TaxTMI 
TaxTMI 
2026 (6) TMI 355
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.... The learned CIT(A) erred in confirming the tax of Rs. 59,04,080/- applied on IT Recharge at the rate of 15% by the learned AO as per the provisions of DAA between India and UK instead of 10.5575% under section 115A of the Income Tax Act, 1961. He ought not to have done so. 2. The learned CIT(A) erred in confirming the addition made by the Assessing Officer on account of the difference in receipt as per 26AS and as per Return of Income of Rs. 24,24,187/- in case of various parties. He ought not to have done so. 3. The learned CIT(A) erred in confirming the short credit of TDS given by the AO to the extent of Rs. 93,24,729 i.e (2,92,00,680-1,98,75,951). In doing so he has disregarded the rectification application filed with AO and details provided. He ought not to have done so. 4. The learned CIT(A) erred in confirming the levy of interest under section 234B and section 234C of the Income Tax Act, 1961 for Rs. 80,80,280/- and Rs. 95,370 respectively. He ought not to have done so. 5. The appellant craves leave to alter, amend or withdraw all or any of the Grounds of Appeal herein or add any further grounds as may be considered necessary and to subm....
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....y, the additional grounds filed by assessee stand admitted. Brief facts of the case for AY 2011-12 are as under:- 3. M/s. Lloyd's Register, U.K. (hereinafter referred to as LR) is having an India Office and has filed the return of income in the capacity as India Office and is known as "M/s. Lloyds Register-India Office" (hereinafter referred to as LR-IO). Further, M/s. Lloyd's Register, U.K. is a parent company having several subsidiaries all over the world, including the following two subsidiaries in U.K. having their Branch Offices in India: (i) "M/s. Lloyd's Register Asia, U.K." (hereinafter referred to as LRA) (ii) "M/s. Lloyd's Register Quality Assurance Ltd., U.K." (hereinafter referred to as LRQA). 3.1. During the assessment proceedings, it was stated that the assessee company discontinued its Indian operations as Branch Office w.e.f. 1/4/2004. M/s. Lloyd's Register, U.K. has entered into a License Agreement on 16/07/2003 with other legal entities (its subsidiaries) including LRA and LRQA, whose names and registered office/trading addresses are mentioned in the Schedule-1 to this agreement as Licensee. 3.1.2. During the year, the assessee has sh....
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.... "In respect of the TDS claimed on the receipts of Licence fees from Lloyds Register Asia for the above AY 2011-12 pertaining to F.Y. 2010-11 that inadvertently the Company M/s Lloyds Register Asia deducted TDS of Rs. 2,36,15,659/- on a sum of Rs. 15,74,37,728/- and deposited the same with the government account. However Subsequently vide letter dt. 19/12/2014, M/s Lloyds Register Asia confirmed that the Payments were for Rs. 9,52,72,864/- only on which applicable TDS is Rs. 1,42,90,929/- Hence Assessee filed a Revised return to claim the refund of Rs. 93,24,729/- out of excess TDS deducted and paid. With respect to the other receipts of Rs. 24,24,187/- from the parties other than group companies (as per Annexure III submitted by assessee) some parties have erroneously uploaded the e-tds return in the name of M.s Lloyds Register UK as against M/s Lloyds Register Asia (IBO) and M/s Lloyds Register Quality Assurance India Branch Office(IBO). Therefore these receipts have been Received by Lloyds Register Asia(IBO) and Lloyds Register Quality Assurance IBO but wrongly reflected in the 26AS of the assessee." 3.2.1. The assessee's explanation has been considered but no....
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....-tax Act should be applied as per section 90(2) of the IT Act. The appellant also submitted that rectification application was filed with the AO, which is also pending on the same issue. 26.2 The facts recorded and finding of the AO in the assessment order and submission made by the appellant have been considered. The facts of the case of the appellant are that during the year, the appellant received license fees, management fees and IT recharge fees amounting to Rs. 16,22,87,717/- Rs. 2,46,84,475/- and Rs. 3,82,28,189/-, respectively. The claim of the appellant is that the agreement for license fees and management fees and also IT recharge fees were entered into on 16.07.2003, i.e., before 01.06.2005, therefore, the management fees and license fees were taxable @ 21.63% as per section 115A of the Act and taxable @ 15% as per India-UK DTAA. In respect of IT recharge fees, the agreement was entered into after 01.06.2005, therefore, tax rate should be 10.55% as per section 115A and @ 15% under Article 13(4)(a) of the India-UK DTAA. In para 13 of the assessment order, the AO has mentioned that fees for technical services were taxable at 15% as per DTAA. The ....
