Kisan International Trading FZE Vs ACIT (ITAT Delhi)
Reopening Quashed—UAE Company Not Required to File ROI u/s 115A(5); AO Taxed Exactly Double the Real Interest Income; No Reasons, No Service of 148, No Disposal of Objections
Kisan International Trading FZE, a UAE tax-resident foreign company, received interest income of USD 7,48,401.66 (₹4,24,75,001) from IFFCO. TDS of ₹53,09,375 was correctly deducted @12.5% as per Article 11, India–UAE DTAA & section 195. Consequently, section 115A(5) exempted the Assessee from filing any return in India.
Despite this, AO triggered 147/148 proceedings based on NMS, without serving 148 notice, without supplying reasons, and without disposing the objections (letter dated 19.11.2019). Worse, AO assessed income at ₹8,49,50,002—exactly double the real interest (₹4.24 crore) reflected in Form 26AS, without any evidence showing higher income. Even the TDS credit of ₹53.09 lakh was denied.
Before CIT(A), extensive written submissions and evidence were filed, yet CIT(A) simply invoked newly inserted proviso to s.251(1)(a) and set aside the assessment mechanically, without adjudicating jurisdictional grounds.
Before Tribunal, the Assessee relied on binding rulings:
- Nestle SA (417 ITR 213, Del HC)—non-resident with only TDS-deducted dividend/interest cannot be treated as “non-filer”; 148 invalid.
- Tsys Card Tech Services Ltd (Del HC, 2020)—non-disposal of objections + 115A(5) violation = 147 invalid.
- Argos Holdings Pte Ltd (ITAT Del, 06-11-2025)—147 invalid where AO initiates reopening mechanically against foreign entities without tangible material.
Tribunal held:
1. Section 115A(5) squarely applies
The Assessee had only DTAA-taxed interest income and full TDS was deducted → no obligation to file ROI → AO’s very basis (“non-filer”) is illegal.
2. AO adopted a patently wrong income figure
AO taxed ₹8.49 crore though Form 26AS shows ₹4.24 crore. No material supports the higher figure. Jurisdiction cannot be assumed based on erroneous facts.
3. Mandatory jurisprudence violated
