Case Law Details
Damco India Pvt Ltd Vs CIT (ITAT Mumbai)
Introduction: In a recent landmark ruling on August 10, 2023, the Income-tax Appellate Tribunal (ITAT) Mumbai division sided with the taxpayer, Damco India Pvt Ltd. This case was brought against the Commissioner of Income Tax (CIT), specifically related to the issue of granting advance tax credits that were not claimed by the taxpayer.
Overview of the Case: Damco India Pvt Ltd challenged the earlier ruling passed under section 250 of the Income Tax Act, 1961, by the learned CIT for the assessment year 2013–14. The primary point of contention was the denial of an advance tax credit amounting to INR 1,10,00,000 paid by the company.
Grounds for Appeal: Damco India Pvt Ltd laid out multiple grounds for the appeal. The company questioned the legal justifications of the decisions taken by the Assessing Officer (AO) and the CIT(A). The grounds for appeal included:
1. Denial of advance tax credit.
2. The failure of the AO to guide the taxpayer as per Circular 14 (XL-35) dated April 11, 1955.
3. Non-compliance with prior rulings by the Bombay High Court.
4. Disregard for the Form 26AS, which had already been part of the records.
The Tribunal’s Ruling: After examining the submitted documents and arguments from both sides, the ITAT ruled that the AO was bound to grant the credit for the advance tax paid by the assessee as it was apparent from Form 26AS and as mandated by Section 219 of the Income Tax Act. The Tribunal emphasized that the inadvertence on the part of the taxpayer in claiming the credit did not absolve the AO from its statutory obligations.
Implications for Taxpayers: This ruling is significant as it emphasizes the responsibilities of the AO in granting tax credits that may have been inadvertently omitted by the taxpayer. It also underscores the importance of accurate record-keeping and proactive assistance by tax authorities.
Implications for Assessing Officers: For the AO, the ruling serves as a reminder of the duty to correct apparent mistakes and guide the taxpayer, particularly in the matter of claiming and securing reliefs.
Conclusion: The ruling in the case of Damco India Pvt Ltd Vs CIT sets a crucial precedent in the context of advance tax credits. It affirms that the responsibility lies with the AO to grant these credits, even if the taxpayer has failed to claim them initially. This decision could have far-reaching implications for both taxpayers and assessing officers, ensuring more fairness and accuracy in the tax assessment process.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The present appeal has been filed by the assessee challenging the impugned order dated 29/11/2021, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [“learned CIT(A)”], for the assessment year 2013–14.
2. In its appeal, the assessee has raised the following grounds:–
“Based on the facts and circumstances of the case, the Appellant respectfully craves leave to prefer an appeal under section 253(1) of the Income-tax Act, 1961 (‘the Act’) against the order passed under section 250 of the Act by the National Faceless Appeal Centre (NFAC) on the following grounds, which are independent and without prejudice to each other:
1. On the facts and circumstances of the case and in law, the NFAC erred in upholding the order passed by the learned Assessing Officer (AO) denying legitimate credit of advance tax paid amounting to INR 1,10,00,000 which was otherwise allowable and could not be claimed in the return of income.
2. On the facts and circumstances of the case and in law, the NFAC erred in upholding the order passed by the learned AO wherein the learned AO failed to discharge his duties as per Circular 14 (XL-35) dated 11 April 1955 issued by the Central Board of Direct Taxes (‘CBDT) to assist the tax payer, particularly in the matter of claiming and securing reliefs and taking the initiative in guiding the taxpayer where proceedings before them indicate that the refund or relief is due to him.
3. On the facts and circumstances of the case and in law, the NFAC erred in upholding the order passed by the learned AO where in the AO erred by not following the judgment of jurisdictional Bombay High Court in case of Sitaldas K. Motwani vs. DCIT (International Taxation), 2010 187 taxman 44 (Bombay) and Pruthvi Brokers and Shareholders 2012 23 com 23 (Bombay).
4. On the facts and circumstances of the case and in law, the NFAC erred in upholding the order passed by the learned AO where in the AO erred in disregarding the fact that Form 26AS already formed part of the records of the Income-tax department, and the credit for taxes paid which was appearing in Form 26AS was not granted to the Appellant.
