TaxTMI 
TaxTMI 
2026 (7) TMI 416
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....:- 1. The Ld. CIT(A) has erred on facts and in law in upholding the action of AO(CPC) in denying the credit of TDS of Rs. 9,01,972/- on the ground that assessee has not declared the corresponding income of Rs. 86,72,806/- in its return of income neither as taxable nor as exempt OR not chargeable to tax under DTAA ignoring that when consultancy services income is not chargeable to tax in terms of DTAA with UAE r.w.s. 9, 90(2) & 195 of IT Act, only because it is not reflected in the return by inadvertence should not lead to denying the credit of TDS in processing the return u/s 143(1). 2 The appellant craves to alter, amend and modify any ground of appeal. 3 Necessary cost be awarded to the assessee. 3. The solit....
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....ome is assessable as per Rule 37BA of Income Tax Rules, 1962. The assessee responded to the same by contending that it was a foreign company based in Dubai and as per DTAA with UAE its entire income was taxable in UAE and no income was taxable in India as the assessee company is providing services outside India and no income was attributable to India. The assessee further pointed out that the service receiver had wrongly deducted the TDS u/s 195 of the Act and hence income was shown at NIL and TDS claimed as refund by the assessee. The response of the assessee to the defect notice so issued was filed before me and is reproduced as hereunder:- 5. Thereafter, the return of income filed by the assessee was processed u/s 143(1)(a) of the Act....
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....sessee, and the assessee had fairly explained the reason for the same as the said income not being taxable as per DTAA and hence not disclosed. After the response filed by the assessee to the defect notice, the AO, I have noted, apparently accepted assessee's explanation and did not treat the return as invalid. This is further strengthened by the fact that in the intimation made u/s 143(1)(a) of the Act, while processing the return of income, the AO accepted NIL income of the assessee. Having accepted no income taxable in India, the entire TDS corresponding to that income deducted at source, therefore, I hold, was rightly claimed by the assessee even in terms of Rule 37BA of the Income Tax Rules. As per Section 119 of the Act read with Rule....
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...., are higher than the total of the receipts shown under all heads of income, in the return of income. Thus, while credit for TDS is being claimed, the corresponding receipts are not offered in the respective income schedules, to arrive at the taxable total income. Hence, the return of Income filed is regarded as defective, as provided in Explanation [a] under section 139(9). Probable Resolution The correction of this defect has to be made by filing a corrected return and disclosing the complete receipts, as per Form 26AS. Alternatively, the claim of TDS may be made corresponding to the extent of income/receipts disclosed in the return. Please note that Credit for the TDS is allowable to the person in whose hands the income is assessab....