TaxTMI 
TaxTMI 
2026 (7) TMI 1032
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....see voluntarily treating himself as a foreign company, resident in India, based on Place of Effective Management, which means that the said residential status and the reasons of claiming that status was completely voluntary. ii) Now, the assessee is seeking revision of the said status in the above mentioned paragraph and relief because of the New Zealand tax authorities having held the company as resident and had taxed its income in New Zealand retrospectively from A.Y. 2017-18 to 2021-22. iii) However, there is no way in which the Income Tax Department can suomoto reverse the stand and hold that the amount to be not taxable after completing scrutiny assessment proceedings. iv) For the reasons stated above, the Section under Which the assessee is seeking relief and refund namely 155 (144A) is not applicable to this case. v) Further, at best, for any relief for taxes already paid, the assessee should be approaching the New Zealand Tax Authorities for claiming DTAA relief for taxes already paid in India and not the other way round." 3. Earlier, the petitioner had approached this court in W.P.No.8479 of 2023. By an order dated 23.03.2023, this co....
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.... Assessment Year Date of Return Filed Income Returned Taxes Paid 1. 2017-18 Revised return filed on 01.11.2018 Return loss of Rs. 23,43,790/- Rs.8,26,300/- 2. 2018-19 Revised return filed on 01.11.2018 Return Loss of Rs. 1,08,54,880/- Rs.38,96,740/- 3. 2019-20 Revised return filed on 26.09.2019 Return Loss of Rs. 17,21,050/- Rs.6,09,910/- 4. 2020-21 Revised return filed on 16.12.2020 Return Loss of Rs. 10,07,080/- Rs.3,33,150/- TOTAL Rs.56,63,100/- 7. These returns filed by the petitioner were also eventually processed both under section 143 (b) and section 143 (1) of Income Tax Act, 1961 on the dates mentioned below and the petitioner had paid the tax for the assessment year as detailed below :- SI. No. Assessment Year Assessment Date Remark Taxes Paid 1. 2017-18 31.03.2019 Under Section 143 (3) Rs.8,26,300/- 2. 2018-19 31.12.2020 Under Section 143 (1) Rs.38,96,740/- 3. 2019-20 11.02.2021 Under Section 143 (1) Rs.6,09,910/- 4. 2020-21 25.09.2021 Under Section 143 (1) Rs.3,33,150/- 8. It is the case of the petitioner that thoug....
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....land. The Petitioner had made certain fixed deposits with their bankers in New Zealand and had received income from the deposits in New Zealand. On these incomes, it appears that the bank had withheld 10% while holding tax equivalent to the TDS under section 194 of the Income Tax Act. 16. No other additional income was offered by the petitioner in New Zealand. However, subsequently the petitioner received communication dated 17.11.2021 from the Inland Revenue Department of New Zealand. Therefore, the petitioner was intimated that since the Petitioner's company was incorporated on 15.04.2015 and was registered on the files of the New Zealand companies register, the Petitioner was a resident in New Zealand and thus liable to pay under section YD2(a) of the New Zealand's Income tax act, 2007 on its worldwide income. 17. In view of the above, the petitioner has paid the differential 18% of the tax in New Zealand Dollars $64,867.40 on 7.12.2021 as detailed in the communication dated 05.04.2022 of the Customer Compliance Specialist issued to the Petitioner. 18. In this background, the Petitioner has approached the Respondent Income Tax Department vide an application dated 24....
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.... such. Our claim is within six months of payment of taxes in New Zealand (Date of payment: 17.12.2021) as per Rule 128 of Income Tax Act. As a matter of fact we were not liable to file the return and pay taxes in India as the POEM applies only to Companies having turnover of Rs. 50 Crores. Our turnover is less than the ceiling limit of Rs. 50 Crores, POEM does not apply. CBDT Circular 8/2017 dt.23.02.2017 clarified that provisions of clause (ii) of such section (3) of Section 6 of the Act, shall not apply to a Company having a turnover or grss receipts of Rs. 5 crores or less in a Financial Year. Act shall come into effect from 1" April 2017 and accordingly, applies to Assessment Year 2017-18 and subsequently years. Although we are entitled to claim refund of entire tax paid in India of Rs. 56,66,100/-, we are restricting to our claim as 18% double tax paid amounting to Rs. 32,43,350/-(Approx) for the same income both in New Zealand and India the petitioner Zealand for is entitled We request yout to allow as per Section 155(144) rwr 128 of the Income Tax Act, since we have claimed within six months from the settlement of the dispute with New Zealand tax a....
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.... 2) and if subsequently, such dispute is settled; page 49 3)and assessee within 6 month from the end of the month in which the dispute is settled., 4) and furnishing to the assessing officer evidence of settlement of dispute and evidence of payment of tax along with an undertaking that no credit in respect of such amount has directly or indirectly been claimed or shall be claimed for any other assessment year, the Assessing Officer shall amend the order of assessment or any intimation or deemed intimation under sub-section (1) of Section 143, as the case may be, and provisions of Section 154 shall, so far as may be apply thereto. 28. I have heard the arguments advanced by the learned counsel for the petitioner and learned counsel for the respondent. I have perused the Impugned Order and the records before this Court as also the provisions of the Income Tax Act, 1961 and Income Tax Rules, 1962. 29. There is no dispute that after the petitioner company was incorporated in New Zealand as a subsidiary of an Indian Company with the New Zealand Companies Office on 15.04.2015. It had no business in its initial years. 30. At the time when the original and revis....
