Hasbro SA Vs DCIT (International Tax) (ITAT Delhi)
The appeal before the Income Tax Appellate Tribunal, Delhi Bench arose from an order of the Commissioner of Income Tax (Appeals) dated 01.02.2025, which upheld a rectification order passed under Section 154 of the Income-tax Act, 1961 by the Centralized Processing Centre, Bengaluru. The rectification order had denied credit of tax deducted at source (TDS) amounting to ₹21,14,675 for Assessment Year (AY) 2020–21, resulting in a demand of ₹27,07,820 including interest.
The assessee, a foreign company incorporated in Switzerland, earned royalty income of ₹2,11,46,750 during AY 2020–21 and offered the same to tax at the rate of 10% in accordance with Article 12 of the India–Switzerland Double Taxation Avoidance Agreement. TDS of ₹21,14,675 had already been deducted on this income. While processing the return under Section 143(1), the Assessing Officer assessed the income as returned but denied the TDS credit on the ground that the corresponding TDS appeared in Form 26AS for Financial Year 2020–21 (relevant to AY 2021–22) and not in Form 26AS for AY 2020–21. The rectification application filed by the assessee was rejected, and this view was affirmed by the CIT(A), who held that under Section 199 read with Rule 37BA of the Income-tax Rules, credit for TDS could be granted only in the year in which the income was reflected in Form 26AS.
