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TMI Blog2024 (10) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... ailable as per Form 26AS. - Hon ble Shri Manoj Kumar Aggarwal, AM And Hon ble Shri Manu Kumar Giri, JM For the Appellant : Shri. S.P. Chidambaram, Advocate For the Respondent : Shri. Nilay Baran Som, IRS, CIT. ORDER PER MANU KUMAR GIRI (JUDICIAL MEMBER) Aforesaid appeal by assessee for Assessment Year (AY) 2015-16 arises out of final assessment order dated 12.12.2023 passed by Ld. Deputy Commissioner of Income Tax, International Taxation-1(1), Chennai (AO) u/s 147 r.w.s. 144C(13) of the Act pursuant to the directions of Ld. Dispute Resolution Panel-2, Bengaluru (DRP) u/s 144C of the Act dated 20.11.2023. The substantive grievance of the assessee are denial of Tax Deducted at Source (TDS) credit by lower authorities and challenge of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re subsequently raised by the appellant. 2.6. The Ld. AO and DRP failed to appreciate that the excess credit deducted by the customer pertains to the royalty income which has been offered to tax by the Appellant. 2.7. The Ld. AO and DRP failed to appreciate that TDS is a machinery provision for collecting tax and thus, TDS credit cannot be the finality to decide the tax amount. 2.8. The Ld. AO and DRP failed to appreciate the judicial precedents cited by the appellant and stated that the case laws are different from the case of the appellant. 3. Reopening of Assessment u/s 147 of the act is invalid 3.1. The DRP has erred in upholding the reopening the assessment under section 147 of the Act in the absence of essential conditions necessary f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm 26AS. 3.7. The Ld. AO initiated the re-assessment proceedings, when the notice u/s.148 is barred by limitation in pursuance of Section 149(1)(b) of the Act, as the notice u/s.148 can be issued beyond three years and up to 10 years, only if any income chargeable to tax of the appellant, represented in the form of asset, has escaped assessment. The AO and the DRP ought to have appreciated that there is no income which is chargeable to tax represented in the form an asset has escaped assessment which is imperative for initiating re-assessment proceedings beyond three years. Restricting TDS credits available in Form 26AS/ taxing the excess revenue appearing in Form 26AS for AY 2015-16 does not represent any asset in the hands of the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the net royalty income of Rs. 21,27,30,630/- to tax in its return of income for the assessment year 2015-16 filed on 28.03.2017. The return of income for AY 2015-16 was selected for scrutiny and the assessment was completed without any adjustments. Subsequently, re-assessment proceedings were initiated under Section 147 by the AO and draft assessment order was passed dated 20.02.2023 under section 143(3) read with section 147 read with section 144C of the Act, by restricting the TDS credit to Rs. 3,19,09,594/- i.e. to a proportion of the royalty income offered to tax instead of granting the full TDS credit available as per Form 26AS of the appellant. The Appellant filed an application before the Hon ble Dispute Resolution Panel ( DRP ) und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f as under. 3. The assessee is a non-resident company incorporated in United States of America (USA). The assessee returned income of Rs. 37.95 Crores and claimed refund of Rs. 3.51 Crores. It transpired that the assessee earned contractual royalty income from M/s Dassault Systems India Pvt. Ltd. and offered the same to tax. However, in the financial statements, the assessee offered royalty income of Rs. 37.86 Crores whereas as per Form 26AS, the payer entity paid an amount of Rs. 69.83 Crores to the assessee after deducting tax at source for Rs. 7.62 Crores. 4. The assessee explained that the amount reflected in Form 26AS represents gross invoices raised by the assessee which, in turn, are based on the amounts reported by the deductor paye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y reconciled the amounts reflected in financial statement vis- -vis amount reflected in Form 26AS. Though income to the extent of credit notes issued by the assessee would never accrue to the assessee, nevertheless, TDS as been deducted against these payments and the same has been deducted against the assessee. Therefore, the assessee would be entitled for the credit of the same. The amount of credit notes could not be held to be the income of the assessee. Therefore, lower authorities are not justified in denying the credit of the same. The provisions of Sec. 155(14) would not apply since these provisions would apply only in cases where the TDS certificate is furnished later and where the income has not been disclosed in the return of inco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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