Case Law Details
ACIT Vs North American Coal Corporation India Pvt. Ltd. (ITAT Pune)
A careful perusal of the ITSC direction explicitly indicates that the AO shall compute the tax payable ‘after giving credit for taxes already paid by the applicant’. `Taxes already paid’ do not mean only the taxes directly paid by the assessee but also those paid on its behalf. Sub-section (1) of section 199 with the caption `Credit for tax deducted’ states that “Any deduction made in accordance with the foregoing provisions of this Chapter and paid to the Central Government shall be treated as a payment of tax on behalf of the person from whose income the deduction was made….”. Thus, it is glaring from section 199 that the tax deducted at source is also a payment of tax on behalf of the assessee in the instant case. In other words, the ITSC’s direction for giving credit for taxes already paid by the applicant brings into its fold not only the amount of tax paid by the assessee but also the amount of tax deducted at source on behalf of the assessee. To sum up, the order passed by the ITSC u/s 245D(4) of the Act even de hors the filing of return u/s 139 of the Act is an order passed under ‘other proceeding under this Act’ for the purposes of section 240 and the amount of TDS is a component of the amount of taxes already paid in terms of section 199 of the Act. The sequitur is that the ld. CIT(A) was fully justified in directing the AO to allow credit for TDS amounting to Rs.70.53 lakh in determining the amount of refund due to the assessee for the year under consideration. I accord imprimatur to the impugned order.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal by the Revenue emanates from the order dated 11.06.2020 passed by the CIT(A)-3, Pune anent to the order u/s 154 of the Income-tax Act, 1961 (hereinafter called `the Act’) delivered by the Assessing Officer (AO) for the assessment year 2014-15.
2. The only issue raised in this appeal is the denial of grant of credit for tax deducted at source. Briefly stated, the facts of the case are that the assessee is a wholly owned subsidiary of The North American Coal Corporation (NACC), USA and it is engaged in the business of providing mine development services to Indian clients. The assessee paid royalty to its parent NACC, USA. The royalty amount was offered by the parent company to tax in India at the gross rate of 10%. The AO, while completing the assessment of the parent company, subjected the royalty and technical fees income to tax @ 40%. In order to prevent protracted litigation, the parent company as well as the assessee filed applications before the Income-tax Settlement Commission (ITSC) on 04-12-2014. The assessee’s application covered three assessment years, viz., 20 12-13, 2013-14 and 2014-15. The assessee had filed returns of income u/s 139 of the Act for the assessment years 2012-13 and 20 13- 14 before filing the application before the ITSC. However, no such return was filed for the assessment year 20 14-15. In the application filed before the ITSC, the assessee made disclosure of total income of Rs.16.80 lakh for the assessment year 2014- 15. In the order passed u/s. 245D(4), the ITSC determined the total income of the assessee for the year in question at Rs.32,95,661/-. The computation of income by the ITSC also contained a direction to give credit for taxes already paid. The AO passed an order giving effect to the ITSC order, thereby raising demand of Rs.4,14,280/-, without granting credit for TDS amounting to Rs.70,53,096/-. The assessee moved rectification application on 18-04-20 19 before the AO urging that credit for TDS be granted. Such an application was rejected by the AO vide his order dated 21-06-2019. The assessee appealed against the said order to the ld. CIT(A), who countenanced the assessee’ s standpoint that credit for TDS ought to have been granted. Aggrieved thereby, the Revenue has come up in appeal before the Tribunal.
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