2018 (12) TMI 1501 - AT - Income Tax

Interest u/s 234A & 234B - benefit of the TDS deducted - Held that - As agreed by both the sides that the matter needs to be set aside to the file of the AO with a direction to decide the issue afresh in the light of decision in the case of ITO Vs. Bachu Lal Kapoor Kewal Ram 1965 (12) TMI 24 - SUPREME COURT . The assessee stated that specific time limit should be prescribed to the Assessing Officer for deciding the issue. Considering we deem it proper to restore the issue to the file of the AO with a direction to adjudicate the issue regarding granting of TDS benefit deducted in the case of M/s. MSRC in its return of income in A. Y. 2008-09 to the assessee and to re-compute the interest u/s 234A & 234B of the IT Act. The Assessing Officer shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee within a period of 3 months from the date of receiving of this order by him. We hold and direct accordingly. The grounds raised by the revenue are accordingly allowed for statistical purpose.

Summary

Issues involved:
1. Assessment of total income and tax liability for A.Y. 2008-09
2. Applicability of TDS credit and interest under sections 234A, 234B of the Income-tax Act, 1961
3. Validity of the order passed by the CIT (A) and directions given regarding TDS benefit

Analysis:

Issue 1: Assessment of total income and tax liability for A.Y. 2008-09
The appeal filed by the revenue challenged the order passed by the CIT (A) relating to the assessment year 2008-09. The Assessing Officer had initially assessed the total income of the assessee at a substantial amount, resulting in a significant demand. The AO had also taxed the same income in the hands of another entity on a protective basis.

Issue 2: Applicability of TDS credit and interest under sections 234A, 234B of the Income-tax Act, 1961
The assessee, a company incorporated in the United States, claimed that the amount received was not taxable in India due to the beneficial provisions of the India-US tax treaty. The CIT (A) directed the Assessing Officer to re-compute the interest under section 234A after transferring the TDS credit claimed by another entity for the same assessment year. The revenue challenged this direction, arguing against the deletion of interest and the granting of TDS benefit to the assessee.

Issue 3: Validity of the order passed by the CIT (A) and directions given regarding TDS benefit
The Tribunal considered the arguments of both sides and decided to set aside the matter to the Assessing Officer for fresh adjudication. The Tribunal directed the Assessing Officer to decide the issue of granting TDS benefit to the assessee and to re-compute the interest under sections 234A and 234B. Specific time limits were set for the Assessing Officer to resolve the issue, emphasizing adherence to the law and providing the assessee with a fair opportunity to be heard.

In conclusion, the appeal filed by the revenue was allowed for statistical purposes, and the matter was remanded back to the Assessing Officer for a fresh decision in accordance with the directions provided by the Tribunal.