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....115A of the Act was liable to be applied. 4.2. Reliance was placed on the decision in Gemological Institute International v. ACIT reported in (2022) 192 ITD 83. The Ld.AR further submitted that surcharge and education cess could not be levied over and above the tax rate prescribed under the applicable DTAA. In support of this proposition, reliance was placed on decision of Hon'ble Ahmedabad Tribunal in case of Shell International B.V. vs DCIT reported in (2024) 160 taxmann.com 761 and decision of Hon'ble Kolkotta Tribunal in case of Philips Electronics Nederland B.V. vs ACIT (IT) reported in (2025) 177 taxmann.com 187. 4.3. Per contra, the Ld. DR strongly relied upon the orders of the lower authorities. It was submitted that the concessional rate prescribed under section 115A of the Act was available only where the agreement in pursuance of which the payment was made had been duly approved by the Central Government, and in the absence of such approval, the assessee was not entitled to claim the benefit of the said provision. The Ld. DR further submitted that the reliance placed by the assessee on the FEMA Regulations and the concept of general approval was misconceived, in....
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....ined. Likewise, Clause 5, read with Schedule III, stipulates that drawal of foreign exchange for transactions covered therein would require prior approval of the Reserve Bank of India. 5.4. In the present facts of the case, the IT recharge fee was paid to avail Intra Group Services concerning information technology. The pages 2 to 23 of the PB with the services being referred to at pages 19 and 20 thereof. Since the said payments do not fall within Clauses 3 to 5 or Schedules I to III of the said Rules, there was no obligation on the appellant to get an approval in respect of the said transaction from the Central Government. In the absence of any restriction, the payment should be regarded as governed by general approval granted in this regard. For this purpose, reliance is also placed on decision of this Tribunal in the case of Gemological Institute International v. ACIT reported in (2022) 192 ITD 83 handed over at the time of hearing) Since, the present payment is covered by general approval, the beneficial rate of tax as provided in section 115A should apply to its case 5.5. We find that identical issue had come up for consideration before the coordinate bench in Gemologic....
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.... involved use of technical expertise by the service provider; however, that by does not satisfy the "make available" requirement embodied in Article 13 of the India-UK DTAA. 5.9. Accordingly, even on this alternate footing, the impugned IT recharge fee cannot be characterized as fees for technical services under Article 13 of the India-UK DTAA and, therefore, would not be liable to tax in India in the absence of a permanent establishment of the assessee in India. Accordingly, Ground.no.1 and additional Ground raised by the assessee vide application dated 17/09/2024 stands allowed. 6. Ground no.2 raised by the assessee relate to difference in income between Form 26AS and as per return of income mismatch. 6.1. The Ld.AR submitted that the assessee earned income only from LRA and LRQA. It was contended that, due to an inadvertent mistake committed by the clients of LRA/LRQA, while filing their TDS returns, the PAN of the assessee had been incorrectly quoted, resulting in certain third-party receipts getting reflected in the assessee's Form 26AS. It was further submitted that the concerned deductors had subsequently revised their TDS returns and, consequently, part of the i....
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....tax and, upon such verification, grant appropriate credit for the TDS in accordance with law. 8.2. Per contra, the Ld. DR submitted that the assessee failed to furnish complete reconciliation and supporting evidences before the lower authorities. Hence, additions and denial of TDS credit were rightly sustained. We have considered the rival submissions and perused the material available on record. 9. The grievance of the assessee is that though, as per the updated Form 26AS, TDS aggregating to Rs. 2,92,00,670/- stood deducted by LRA and LRQA. However, Ld.AO granted credit only to the extent of Rs. 1,98,75,951/-. 9.1. In our considered view, credit for TDS cannot be denied where the corresponding income has been duly offered to tax by the assessee and the tax deducted at source is duly reflected in the relevant records. Since the assessee has placed reliance on the updated Form 26AS and has also sought verification of the corresponding income offered to tax, we deem it appropriate, in the interest of justice, to restore this limited issue to the file of the Ld.AO. 9.2. The Ld.AO is directed to verify the updated Form 26AS, the claim of the assessee regarding offering o....
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....refore, levy of interest under section 234C of the Act was unsustainable. In support of the aforesaid contention reliance was placed on decisions by coordinate bench of this Tribunal in case of Zensar Technologies Ltd. vs DCIT in ITA No.4307/Mum/2017 and decision of Hon'ble Bnagalore Tribunal in case of ExxonMobil Services and Technology (P.) Ltd. vs DCIT reported in (2026) 184 taxmann.com 94. 12.1. On levy of interest u/s.234C, the Ld. DR submitted that charging of interest is mandatory and consequential in nature. We have perused the submissions advanced by both sides in light of the records placed before this Tribunal. 13. We have considered the rival submissions and perused the material available on record. Interest under section 234C is leviable only where there is deferment or shortfall in payment of advance tax installments as prescribed under the Act. In the present case, the specific contention of the assessee is that there was no shortfall in payment of advance tax with reference to the income returned by it. We thus direct the Ld.AO to consider the claim in accordance with law. Accordingly Ground no.4 raised by the assessee stands allowed. Assessment year ....