9911796707
TMI Blog2025 (2) TMI 648X X X X Extracts X X X X X X X X Extracts X X X X ..... eferred to as "the Act"], for the Assessment Year (AY) 2018- 19. 2. The Assessee has taken following grounds of appeal :- "1. The order passed by the learned PCIT under Section 263 of the Act is bad in law and needs to be quashed. It is submitted it be so held now. 2. The learned PCIT erred on facts and in law in holding that the order passed by the Assessing officer ('AO') under Section 143(3) of the Act was erroneous and prejudicial to the interest of the revenue and thereby setting aside the order with direction for fresh assessment order. It is submitted it be so held now. 2.1. The learned PCIT erred in facts and in law in invoking Explanation 2 to Sub-Section (1) of Section 263 of the Act while holding that the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee is a company engaged in the business of I.T. enabled services, BPO service providers. The assessee had filed return of income for the year under consideration on 28.11.2019 declaring total income of Rs. 4,89,31,010/-. The case was selected for scrutiny and assessment was finalized 143(3) r.w.s 144B of the Income-tax Act on 20.09.2021 by assessing the total income at Rs. 7,02,12,474/-. On verification of assessment records, the Ld. PCIT observed that the assessee had paid tax of Rs. 8,75,37,468/- in Philippines, for the year under consideration, with the rate of tax @30%, but the assessee had shown income from Philippines of Rs. 13,32,45,195/- only. The Ld. PCIT was of the opinion that since the assessee had paid tax of Rs. 8,75,37,468/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come tax based on the provisions of Income Tax Act, 1961. * The assessee company's branch is a PEZA (Philippine Economic Zone Authority) registered ECO zone IT Enterprise which enjoys tax holiday In Philippines as per domestic laws of Philippines. Originally, the tax holiday was granted till 30th September 2014. Post expiration of the holiday the PEZA, vide letter dated 25th July 2014, granted further extension for tax incentive as per which branch is entitled for exemption from all national and local taxes. But, in lieu of tax exemption, assessee's branch is required to pay 5% final tax on gross income as provided under section 24 of Republic Act 7916 of Philippines. * Since Form no.67, tax paid outside India is mentioned at Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the assessee is just forsake of argument. * The Ld DR argued that it is quite evident that the assessee company has shown income only of Rs. 13,32,45,195/- as income from outside India, after making the adjustments, which is not allowed to the assessee, and the assessee's total income from outside India should be Rs. 29,17,91,560/- * The Ld DR argued that the assessee has paid tax @ 30% amounting to Rs. 8,75,37,468/- in Philippines, but the assessee has shown Income from Philippines of Rs. 13,32,45,195/- instead of Rs. 29,17,91,560/-. The remaining income of Rs. 15,85,46,365/- has not been disclosed during the filing of ITR. Further, no verification with respect to the above issue was conducted by the then AO during the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,951 Total 9,331,469 11,849,828 Amount in PHP Amount in INR Less: Opex expenses not allowed in PH return 115,762,981 146,690,461 Retirement expenses disallowed in PH return 2,216,356 2,808,482 Realized exchange loss 2,274,163 2,881,733 Accrued 13th month & leave 10,883,082 13,790,629 Bad debt expense 1,579,766 2,001,819 Net Income before tax as per PH return 111,509,561 141,300,639 Less: Depreciation as per PH financials 10,678,087 13,530,867 Depreciation as per India financials as per Companies Act 15,860,994 20,098,451 Actuarial loss on retirement liability accounted in Gratuity expense in India financials 549,025 695,704 Leave expense reversed later in PH financials 2,355,907 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ippines branch as per the provisions of Indian Income Tax Act to determine the income doubly taxed in India & Philippines. Such doubly taxed income worked out to Rs. 13,32,45,195/- which has been mentioned in the Form no 67. From the entire events and accounting, it is clear that the income as mentioned in the notice of Rs. 29,17,91,560/- being 100% of the tax payable in Manila of Rs. 8,75,37,468/- @ 30% is taxed in India. Accordingly, no further income needs to be taxed in India. The amount of Rs. 13,32,45,195/- is income of the Philippines as worked out under the Indian Income Tax Act. 7.3 In view of the these facts on the merits of the case, we hold that there is neither any error committed by the Assessing Officer nor any prejudice is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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