Mistaken disclosure in return cannot create tax liability; treaty-exempt service receipt deleted and eligible TDS credit remanded for verification.

A mistaken disclosure in a return does not by itself make a service receipt taxable where the receipt is otherwise not chargeable under the India-USA tax treaty, and denial of relief merely because no revised return was filed cannot be sustained. The Tribunal deleted the adjustment on that receipt. On TDS credit, eligible credit had to be allowed on verification of the tax credit statement and admissible entitlement, so the matter was remanded for grant of credit in accordance with law.

---

---

Issues: (i) Whether tax could be sustained on the service receipt merely because it was wrongly reported in the return, and whether relief was barred because the assessee had not filed a revised return within the statutory time limit; (ii) whether eligible TDS credit was required to be granted in full.

Issue (i): Whether tax could be sustained on the service receipt merely because it was wrongly reported in the return, and whether relief was barred because the assessee had not filed a revised return within the statutory time limit.

Analysis: The return had treated the service receipt as taxable, but the record showed that under the India-USA tax treaty the receipt was not chargeable to tax. The denial of relief solely on the ground that the assessee had not filed a revised return could not be sustained where the addition arose from an apparent wrong reporting and the substantive tax position was otherwise in the assessee's favour. The Tribunal also relied on the principle that a mistaken entry in the return does not create a valid charge to tax when the income is not legally taxable.

Conclusion: The issue was decided in favour of the assessee.

Issue (ii): Whether eligible TDS credit was required to be granted in full.

Analysis: The claim for TDS credit was supported by the tax credit statement, and the matter required verification of the credit actually available and admissible in law. Since the credit had not been granted to the extent claimed, the matter was directed to be reconsidered by the processing authority for allowing eligible credit.

Conclusion: The issue was decided in favour of the assessee by remanding the TDS credit claim for grant of eligible credit in accordance with law.

Final Conclusion: The assessment adjustment on the disputed service receipt was deleted, and the TDS credit issue was sent back for proper allowance of admissible credit, leaving the appeal only partly successful on the substantive tax relief sought.

Ratio Decidendi: A mistaken disclosure in the return does not justify taxation of income that is otherwise not chargeable, and eligible tax credit must be allowed on verification in accordance with law.

---