UI PATH SRL ,DELHI vs. ACIT, CIRCLE-1(1)(1) INT.TAXATION, DELHI

This appeal by the assessee is preferred against the order of the ld. CIT(A) - 42, Delhi dated 30.12.2021 pertaining to Assessment Year 2019-20.

The grievances of the assessee read as under:

Briefly stated, the facts of the case are that the assessee filed its return of income electronically on 07.10.2020. The said return was processed and intimation u/s 143(1) of the Income-tax Act, 1961 [the Act, for short] was issued vide order dated 23.12.2020 by which demand of Rs. 72,67,600/- was created. Credit of TDS was denied.

The matter was agitated before the ld. CIT(A) but without any success.

Before us, the ld. counsel for the assessee brought to our notice that a total income of Rs. 7,00,28,704/- comprising of income from professional services under the provisions of DTAA between India and Romania was returned, on which tax payable was computed at Rs. 70,02,870/-.

The ld. counsel for the assessee explained that the assessee has claimed credit for withholding tax aggregating to Rs. 70,12,874/-. It is the say of the ld. counsel for the assessee that credit of tax was restricted to Rs. 17,46,011/- which resulted into demand of Rs. 72,67,600/-. The ld. counsel for the assessee explained that the assessee company did not have PAN in India during the F.Y.2018-19 relevant to A.Y 2019-20. Therefore, TDS was not tagged to the PAN of the company for income received during the year and, therefore, credit for such tax deducted at source is not reflecting completely in Form 26AS.

The ld. counsel for the assessee drew our attention to the Transaction Based Reports from the portal of the Income tax Department to show that the taxes have been deducted at source by deductors and the same can be verified. The ld. counsel for the assessee further pointed out that the assessee has also earned income of Rs. 61,86,58,610/- from sale of software licensing in India, which was not returned for taxation purposes as the same were not chargeable to tax in India as per provisions of Article 12 of the treaty.

The ld. counsel for the assessee stated that the claim of additional credit for tax deducted at source was inadvertently not factored in the return of income but claimed before the ld. CIT(A), which was denied by the ld. CIT(A) drawing support from the decision of the Hon'ble Supreme Court in the case of Goetz India Ltd 284 ITR

The ld. counsel for the assessee prayed for restoration of the appeal to the file of the Assessing Officer for verification of the claim of TDS.

Per contra, the ld. DR strongly supported the findings of the ld. CIT(A) but fairly stated that the claim of the assessee needs further verification.

We have given thoughtful consideration to the orders of the authorities below. There is no dispute that since the assessee was not having PAN, taxes deducted by the deductors could not be tagged alongwith PAN details in Form No. 26AS. It is also true that in the Transaction Based Report, generated from portal of the Income tax Department, tax has been deducted at source standing credit in the name of the assessee.

We have verified the said reports exhibited at pages 88 to 118 of the Paper Book. We also find that the assessee has shown sales of software licensing amounting to Rs. 61,86,58,610/- in its return of income as not chargeable to tax under DTAA. It is true that the assessee did not claim TDS in its return of income but it is equally true that the claim was made before the ld. CIT(A).

In our considered opinion, if tax has been deducted at source by the payer, then the assessee ought to get credit of the said TDS. We, therefore, in the interest of justice and fair play, restore the entire quarrel to the file of the Assessing Officer. The Assessing Officer is directed to examine:

In the result, the appeal of the assessee in is allowed.