5. The Appellant craves for leave to add, amend, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of the appeal, so as to enable the Hon’ble Income-tax Appellate Tribunal to decide this appeal according to law.
(1) The tax effect arising on account of grounds 1 to 3 has not been quantified since the grounds relate to a single issue and INR. 1,10,00,000 is entirely a credit for legitimate advance tax paid by the Appellant that needs to be granted in totality.”
3. The only dispute raised by the assessee, in the present appeal, is pertaining to the denial of credit of advance tax amounting to Rs. 1,10,00,000 paid by the assessee.
4. The brief facts of the case are that the assessee is engaged in the business of providing freight forwarding and supply chain management services to global customers of DAMCO Group. For the year under consideration, the assessee filed its return of income on 30/11/2013 declaring a total income of Rs. 18,58,74,940. The return filed by the assessee was selected for scrutiny and vide order dated 28/04/2017 the total income of the assessee was assessed at Rs. 38,23,56,290. In appellate proceedings, the Tribunal granted partial relief to the assessee. Upon receipt of the order giving effect to the Tribunal’s direction, the assessee noticed that the credit for advance tax amounting to Rs. 1,10,00,000 paid was not claimed in the return of income. As the due date for filing the revised return of income had expired, the assessee approached the Assessing Officer (“AO”) by filing the rectification application under section 154 of the Act. Vide order dated 12/08/2020, the AO rejected the claim of the assessee for grant of credit of advance tax paid on the basis that the claim of the assessee is made after a lapse of almost 3 years after completion of the assessment. The learned CIT(A), vide impugned order, dismissed the appeal filed by the assessee on the basis that there is no mistake apparent from the record in the order passed by the AO giving effect to the order of the Tribunal, and thus the order of the AO cannot be interfered with under section 154 of the Act. Being aggrieved, the assessee is in appeal before us.
5. During the hearing, the learned Authorised Representative (“learned AR”) submitted that the assessee has filed an application before CBDT under section 119(2)(b) of the Act for condonation of delay in claiming the advance tax credit, which is pending consideration. The learned AR also placed on record a copy of the challan payments of advance tax amounting to Rs. 1,10,00,000 as well as relevant extracts of Form 26AS wherein the aforesaid payment is duly reflected.
6. On the other hand, the learned Departmental Representative vehemently relied upon the orders passed by the lower authorities and submitted that this claim was neither made in the return of income nor any revised return of income was filed by the assessee and therefore the claim has been correctly rejected.
7. We have considered the submissions of both sides and perused the material available on record. From the perusal of the challan of payment of advance tax, we find that an advance tax of Rs. 44 lakh was paid by the assessee on 14/06/2012, and an advance tax of Rs. 66 lakh was paid by the assessee on 13/09/2012. We find that the aforesaid payments are duly reflected in the relevant extracts of Form 26AS furnished by the assessee. It cannot be disputed that the claim made by the assessee was limited to the grant of credit of the aforesaid advance tax paid during the year under consideration and the same doesn’t pertain to fresh claim of any allowance/deduction. It is not a case wherein the assessee sought credit of TDS which needs to be verified with documentation and correlated with the corresponding income. Further, section 219 of the Act also mandates that the credit of advance tax shall be given to the assessee in the regular assessment. Thus, the inadvertence on the part of the assessee to claim the credit for the advance tax while filing its return of income or filing the revised return of income in this regard does not absolve the AO from its statutory duty as per section 219 of the Act to grant the credit in the regular assessment, particularly when the said amount is duly reflected in Form 26AS which forms part of the record of the Revenue. Therefore, we are of the considered view that the AO erred in not rectifying this apparent mistake when the same was pointed out by the assessee vide its application under section 154 of the Act. Accordingly, we direct the jurisdictional AO to grant the credit of advance tax of Rs. 1,10,00,000 paid by the assessee during the financial year 2012-13. As a result, the impugned order passed by the learned CIT(A) is set aside and the grounds raised by the assessee are allowed.
8. In the result, the appeal by the assessee is allowed.
Order pronounced in the open Court on 10/08/2023
