2023 (6) TMI 38 - AT - Income Tax

Non-grant of TDS credit - CIT- A has denied the credit for the reason as receipt received from Bangalore Metrorail Corporation Ltd on which tax deduction at source credit has been claimed is not offered for taxation - HELD THAT - As in the interest of justice we set-aside the issue back to the file of the learned assessing officer with a direction to examine, whether the income is taxable in India or not, if the same is taxable in India, for which year the same income is offered, the tax credit is required to be granted for that year. If the above amount is not chargeable to tax in India at all, then, the refund is required to be issued in favour of the assessee. Therefore, AO may proceed in accordance with the provisions of section 4, 5, 9 and 199 of The Act and rule 37BA of the I T Rules. Needless to say, the assessee may be granted an opportunity of hearing before deciding the issue. Appeal of the assessee is allowed for statistical purposes.

Summary

Issues involved: Violation of Principles of Natural Justice, Non-grant of TDS Credit

Violation of Principles of Natural Justice:
The appeal was filed by the assessee against the appellate order passed by the Ld. Commissioner of Income Tax (Appeals) for the assessment year 2017-18. The assessee contended that the Hon'ble CIT(A) erred in not granting any opportunity of personal hearing, which led to a violation of principles of natural justice. The appellant sought for the order of Hon'ble CIT(A) to be held as bad in law and quashed due to this violation.

Non-grant of TDS Credit:
The assessee, a company incorporated in China, claimed a tax deduction at source credit of Rs 3,93,375/-, which was reflected in form no 26AS. However, the Ld. CIT(A) held that the tax credit is allowable only in the assessment year in which the corresponding income has been offered to tax. As the income of Rs 182,09,865/- received from Bangalore Metro Rail Corporation Ltd. was not offered for taxation in that year, the tax credit was not allowed. The appeal of the assessee on this ground was dismissed.

The Appellate Tribunal, after considering the contentions of both parties, found that the income in question was not offered for taxation in the relevant year. Therefore, the issue was set aside back to the assessing officer to determine the taxability of the income in India. If the income is taxable, the tax credit should be granted for that year; if not taxable, a refund of Rs 3,93,375/- should be issued to the assessee. The assessing officer was directed to proceed in accordance with the provisions of the Income Tax Act and IT Rules, ensuring the assessee is given an opportunity of hearing. Consequently, both grounds of appeal raised by the assessee were allowed with the above direction.

In conclusion, the appeal of the assessee was allowed for statistical purposes, and the order was pronounced in the open court on 29.05.2023.