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....ase of a person not ordinarily resident in India within the meaning of sub-section (6) of section 6, the income which accrues or arises to him outside India shall not be so included unless it is derived from a business controlled in or a profession set up in India. (2) Subject to the provisions of this Act, the total income of any previous year of a person who is a non-resident includes all income from whatever source derived which- (a) is received or is deemed to be received in India in such year by or on behalf of such person; or (b) accrues or arises or is deemed to accrue or arise to him in India during such year. Explanation 1.-Income accruing or arising outside India shall not be deemed to be received in India within the meaning of this section by reason only of the fact that it is taken into account in a balance sheet prepared in India. Explanation 2.-For the removal of doubts, it is hereby declared that income which has been included in the total income of a person on the basis that it has accrued or arisen or is deemed to have accrued or arisen to him shall not again be so included on the basis that it is received or deemed to be received by him ....
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....e "place of effective management" means a place where key management and commercial decisions that are necessary for the conduct of business of an entity as a whole are, in substance made. (6)A person is said to be "not ordinarily resident" in India in any previous year if such person is- (a) an individual who has been a non-resident in India in nine out of the ten previous years preceding that year, or has during the seven previous years preceding that year been in India for a period of, or periods amounting in all to, seven hundred and twenty-nine days or less; or (b) a Hindu undivided family whose manager has been a non-resident in India in nine out of the ten previous years preceding that year, or has during the seven previous years preceding that year been in India for a period of, or periods amounting in all to, seven hundred and twenty-nine days or less ; or (c) a citizen of India, or a person of Indian origin, having total income, other than the income from foreign sources, exceeding fifteen lakh rupees during the previous year, as referred to in clause (b) of Explanation 1 to clause (1), who has been in India for a period or periods amounting in all to one hund....
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....nts. (1) to (14) are left blank as they are not relevant for the present discussion (14A). Where in the assessment for any previous year or in any intimation or deemed intimation under sub-section (1) of section 143 for any previous year, credit for income-tax paid in any country outside India or a specified territory outside India referred to in section 90, section 90A or section 91 has not been given on the ground that the payment of such tax was under dispute, and if subsequently such dispute is settled; and the assessee, within six months from the end of the month in which the dispute is settled, furnishes to the Assessing Officer evidence of settlement of dispute and evidence of payment of such tax along with an undertaking that no credit in respect of such amount has directly or indirectly been claimed or shall be claimed for any other assessment year, the Assessing Officer shall amend the order of assessment or any intimation or deemed intimation under sub-section (1) of section 143, as the case may be, and the provisions of section 154 shall, so far as may be, apply thereto: Provided that the credit of tax which was under dispute shall be allowed ....
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....o Section 155(14A). Therefore, the tax that was paid abroad is to be allowed to the petitioner for the year such income is offered to tax or assessed to tax in India. There cannot be double taxation on the same income. 50. Thus, the Petitioner was not liable to pay tax and if such tax was paid, was also entitled to Rectification under Section 155(14A) of the Income Tax Act, 1961. 51. That apart, the Tax Authorities are not concerned with tax that is not due to them as revenue. They are only required to collect tax due & payable by an assessee. Therefore, tax paid in excess has to be refunded notwithstanding the proceedure in Section 155 (14A) of the Income Tax Act, 1961, if such Income was taxed in a Foreign Country. 52. Section 155(14A) of the Income Tax Act, 1961 is both substantive and procedural. Therefore, the benefit should enure to the Assessee, notwithstanding the procedural impediments, if any. 53. That apart, Section 90 of the Income Tax Act, 1961 provides for Double Taxation relief through Agreements between India and foreign countries and / or specified territories. The said Agreements are signed for the following purposes :- (a) for the granting of....
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.... and New Zealand which provides for elimination of double taxation. Relevant portion of the said Article is extracted below:- ARTICLE 23 - Elimination of double taxation - 1........... 2.(a)Subject to the provisions of the law of India relating to the allowance as a credit against Indian tax of tax paid in any country other than India (which shall not affect the general principle hereof), New Zealand tax paid under the law of New Zealand and consistently with this Convention, whether directly or by deduction, in respect of income derived by a resident of India from sources in New Zealand (excluding, in the case of a dividend, tax paid in respect of the profits out of which the dividend is paid), shall be allowed as a credit against Indian tax payable in respect of that income. (b) For the purposes of this article, income of a resident of India which in accordance with the provisions of this Convention may be taxed in New Zealand shall be deemed to arise from sources in New Zealand. 57. Further, it has been consistently held by Courts that procedures should not come in the way of doing substantive relief. In this connection, the observations of....