TaxTMI 
TaxTMI 
2024 (12) TMI 810
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....Tianjin] Ltd at China [hereinafter referred as SETL] and earned royalty income aggregating to Rs. 16,22,63,445/- and Rs. 11,05,97,227/- during the asst. years 2008-09 and 2007-08 respectively. These royalty incomes were already taxed in China on gross basis at 10% under Article 23[2] of the India-China Double Taxation Avoidance Agreement [hereinafter referred as Indo-China Tax Treaty]. Further these royalty incomes already been accepted to be at Arm's Length Price by TPO while framing transfer pricing assessment for the above asst. years, thus there is no dispute by TPO in respect of the royalty income. However, the assessee company failed to claim the Foreign Tax Credit [herein after referred as FTC] under section 90 of the Act while filing the Return of Income as the Tax With-holding Certificates [TWC] were received by the Assessee company in September 2009 from SETL, China. The details of TWCs with 'challan' for tax withheld on such royalty incomes are as follows: A.Y.2007-08 Rs. 1,05,43,697 [RMB 19,56,159 x Rs. 5.39] A.Y.2008-09 Rs. 1,62,26,344 [RMB 30,10,467 x Rs. 5.39] 2.1. However during the assessment proceedings, the Assessee Company vide its letter da....
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....he assessee as specified in India- Indonesia DTAA and India-Singapore DTAA, wherein the clauses of DTAA are identical to Article 23 of the DTAA between India and China and as considered in the decision rendered by the Co-ordinate Bench of this Tribunal in the case of M/s. Elitecore Technologies Pvt Ltd -Vs- DCIT [2017] 77 Taxmann.com 149 [AHD Trib]. Thus Ld CIT[A] partly allowed the appeal in favour of the assessee. 4. Aggrieved against the appellate order, Revenue is in appeal before us in ITA No.1517/Ahd/2019 raising the solitary Ground of Appeal: 1. That the Ld. CIT (A) has erred in law and on facts in allowing credit for tax paid u/s. 90 of the Income Tax Act,1961 in a foreign country amounting to Rs. 1,62,26,344/- against tax liability under MAT provisions." 4.1. Ld. Sr. DR Shri Rignesh Das appearing for the Revenue submitted that the CIT[A] erred in allowing the credit for tax paid u/s. 90 of the Act in a foreign country amounting to Rs. 1,62,26,344/- against tax liability under MAT provisions. Ld DR further relied upon the remand report of the Ld AO and requested to allow the appeal in favour of the Revenue. 5. Per contra Shri Soumitra Choudhary Ld Counsel ....
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....dget 2017, it was possible to carry forward the difference between the tax paid under MAT/AMT and the tax computed under the normal provisions as credit for future years and to be set off against tax payable under normal provisions. However, as per the Budget proposals which became law later, Minimum Alternate Tax/Alternate Minimum Tax [for short referred as MAT/AMT] credit will not be allowed to be carried forward to the extent that the amount of FTC that can be claimed against MAT/AMT exceeds the amount of FTC that can be claimed against tax computed under the normal Income Tax provisions. This amendment was to apply in relation to Asst. Year 2018-19 and subsequent years. 5.3. Further Rule 128(6) provides that in case of MAT/AMT liability, FTC would be allowed in the same manner as is allowable against tax payable under the normal provisions. Rule 128(7) provides that when FTC against MAT/AMT liability exceeds FTC against tax payable under normal provisions, such excess would be ignored while computing credit under section 115JAA or section 115JD. Therefore Rule 128(6) is a statutory recognition of a right that FTC is to be allowed in the same manner against tax payable under ....
