TaxTMI 
TaxTMI 
2024 (10) TMI 172
X X X X Extracts X X X X
X X X X Extracts X X X X
....td. announced the compulsory redemption of the ADR program. Consequently, in January 2022, Citibank NA, acting as the Depository Participant, redeemed the ADRs and withheld tax at 43.68% on the gross proceeds, amounting to Rs. 57,28,565/-. 2.1. The assessee initially filed its original return of income under Section 139(1) of the Act on 05.11.2022, declaring capital gains income arising from the redemption of ADRs and offering the net capital gains to tax at Rs. 13,44,540/-. Subsequently, the assessee filed a revised return under Section 139(5) of the Act on 31.12.2022, claiming TDS credit of Rs. 57,28,565/-. The CPC processed the revised return under Section 143(1) of the Act on 20.02.2023, determining the total income at Rs. 13,44,540/- but denied the TDS credit on the grounds that the TDS was not reflected in Form 26AS. 3. Aggrieved by the intimation under Section 143(1) of the Act, the assessee filed an appeal before the CIT(A). During the appellate proceedings, the assessee contended that the denial of TDS credit was unwarranted since the income had already been offered to tax, and the TDS was duly deducted by Citibank NA. The assessee submitted that the non-reflection of TD....
X X X X Extracts X X X X
X X X X Extracts X X X X
....me Tax, CPC, Bengaluru ("AO") in not allowing the TDS credit of Rs. 57,28,565/- while processing the ITR u/s 143(1) of the Act. 3. The learned CIT(A) erred in law and in fact in not allowing the TDS credit to the Appellant despite the fact that it is not in dispute that income from sale of ADRs is assessable in the hands of the Appellant. 4. The learned CIT(A) erred in law and in fact in denying the claim of TDS credit of Rs. 57,28,565/- without appreciating the facts of the case in proper perspective. 5. The learned CIT(A) erred in law and in fact in denying the credit of TDS of Rs. 57,28,565/- despite of the fact that the Appellant had demonstrated that in substance the requirements of the provisions of Rule 37BA of the Income Tax Rules, 1962 read with section 199 of the Act are satisfied. 6. The learned CIT(A) erred in law and in fact in not appreciating the provisions of Section 205 of the Act in proper perspective. 7. The learned CIT(A) erred in law and in fact in upholding the action of learned AO in enforcing the tax demand from the Appellant which is in violation to the provisions of Section 205 of the Act. 8. Your Appellant reserves the right to add to or to al....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e broker's role in the redemption of ADRs and the onward payment of net proceeds to the assessee, establishing that the TDS credit should be attributed to the assessee, not the broker. 2. Correspondence with Citibank NA and Credit Suisse AG - This includes email communications from October 2022, showing the PAN and other relevant details were provided to Citibank NA and that requests were made to correct the attribution of TDS credit. 6.1. The admission of additional evidence in appellate proceedings is governed by Rule 29 of the Income Tax Appellate Tribunal Rules, 1963. Courts have consistently emphasised that the admission of such evidence should align with the principles of natural justice, particularly when it is crucial for the fair adjudication of a dispute. The judicial precedents relied on the assessee collectively support the notion that additional evidence, crucial for a just decision, should be admitted to uphold the principles of fairness and natural justice and are relevant and necessary to resolve the dispute fairly, admission of such evidence should not cause undue prejudice to the revenue and it was not produced earlier due to a bona fide mistake or oversigh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rather than a substantive legislative requirement like Section 5A of the Act. 6.4. We have also noted the judicial precedents relied on by the assessee before CIT(A). The CIT(A)'s approach in denying TDS credit was primarily procedural, focusing on technical compliance rather than engaging with the substantive merits of the case as outlined in the judicial precedents. The failure to address the judicial principles that procedural deficiencies should not override substantive rights and the lack of recognition of the assessee's bona fide efforts significantly impacted the CIT(A)'s assessment. We are inclined to adopt more balanced approach, considering both the procedural requirements and the substantive rights of the assessee as emphasized in the cited precedents. 6.5. The denial of TDS credit to the assessee hinges primarily on procedural lapses, specifically the non-reflection of TDS credit in Form 26AS and the failure to comply with Rule 37BA of the Income Tax Rules, 1962. However, a critical aspect that needs to be addressed is the role of third parties-namely Citibank NA and Credit Suisse AG-in causing these procedural lapses. Citibank NA, acting as the depository for Vedanta....