Tribunal directs relief for excess revenue taxed under BSNL project, prevents double taxation.

M/s Nortel Networks India Pvt. Ltd. Versus Dy. CIT, Circle-18 (2), New Delhi

M/s Nortel Networks India Pvt. Ltd. Versus Dy. CIT, Circle-18 (2), New Delhi - TMI Issues Involved:
1. Non-grant of deduction for excess revenue taxed in earlier years.
2. Non-grant of credit for taxes paid under protest.
3. Levy of penalty under section 271(1)(c) of the Income Tax Act.

Detailed Analysis:

1. Non-grant of deduction for excess revenue taxed in earlier years:

The core issue pertains to the non-grant of deduction for excess revenue taxed under the BSNL project for the assessment year (AY) 2008-09. The tribunal had previously remanded the matter back to the Assessing Officer (AO) for re-adjudication. The AO, in his order dated 26.06.2015, acknowledged the correct determination of total revenue over the life of the BSNL project but did not allow deduction for revenues already taxed in earlier years, citing that the matter for AY 2006-07 was still sub-judice.

The assessee contended that the AO had taxed excess revenue of INR 39,77,95,919 under the BSNL project, which had already been taxed in prior years. The CIT(A), however, rejected this claim, stating that the appellant had misled by providing incorrect figures and that the project was not complete, making the claim premature.

The tribunal, upon review, noted that the percentage completion method was consistently applied by both the assessee and the AO. The tribunal highlighted that the estimated revenue of a project is dynamic and changes over the contract period. The tribunal found that the AO had not disputed the total estimated revenue under the BSNL project for AY 2008-09 as INR 1606,85,17,755/- and that 97.76% of the project was completed, making the recognizable revenue INR 1570,82,26,462/-. The tribunal concluded that the CIT(A) erred in not considering the revenue of INR 24,92,41,718/- from the BSNL project, which was offered to tax by the assessee. Therefore, the tribunal directed the AO to grant relief to the assessee to avoid double taxation, allowing grounds 1 to 1.3.1.

2. Non-grant of credit for taxes paid under protest:

This issue was not explicitly discussed in the detailed analysis of the judgment. However, considering the tribunal's direction to grant relief for the excess revenue taxed, it can be inferred that the tribunal's decision indirectly addresses the concern of taxes paid under protest.

3. Levy of penalty under section 271(1)(c) of the Income Tax Act:

The tribunal noted that the issue of penalty under section 271(1)(c) was not pressed by the assessee during the proceedings. Consequently, this ground was disposed of as not pressed.

Final Judgment:

The appeal of the assessee was allowed, and the AO was directed to grant relief for the excessively taxed sum to avoid double taxation. The issue of penalty under section 271(1)(c) was disposed of as not pressed. The order was pronounced on 09.02.2022.