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....ome up before the Mumbai Bench of the Tribunal in the case of L & T Ltd. 5. Co-ordinate Bench noted that the income on which tax has been paid abroad was included in 'book profit' for the purpose of Sec.115JA. It was held that once taxable income was determined either under the normal provisions of the Act or as per Sec.115JB, subsequent portion relating to computation of the tax has to be governed by the normal provision of the Act. It also held that there was no provision in the Act, debarring granting of credit for tax paid abroad in case income is computed u/s. 115JA. It was further held that the assessee could not be denied the set off of tax relief against the tax liability determined u/s. 115JA. 6. CIT[A] had given relief to the assessee for the very same reasons mentioned by Co-ordinate Bench in the case of L & T Ltd [supra]. We do not find any good reason to interfere." 7. As regards "quantification" of claim of FTC, as per Article 23(2) of Indo-China Tax Treaty, deduction of FTC shall not exceed that part of income-tax (as computed before deduction is given) which is attributable to income which may be taxed in China. Thus effective rate of tax paid o....
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....rder. This action of the lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. 6. Alternatively and without prejudice to above appellant most humbly craves before your honour that in case of dismissal of all above grounds suitable direction may kindly be given for allowing subject credit in the year in which income has been booked. 7. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal. 9.1. Registry has noted that there is delay of 32 days in filing the above appeal by the assessee. The assessee company through its 76 years old Accountant Mr.Mahendra Nathalal Shah filed a notarized affidavit explaining that by inadvertent mistake the appellate order could not be handed over to the Chartered Accountant who handles the appeal. On inquiry from the concerned Chartered Accountant this inadvertent mistake was noted and then filed the appeal with a delay of 32 days and requested to condone the delay since it is neither willful nor wanton and no prejudice to be caused to the Revenue. Ld CIT DR ....
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....271 and allowed in favour of the assessee. 11.2. Further the Appellate Tribunal in the case of Bank of India also distinguished the decision rendered in the case of DCIT -Vs- Elitecore Technologies (P.) Ltd. 165 ITD 153(Ahd.), based on which the CIT(A) had given the directions in the impugned order against which the Assessee is in appeal before this Tribunal. The Tribunal in Bank of India (supra) made the following observations: "78. Learned Departmental Representative's plea is only fit to be noted and rejected. It is relevant to note that this decision was rendered by a bench that did not fall in the jurisdiction of this Hon'ble jurisdictional High Court, and, for that reason, strictly speaking, this Hon'ble jurisdictional High Court judgment was not conclusively binding on the said Bench. As on now, however, the said judgment of Hon'ble jurisdictional High Court judgment is binding on this Bench, which is in the jurisdiction of Hon'ble Bombay High Court, and we most humbly and most respectfully bow before the views expressed by Their Lordships. As laid down by the Apex Court in the case of Ambika Prasad Mishra v. State of U.P. AIR 1980 SC 1762; [1....
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....sion (supra), and examine the matter be afresh in this light. To this extent, this plea of the assessee is upheld. Our conclusions on the second issue 79. The second question that we had identified for our adjudication, i.e. whether or not the learned CIT(A) was justified in upholding the action of the Assessing Officer in declining deduction, in the computation of business income, of Rs. 182,64,22,948 in respect of taxes so paid abroad, is thus answered in favour of the assessee in principle but the matter is remitted to the file of the Assessing Officer for limited factual verification." 12. Thus Ld Counsel prayed considering the aforesaid decisions, this Hon'ble Tribunal may hold that to the extent the Assessee does not get FTC while computing MAT, the same be allowed as deduction in computing business income in respect of taxes paid abroad and allow the assessee appeal. 13. Per contra Ld. Sr. DR Shri Rignesh Das appearing for the Revenue supported the order passed by Ld CIT[A] and requested to uphold the same and requested to dismiss the appeal filed by the assessee. 14. Heard rival submissions at length and also considered the Paper Book and case....
