TaxTMI 
TaxTMI 
2024 (3) TMI 571
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..... 8429/Del/2019, following grounds have been raised by the Revenue: "1. On the facts and circumstances of the case and in law, the ld. CIT(A) has erred in allowing the credit of TDS of Rs. 2,41,05,620/- on consideration received for offshore supply of rolling stock, when no corresponding income has been offered for taxation by the assessee." 3. In ITA No. 7275/Del/2017, following grounds have been raised by the assessee: "1. That on the facts and circumstances of the case and in law, the order passed by the Commissioner of Income Tax (Appeals) - 23, New Delhi ('Ld. CIT(A)'] is bad in law and contrary to facts and provisions of the Income Tax Act, 1961 ('the Act'). 2. That the Ld. CIT(A) has erred in law and on the fac....
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....offshore supplies were undertaken by the Appellant. (b) The Appellant is accepting that the question of these receipts (mobilization advance) having element of income could be decided in the year in which actual offshore supplies were undertaken by the Appellant. (c) The contract is, indeed, composite/indivisible one. (d) The contact being performed by Siemens Consortium is composite/indivisible contract of which the appellant is leader and partner. (e) There will certainly be a Permanent Establishment ('PE') of the Appellant in India. (f) The part of income arising out of activities performed by the appellant, certainly accrues and arises in India." 4. The grounds raised by the assessee and the Revenue in this appeal are....
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....eal before the ld. CIT(A). 9. The fact that the underlying receipts from the contract is not taxable was submitted before the AO during the course of assessment proceedings and while obtaining the lower withholding tax certificate from ITO, Ward-3(1)(2), (Int. Tax), Delhi under section 197 of the Act pursuant to which the Assessee was granted the lower withholding tax certificate, it was submitted that the amount received during the subject year was not in the nature of income chargeable to tax in India. 10. The Assessing Officer held that credit of TDS is not allowable since the Assessee did not offer corresponding income to tax in its RoI. In this regard, the Assessee submitted that the credit for tax withheld is not linked to actual di....
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....levant extract of the judgment in this regard is reproduced below: "....7. Credit for TDS must in every case be given to the assessee from whose income tax was deducted at source and paid to the credit of the Central Government. If the recipient of the income considers that he is not liable to tax in respect of the income, wholly or partly, therefore, does not disclose the amount of such income in his return, the Income-tax Department cannot refuse to give credit merely by contending that the income had not been disclosed in the return filed by the assessee for the assessment year. The assessee may as per relevant provisions of Income-tax Act, consider the income either as not taxable in his hands or as being relatable to a different asse....
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....rectly offered the said income for tax as the assessee considered the same was not liable to tax. 10. In view of the above-mentioned decisions of the Supreme Court and order of this Tribunal, it is clear position of law that when TDS is made on a particular income which is otherwise not liable for tax, the assessee is entitled for the said credit of the TDS. In the case in hand when the assessee has earned interest on deposit mandatory for acquisition on installation of machinery then the interest was earned by the assessee and is directly incidental to the acquisition in respect of machinery and therefore the same has been rightly reduced from the cost of the machinery. In this way the assessee has indirectly disclosed income and has off....
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....le 37BA(3) are not applicable to him. In this regard, the appellant explained that the rules are sub-servient to Section 199 and maybe read in harmony with the said section. It was also submitted that the tax was deducted on the instance of the revenue which was specified in the certificate issued under section 197. It was further stated that the term *assessable" should not mean that the amount per se is actually taxable. The arguments furnished by the appellant have been seen. The basic issue which arises from the aforesaid facts is that whether the credit for TDS is eligible to be refunded if the consideration did not yield any taxable income under the Income Tax Act. The rigid and literal interpretation of Rule 37BA may indicate that cr....