2013 (7) TMI 731 - AT - Income Tax

Credit of Advance Corporation Tax, paid in United Kingdom on dividend paid to the assessee by UK companies - Article 11 1(2) of the DTAA. - the tribunal has dismissed the appeal of the assessee by holding that the matter had already been decided by CIT (A) in appeal against order u/s 154 applying the principle of res judicata - the appeal for the same amount of refund against order u/s 143(3) and against section 154 read with section 143(1) (a) are different proceedings the assessee had the right to appeal against order passed u/s 143 (3) and had the right to agitate the same issue as already agitated in proceedings against order passed u/s 154 r.w section 143(1) (a) as order passed u/s 154 against order passed u/s 143 (1) (a) is an extension of proceedings u/s 143 (1) (a) - the interest of justice we set aside the matter to the office of Assessing Officer who will readjudicate the case on the basis of facts of the case and as per law appeal allowed in favour of assesse

Summary

Issues Involved:
Appeal against denial of credit for Advance Corporation Tax paid in the United Kingdom on dividend income for assessment year 1999-2000.

Detailed Analysis:

1. Initial Denial of Credit by Assessing Officer:
The assessee initially filed a return of income declaring a loss and claiming a refund, but the Assessing Officer observed defective TDS certificates and denied credit for the same. The rectification application for claiming credit was also rejected. The CIT (A) dismissed the appeal against the order, leading to further appeals.

2. Rejection of Claim by Assessing Officer and CIT (A):
The Assessing Officer rejected the claim for credit of Advance Corporation Tax paid in the United Kingdom, stating that the tax was not actually credited to the UK government's account. The CIT (A) upheld this decision, emphasizing that the appellant failed to rebut specific reasons provided by the Assessing Officer. The CIT (A) also noted that the issue had already been decided in a previous order, leading to the dismissal of the appeal.

3. Appeal to ITAT and High Court Directions:
The assessee appealed to the ITAT, which dismissed the appeal. Subsequently, the High Court remitted the case back to the Tribunal for detailed consideration of the aspect related to the refund under the Double Taxation Avoidance Agreement (DTAA) between India and the UK.

4. ITAT's Consideration and Decision:
During subsequent proceedings, the ITAT reviewed the arguments presented by both parties. The ITAT noted that the High Court had directed a detailed examination of the issue related to the DTAA. The ITAT observed that the matter had been decided based on the principle of res judicata in previous proceedings. However, the ITAT held that the right to appeal against different assessment orders exists, and the assessee had the right to challenge the denial of credit in the current proceedings.

5. Decision and Directions by ITAT:
The ITAT allowed the appeal for statistical purposes, directing the Assessing Officer to readjudicate the case based on facts and applicable laws. The ITAT emphasized that the questions raised by the Assessing Officer were factual in nature and required verification, thereby setting aside the previous decisions and providing an opportunity for a fresh assessment.

In conclusion, the ITAT's judgment allowed the appeal, highlighting the importance of verifying factual aspects and ensuring a fair reconsideration of the denial of credit for Advance Corporation Tax paid in the United Kingdom on dividend income for the assessment year 1999-2000.