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....,73,52,062/- for the AV 2006-07 and Rs. 2,25,09,037 in AV 2007-08 which was not allowed by the AO on the ground that the income in respect of the said TDS was not shown by the assessee in view of the provisions of section 199 of the Act. The Id. CIT(A) also confirmed the same 25. The AR of the assessee submitted that the issue is now covered in favour of the assessee by the decision of Hon'ble Visakhapatnam Bench of the Tribunal in IT Appeal No.324(Vizag) of 2009 for AY 2006-07, dated 03/03/2011 in the case of Asstt. CIT v. Poddu Srinivasa Rao. The Id. DR for the Revenue supported the orders of the authorities below. 26. We find that the Visakhapatnam Bench in the case of Peddu Srinivasa Rao (supra) has held as under- "8. We have carefully perused the provisions of section 199 of the Act and according to the pre-amended provisions of section 199, the credit of deduction made in accordance with the relevant provisions of this chapter and paid to the Central Government, shall be given for the amount so deducted on the production of the certificate furnished u/s 203 for the assessment made under this Act for the assessment year for which such income is a....
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....on 192 and paid to the Central Government shall be treated as the tax paid on behalf of the person in respect of whose income such payment of tax has been made." 26. The Ld. DR could not cite any contrary decision or any other good reason for which the aforesaid decision of the Co-ordinate Bench of the Tribunal should not be followed by us. Respectfully following the aforesaid order of the Tribunal, we set aside the orders of the lower authorities and direct the AO to allow credit for the TDS to the assessee. Thus, the ground of appeal of the assessee is allowed." 14.3. In the case of Chandra Shekhar Aggarwal -Vs- ACIT - (2016) 57 ITD 626 Delhi Tribunal considered above mentioned decisions of Co-ordinate Benches of Vishakapatnam and Ahmedabad and held as follows: "Analysis of order of Commissioner (Appeals) In view of the aforesaid provisions of sections 198 and 199, there is no justification not to grant credit of TDS to the assessee from whose income such tax has been deducted by the deductor, more particularly B when such TDS stands duly declared as income by the assessee. The conclusion of the Commissioner (Appeals) to grant proportionate credit is....
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.... deposited to the account of the Central Government. Rule 37BA(3) cannot be interpreted so as to say that TDS deducted by the deductor and deposited to the account of the Central Government is though income of the assessee but is not eligible for credit of TDS in the year when such TDS was offered as income. This view is otherwise also not in accordance with the provisions contained in sections 198 and 199. The proposition as laid out by the Commissioner (Appeals), therefore, cannot be countenanced. [Para 10] In view of the aforesaid, the assessee would be entitled to credit of the entire TDS offered as income by him in his return of income." 14.4. In the case of Shri Rangji Realities P. Ltd. -Vs- ITO (2017) 82 taxmann.com 456 Mumbai Tribunal followed Delhi Tribunal decision of Chandra Shekhar Aggarwal and held as follows: "The assessee duly fulfills all the conditions as laid down in section 198 r.ws. 199 r.w. Rule 378A of the Act. I find that TDS had been deducted and paid to the Central Government by the deductee and Payment/ Credit of Rent Income has been included in the accounts of the assessee. The deductor had duly filed requisite TDS returns as....
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....hmedabad Bench) relied upon by Ld CIT(A). 16.1. Further more Ld CIT[A] called for a Remand Report from the Assessing Officer on this issue and Ld AO has not given any adverse report on this issue in his Remand Report which is placed at Pgs.-129-136 @ 132-134 of the Paper Book. In fact the Ld AO, after taking cognizance of Rule 128 inserted w.e.f. 01.04.17, has observed that "Rule 128" is "not applicable for Asst Year 2008-09. 16.2. It is well settled Principle of law and as per CBDT's Circular No. 14 of 1955, it is the duty of Tax Authority to make available to the tax-payer concerned any legitimate and legal tax relief to which such tax payer is entitled to, but was omitted to claim for one or the other reason. Accordingly, FTC in question is liable to be allowed since assessee is legitimately eligible for the same. Similarly, Article 265 of The Constitution of India, 1950 states that no tax can be levied except by Authority of Law. This further implies that any tax collected contrary to law has to be refunded. Accordingly, FTC of Rs. 1,05,43,697/- is liable to be allowed in Asst. Year 2008-09 even though corresponding income has been offered in the Asst. Year 2007-08. ....