Procedure to claim Refund On Contract Cancellation with non-resident

Case of the assessee is covered by sub-clause (b) of clause 2 of Circular No. 7 dated 23-10-2007 and it is also covered by clause 2(b) of Circular No. 790 dated 20.04.2000. In para 2.1 of Circular 7 dated 23-10-2007, it is clearly provided that once the amount already remitted in pursuance of a contract has been refund back to the remitted after cancellation of the contract, any income does not accrue to the non­resident. It is also provided in the circular that the amount of tax paid u/s. 195 can be refunded to the deductor with prior approval of the Chief Commissioner of Income Tax. The detailed procedure in this regard is provided in the said circular and certain pre-conditions are to be satisfied, suitable undertaking from the deductor has to be obtained before the refund can be issued. It also specifies that refund can be given only if the non-resident has not filed any return and the time limit for filing of return has already expired.

I find that the submission of the Ld. Authorized Representative has merit. Once, the contract has been cancelled and the money has been received back, tax already paid for such remittance is no longer payable to the credit to the Government as per law on behalf of non resident and as per the said Circular, refund should be issued to the deductor following the specified procedure and after satisfying the conditions provided in the circular.

INCOME TAX APPELLATE TRIBUNAL “E” BENCH, MUMBAI

BEFORE SHRI R.K. GUPTA, JM, AND SHRI N. K. BILLAIYA, AM
 I.T.A. No. 6100/Mum/2011

  Assessment Year: 2007-2008)

Income Tax Officer, (International Taxation) TDS-2, Mumbai     

Vs.     

M/s. Sun Pharmaceutical Industries Ltd.

Date of Hearing: 25.06. 2013

Date of  Pronouncement: 10.07.2013

OR D E R