4 of 12 IT(TP)A Nos. 282/Bang/2021 & 367/Bang/2022
Page 5 of 12 IT(TP)A Nos. 282/Bang/2021 & 367/Bang/2022 3. She submitted that upon withdrawal of the transfer pricing issue, the other grounds raised by the assessee on corporate tax issue that needs consideration are as under 3.1. At the outset the Ld.AR also submitted that, assessee has filed application dated 25/08/2021 seeking admission of additional ground for A.Y. 2016-17 being ground nos. 24 and 25. She submitted that the assessee do not wish to press these grounds and accordingly is withdrawn the same at the instructions of the assessee.
Corporate tax issue (Assessment Year 2016-17) Page 6 of 12 IT(TP)A Nos. 282/Bang/2021 & 367/Bang/2022 Page 7 of 12 IT(TP)A Nos. 282/Bang/2021 & 367/Bang/2022
Page 8 of 12 IT(TP)A Nos. 282/Bang/2021 & 367/Bang/2022 Corporate tax issue (Assessment Year 2017-18)
Page 9 of 12 IT(TP)A Nos. 282/Bang/2021 & 367/Bang/2022 3.2. Ground no. 23 is thus dismissed as withdrawn.
This Tribunal is thus left with issues raised by the assessee in ground nos. 21, 24 to 30. For the sake of convenience, the grounds that are adjudicated in this order for both the years under consideration are tabulated as under: Assessment Assessment S.No. Issues Year 2016-17 Year 2017-18 (Ground nos.) (Ground nos.) 1. 80G 21 24 Error in 2. 24 Nil computation Penalty u/s. 3. 26-28 Nil 271(1)(c) Interest u/s. 4. 29 & 30 26 234B & C Non-grant of 5. Nil 25 relief u/s. 90
A) Issue 1 – 80G: 4.1. The Ld.AR submitted that, deduction claimed u/s. 80G was denied to the assessee by holding that, the claim forms part of CSR expenses. She submitted that, identical issue was considered by Coordinate Bench of this Tribunal in case of First American (India) Pvt. Ltd. vs. ACIT in vide order dated 29/04/2020. The Ld.AR submitted that, the issue may be remanded to the Ld.AO to verify the claim of the assessee in accordance with the principles laid down in the aforestated decision.
Page 10 of 12 IT(TP)A Nos. 282/Bang/2021 & 367/Bang/2022 4.2. The Ld.DR did not object for the submissions made by the Ld.AR.
4.3. In the interest of justice, we remit this issue to the Ld.AO to verify the claim in accordance with the principles laid down in the decision relied by the assessee. Accordingly, this ground raised by the assessee stands allowed for statistical purposes.
B) Issue – 2 (Error in computation): 4.4. The Ld.AR submitted that the Ld.AO considered wrong figures of the total income declared by the assessee and the same needs to be rectified.
4.4.1 We direct the Ld.AO to carry out verification and correct the computation if there is any error. Accordingly, this issue raised by the assessee stands allowed for statistical purposes.
C) Issue 3 (Penalty u/s. 271(1)(c)): 4.5. This is consequential in nature and do not require any adjudication. Accordingly, ground nos. 26-28 need not be adjudicated.
D) Issue 4 (Interest u/s. 234B &C): 4.6. The Ld.AO directed to compute the interest leviable u/s. 234B and C in accordance with law.
Page 11 of 12 IT(TP)A Nos. 282/Bang/2021 & 367/Bang/2022 Accordingly, the grounds raised by the assessee for A.Y. 2016-17 stands allowed for statistical purposes.
It is noted that the assessee raised an issue in A.Y. 2017-18 in respect of non-grant of relief u/s. 90.
5.1. The Ld.AR submitted that foreign tax credit u/s. 90, amounting to Rs.68,48,185/- was denied to the assessee.
5.2. The Ld.DR relied on the orders passed by the authorities below. We have perused the submissions advanced by both sides in the light of records placed before us.
5.3. It’s a trite law that DTAA overrides the provisions of the Act and the Rules, as held by various High Courts, which has also been approved by Hon’ble Supreme Court in case of Engineering Analysis Centre of Excellence (P.) Ltd. reported in (2021) 432 ITR 471.
5.4. We accordingly, hold that FTC cannot be denied to the assessee. Assessee is directed to file the relevant details/evidences in support of its claim. We thus remand this issue back to the Ld.AO to consider the claim of assessee in accordance with law, based on the verification carried out in respect of the supporting documents filed by assessee.
Page 12 of 12 IT(TP)A Nos. 282/Bang/2021 & 367/Bang/2022 Accordingly, ground no. 25 raised by the assessee for A.Y. 2017-18 stands partly allowed for statistical purposes.
The other common issues raised by assessee in A.Y. 2017-18 are to be considered mutatis mutandis with the observations hereinabove provided while considering the issues in A.Y. 2016- 17. Accordingly, the grounds raised by the assessee for A.Y. 2017-18 stands partly allowed for statistical purposes. In the result, the appeals for A.Ys. 2016-17 and 2017-18 stands partly allowed for statistical purposes. Order pronounced in the open court on 22nd August, 2024.