WORLD QUANT RESEARCH (INDIA) P LTD., MUMBAI-400076 V. COMMISSIONER OF INCOME TAX (APPEAL) NATIONAL FACELESS APPEAL CENTRES)-, DELHI

ITA 1067/MUM/2022

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The case involves WorldQuant Research (India) Pvt. Ltd., which appealed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi. The appeal was concerning a demand raised due to short payment of TDS under section 195 of the Income Tax Act, 1961, attributed to an error in depositing TDS under the wrong challan. The assessee had inadvertently deposited TDS for dividends paid to a non-resident shareholder under challan No. 280 instead of the required challan No. 281. The CIT(A) upheld the demand, leading to the present appeal. The Tribunal found that the assessee had pursued the matter adequately with the authorities and directed the necessary correction of the challan.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 299486 (ITAT-MUMBAI)
• Duration Of Justice: 17 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 07-12-2022
• Assessment Year: misc
• Appeal Filed On: 12-08-2005
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: TDS
• Section: 195; 250; 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER ITA no.1067/Mum./2022 (Assessment Year : 2021–22) WorldQuant Research (India) Pvt. Ltd. 1102, 11 th Floor, Hirinandani Knowledge Park Technology Street, Hiranandani Gardens Mumbai 400 076 PAN – AAACW8197K ................ Appellant v/s Commissioner of Income Tax National Faceless Appeal Centre, Delhi ................Respondent Assessee by : Shri Jeet Kamdar Revenue by : Ms. Richa Gulati Date of Hearing – 08/12/2022 Date of Order – 13/12/2022 O R D E R PER SANDEEP SINGH KARHAIL, J.M. The present appeal has been filed by the assessee challenging the impugned order dated 15/03/2022, 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 2021–22. 2. In this appeal, the assessee has raised the following grounds: “Ground No.1 On the facts and in the circumstances of the case and in lave the Learned TOS CPC bas erred in raising demand or short payment of TDS under sections of the Act amounting to Rs. 2,64,75,788. WorldQuant Research (India) Pvt. Ltd. ITA no.1067/Mum./2022 Page | 2 The Appellant humbly prays that the Learned TDS CPC be directest to delete the demand for short payment of TDS under section 195 of the Act. Ground No.2 On the facts and in the circumstances of the case and in law, the Learned TOS CPC has erred in calculating interest on short payment and interest on late deduction of TDS under section 201 of the Act amounting to Rs.34,02,841. The Appellant humbly prays that the Learned TDS CPC be directed to delete interest under section 201 of the Act. Your Appellant craves leave to add, amend, alter, substitute, modify and/or withdraw any/all of the grounds of appeal on or before the time of hearing.” 3. The only grievance of the assessee is against demand raised on account of short payment of TDS under section 195 of the Act due to error in depositing TDS under the wrong challan. 4. The brief facts of the case as emanating from the record are: During the year under consideration, the assessee has declared dividends to its shareholder who is a non-resident as per the provisions of the Act. Since vide Finance Act 2020, provisions in connection to Dividend Distribution Tax under section 115-O of the Act are not applicable on dividends declared, distributed or paid after 01/04/2020, the assessee deducted taxes in accordance with section 195 while paying the dividend to the non-resident shareholder. However, at the time of depositing taxes, the assessee deposited taxes vide challan No. 280 which is applicable for payment in nature of advance tax, self assessment tax, tax on regular assessment, tax on distributed income to unit holders, etc. instead of depositing the taxes vide challan No. 281 which is applicable for taxes deducted at source. The assessee also filed relevant TDS return on 31/03/2021. Once the inadvertent error due to change in law was noticed, the assessee filed a letter to DCIT–15(3)(1) as well as DCIT (TDS) WorldQuant Research (India) Pvt. Ltd. ITA no.1067/Mum./2022 Page | 3 (OSD), requesting to consider the deposit of taxes on dividend under challan No. 281 though erroneously deposited vide challan No. 280. Vide intimation dated 05/04/2021, issued under section 200A/206CB of the Act for Q2 demand of Rs. 2,95,78,630, was levied on account of short payment of taxes. 