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Facts
The assessee's appeal challenges an order from the NFAC for AY 2021-22 concerning a disallowance of interest paid on delayed taxes and issues related to foreign tax credit. The assessee contended that the interest disallowance of INR 17,770,943 was a double disallowance as it was already disallowed in the ITR. Regarding foreign tax credit, the assessee claimed an amount of INR 18,66,641 was not granted.
Held
The Tribunal found that the issue of interest disallowance required further inquiry by the jurisdictional AO due to a potential disparity between the 3CD report and ITR, and a lack of verification by lower authorities. Similarly, the foreign tax credit issue was remitted to the jurisdictional AO for verification and fresh consideration.
Key Issues
Whether the interest paid on delayed taxes amounting to INR 17,770,943 was a double disallowance, and whether the foreign tax credit of INR 18,66,641 was correctly granted.
Sections Cited
250, 37, 143(1), 234A, 234B, 234C, 40(a)(ii)
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Income Tax Appellate Tribunal, “A’’ BENCH: BANGALORE
Before: SHRI CHANDRA POOJARI & SHRI PRAKASH CHAND YADAV
PER CHANDRA POOJARI, ACCOUNTANT MEMBER:
This appeal by assessee is directed against the order of NFAC for the assessment year 2021-22 dated 29.2.2024 passed u/s 250 of the Income Tax Act, 1961 (in short “The Act”). The assessee has raised following grounds of appeal: Sl.No. Grounds of Appeal Tax effect (in INR)
1 The Order/ Directions are bad in law and on facts 1.1 The order dated 29 February 2024 passed by the Additional/ Joint Commissioner of Income Tax (Appeals) — I ['CIT(A)'] under section 250 of the Income-tax Act, 1961 ['Act'] pursuant to the appeal filed against the Intimation dated 25 October 2022 issued by the Assistant Director of Income-tax, Centralized Processing Center ['ADIT-CPC'] u/s 143(1) of the Act, is bad in law and on facts Erroneous addition of INR 17,770,943 towards INR 4,472,591 2 interest paid under the Act Autoliv India Private Limited, Bangalore Page 2 of 4 2.1 The CIT(A) grossly erred in upholding the disallowance u/s 37 of the Act towards interest of INR 17,770,943 paid towards delayed payment of taxes, without considering the fact that the same had already been disallowed by the Appellant in the Income Tax Return ['ITR'] and has, therefore resulted in a double disallowance of the same amount. 2.2 The CIT(A) grossly erred in upholding the disallowance merely by comparing the disclosure made in Clause 21 (a) of Form 3CD vis-å-vis disclosure made in the ITR without taking into consideration the Appellant's reply filed in response to the proposed addition u/s 143(l)(a) of the Act Short grant of credit of foreign taxes paid outside INR 3 India 3.1 The CIT(A) grossly erred in upholding the short grant of foreign tax credit of INR 1,866,641 relating to tax suffered by the Appellant in Korea against its income earned from Korea. 3.2 The CIT(A) grossly erred in holding that foreign tax credit of INR 15,893,989 has been granted in the Intimation whereas the fact is that foreign tax credit of only INR 14,027,348 was granted in the Intimation INR 843,633 Erroneous computation of interest u/s 234A of the 4 Act 4.1 The CIT(A) erred in confirming interest of INR 989,391 u/s 234A of the Act as against INR 145,758 computed by the Appellant in its ITR filed for AY 2021-22 Erroneous computation of interest u/s 234B of the 5 INR 5,474,629 Act 5.1 The CIT(A) erred in confirming interest of INR 7,623, 123 u/s 234B of the Act as against INR 2, 148,494 computed by the Appellant in its ITR filed for AY 2021-22 Erroneous computation of interest u/s 234C of the INR 6 Act 6.1 The CIT(A) erred in confirming interest INR 5,142,643 u/s 234C of the Act as against INR 3,840,382 computed by the Appellant in its ITR filed for AY 2021-22. 7 Relief 7.1 The Appellant prays that Order be passed to grant all such relief arising from the above grounds and all relief consequential thereto. 7.2 The Appellant craves leave to add to or alter, by deletion, substitution or otherwise, any or all of the above grounds of objections, at any time before or during the hearing of the Appeal. Total tax effect INR 13,959,755
The first ground for our consideration is with regard to addition of Rs.1,77,70,943/- towards interest paid under the Act. The contention of the ld. A.R. is that this amount has already been Autoliv India Private Limited, Bangalore Page 3 of 4 disallowed u/s 40(a)(ii) of the Act and same has been disclosed in the return of income. However, while processing the return u/s 143(1)(a) of the Act, once again ld. AO made addition on this count, which amounts to double additions, which shall be avoided.
On the other hand, ld. D.R. submitted that there is a disparity in the information available in 3CD and the ITR, the CPC has made addition and same has been confirmed by the NFAC and same may be confirmed. 4. We have heard the rival submissions and perused the materials available on record. The ld. A.R. before us drew our attention to the computation of income where the assessee has made disallowance of this amount of Rs.1,77,70,943/- being interest paid under the Act towards delayed payment of taxes u/s 37 of the Act. However, according to the ld. D.R. there is a disparity in the information available in 3CD and the ITR. In our opinion, if there is a disparity, the same could have been verified at the end of the lower authorities by calling the information from the assessee, which they failed to do so. Hence, in the interest of justice, we remit this issue to the file of jurisdictional AO to carry out necessary enquiry on this issue and giving opportunity of hearing to the assessee to explain the same and decide thereupon in accordance with law. 5. Next ground in this appeal is with regard to short grant of credit of foreign taxes paid outside India. 6. The ld. A.R. submitted that the foreign tax credit to the tune of Rs.18,66,641/- was not given credit which has been offered to tax in Korea against the assessee’s income earned from Korea and prayed that proper credits should be given towards foreign tax payment. 7. The ld. D.R. submitted that the assessee has claimed foreign tax credit of Rs.1,58,93,989/- same has been granted to the assessee while processing the return u/s 143(1) of the Act. 8. We have heard the rival submissions and perused the materials available on record. The contention of the ld. A.R. is that