5. The learned CIT(A) vide impugned order after taking note of the letters filed by the assessee held that the assessee has simply requested both the AO (including TDS) to treat the tax paid through challan No. 280 as tax paid as TDS, however, has not made any formal request for correction of challan from 280 to 281 with the AO (TDS). The learned CIT(A) further held that the AO (TDS) only after receipt of a formal request for change/correction in challan No. from 280 to 281, can act within the time limit prescribed as per the notification. Accordingly, vide impugned order, the learned CIT(A) upheld the demand raised vide intimation issued under section 200A/206CB of the Act. The learned CIT(A) further noted that the assessee is required to file a challan correction application with the jurisdictional TDS AO as per the prescribed challan correction mechanism, who is required to do the needful as per the provisions. Being aggrieved, the assessee is in appeal before us. 6. During the hearing, the learned Authorised Representative brought to our notice a letter dated 12/08/2022 filed before DCIT–TDS [OSD TDS Circle 2(3)] praying for correction of challan. In the said letter reference has also been made to an email dated 12/04/2021, to DCIT TDS praying for rectification of challan. WorldQuant Research (India) Pvt. Ltd. ITA no.1067/Mum./2022 Page | 4 7. Pursuant to the direction of the bench regarding the status of the letter/applications filed by the assessee, the learned Departmental Representative submitted the copy of an email dated 06/12/2022 from DCIT (OSD)–TDS–2(3), Mumbai, stating as under: “To ITO (HQ) ITAT, G-Bench, Mumbai Sub: Appeal in the case of World Quant Research (India) P. Ltd. ITA NO.1067/M/1022 for AY 2021-22 PAN AMACW8197X - reg Please refer to the above abject and trail mail In this regard, it is intimated that as per TRACES records, the challan No with CIN No. 639034015092024392 is deposited on TAN No.MUMW/04164G under minor head 106. However, for a challan to be utilized in the TDS statement against the underlying deductees it should be deposited under minor head 200. Therefore his office has tried to raise the online challan correction ticket change the miner head, 106 to minor head 200 but the TRACES system doesn‟t allow to change the minor head of the challan without changing the TAN of assessee. The screenshots in this regard are attached for your ready reference. The above sue has also been escalated to CPC-TDS (as per trail mail) for either necessitating the required changes in the challan from back end or enabling the system to allow the TDS-AO to do the same from his login at TRACSES AO- Patal. This is for your land information and necessary action. Yours faithfully Sd/– Dr. Surendra Singh Charan DCIT (OSD)–TDS–2(3), Mumbai” 8. We have considered the submissions of both sides and perused the material available on record. It is the plea of the assessee that the demand raised vide intimation issued under section 200A/206CB is only due to the wrong challan filed by the assessee while depositing the tax deducted at source under section 195 of the Act in respect of payment of dividend to the non-resident shareholder. From the applications filed by the assessee, a copy WorldQuant Research (India) Pvt. Ltd. ITA no.1067/Mum./2022 Page | 5 of which has been brought on record, we find that the assessee has pursued this matter with the concerned authorities and not only requested to consider the deposit of taxes on dividends by the company but has also prayed for correction of the challan from challan No. 280 to challan No. 281. From the copy of the email dated 06/12/2022, filed by the learned DR, we find that the office of DCIT (OSD) TDS has escalated the issue to CPC – TDS for either necessitating the required changes in the challan from the backend or enabling the system to allow the TDS–AO to do the same from his login at TRACES AO – Portal. Therefore, in view of the above, we deem it appropriate to direct the concerned authority to make every possible endeavour of carrying out the necessary correction in the challan within a period of 2 months from the date of receipt of this order and grant the relief to the assessee as per law. As a result, grounds raised by the assessee are allowed for statistical purposes. 9. In the result, the appeal by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 13/12/2022 Sd/- S. RIFAUR RAHMAN ACCOUNTANT MEMBER Sd/- SANDEEP SINGH KARHAIL JUDICIAL MEMBER MUMBAI, DATED: 13/12/2022 WorldQuant Research (India) Pvt. Ltd. ITA no.1067/Mum./2022 Page | 6 Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The CIT(A); (4) The CIT, Mumbai City concerned; (5) The DR, ITAT, Mumbai; (6) Guard file. True Copy By Order Pradeep J. Chowdhury Sr. Private Secretary Assistant Registrar ITAT, Mumbai