SCHINDLER CHINA ELEVATOR COMPANY LIMITED, MUMBAI V. CIT (APPEALS)-58, MUMBAI

ITA 835/MUM/2023

AI Insights

The case involves Schindler China Elevator Company Ltd., a Chinese company engaged in the business of elevators, which appealed against the order of the Commissioner of Income Tax (Appeals) -58, Mumbai. The primary issues in the appeal were the alleged violation of the principles of natural justice due to the absence of a personal hearing and the non-grant of TDS credit of Rs 3,93,375, which was claimed based on tax deducted at source from income received from Bangalore Metro Rail Corporation Ltd. The CIT(A) had denied the TDS credit on the grounds that the corresponding income had not been offered for tax in the relevant assessment year.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 299464 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: G
• Next Hearing Date: 22-05-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 15-03-2023
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Assessee Lawyers: AYUSH MODANI
• Keywords: Principle of natural justice; TDS
• Section: 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI PRASHANT MAHARISHI, AM AND SHRI KULDIP SINGH, JM ITA No.835/MUM/2023 (Assessment Year 2017-18) Schindler China Elevator Company Ltd. C/o Bansi S. Mehta & Co. Metro House, 3 rd Floor, Dhobi Talao, M.G. Road, Mumbai 400020 Vs. CIT(A)-58 Room No. 515, 5 th Floor, Earnest House, NCPA Road, Nariman Point, Mumbai 400021 (Appellant) (Respondent) PAN No. AASCS8166L Assessee by : Ms. Ayush Modani, AR Revenue by : Smt. Sonia Kumar, DR Date of hearing: 23.05.2023 Date of pronouncement : 29.05.2023 O R D E R PER PRASHANT MAHARISHI, AM: 01. This appeal is filed by the assessee against the appellate order passed by the Ld. Commissioner of Income Tax (Appeals) -58, Mumbai (hereinafter ”the CIT(A)”) for assessment year 2017-18 on 19-01-2023. 02. The assessee has raised the following two grounds of appeal as under: “Ground no. 1 : Violation of Principles of Natural Justice: Page | 2 ITA No.835/MUM/2023 Schindler China Elevator Company Ltd.; A.Y. 2017-18 1. On the facts and circumstances of the case and in law, Hon’ble CIT(A) erred in not granting any opportunity of personal haring to the Appellant in deciding the appeal.. 2. The appellant prays that the order of Hon’ble CIT(A)be held as bad in law and be quashed as it violates principles of natural justice.. WITHOUT PREJUDICE TO ABOVE, Ground no. 2 : Non-grant of TDS Credit 1. On the facts and circumstances of the case and in law, Hon’ble CIT(A) erred in confirming non-grant of TDS credit of Rs 3,93,375/- and thereby denying refund of Rs 3,93,375/- 2. The Appellant prays that the Ld. AO be directed to grand refund of ₹ 3,93,375/- since the underlying income received from Bangalore Metro Rail Corporation Ltd (BMRCL) is emanating from offshore supply and is not chargeable to tax in India.” 03. Brief facts of the case are that the assessee is a company incorporated in china and also tax resident of china. It is engaged in the business of design, manufacturing and supply of elevators. It filed its return of income on 31.10.17 declaring nil income. The return was processed u/s 143(1) of the Income Tax Act (hereinafter “the Act”) on 24.03.2019. In the return of income the assessee claimed refund of Rs 3,93,375/- and did not have any income. The CPC did not grant any refund and accordingly refund has been computed at Rs Nil. The assessee has also filed rectification application on 22.04.2019 stating that in form no 26 AS tax credit of 03,93,395/- is reflected Page | 3 ITA No.835/MUM/2023 Schindler China Elevator Company Ltd.; A.Y. 2017-18 and therefore the credit to that extent should be granted. Assessee has also filed an appeal before the Ld. CIT (A). 04. Assessee submitted before the Ld. CIT(A) that assessee is eligible for tax deduction at source credit of Rs 03,93,375/-. Ld CIT(A) held that tax credit is allowed in the assessment year in which the corresponding income has been offered to tax. He further noted that the corresponding income of Rs 182,92,865/- as reflected in form no 26AS has not been offered to tax and therefore for this year tax credit is not allowable. He further held that income of Rs 1,82,09,865 is received from Bangalore Metro Rail corporation Ltd. for which the above tax credit has been claimed. Income has not been offered in this year, assessee is not eligible in tax credit of Rs 03,93,375/-. Thus , appeal of the assessee is dismissed. 05. Aggrieved by the appellate order assessee is in appeal before us. 06. At the time of hearing, the assessee has filed request of adjournment stating that they would like to file the paper book. However looking at the grounds of appeal we find that assessee has challenged the violation of principles of natural justice and only issue involved in this appeal is non-grant of TDS credit. This is the only grievance. In view of the above, we reject the request for the adjournment by the assessee. Therefore, we proceed to decide the appeal on merits of the case. Page | 4 ITA No.835/MUM/2023 Schindler China Elevator Company Ltd.; A.Y. 2017-18 07. The learned AR submitted that the assessee has not been granted tax credit of ₹ 393, 375/– which is appearing in form number 26 AS. It is not the claim of the revenue that income embedded in the tax deduction at source credit is income of the assessee. Therefore, the credit should have been granted. 08. The learned departmental representative vehemently supported the order of the learned CIT – A stating that tax deduction at source credit is required to be granted in the year in which the income related to that TDS is offered for taxation. 09. We have carefully considered the rival contention. The simple facts show that assessee is a company Incorporated in China and resident of China. It is engaged in the business of design and manufacture and supply of elevators. The return of income filed by the assessee declaring nil income claiming credit of tax deduction at source of ₹ 3 93 375. Looking at the provisions of section 199 of the income tax act which provides about credit for tax deducted at source stating that any tax deduction made in accordance with the provisions of tax deduction at source and which is paid to the central government shall be treated as payment of tax on behalf of the assessee from whose income the deduction was made. Corresponding rule 37BA also deals with the procedural manner in which credit for tax deducted at source is required to be given. Rule (3) (i) provides that credit for tax deducted at source and paid to the central government Page | 5 ITA No.835/MUM/2023 Schindler China Elevator Company Ltd.; A.Y. 2017-18 shall be given for the assessment year for which such income is assessable. Rule (ii) also provide that if tax has been deducted at source and income is assessable over a number of years, credit for tax deducted at source be allowed across those years in the same proportion in which income is assessable to tax. Now the fact shows that on perusal of form number 26AS for the impugned assessment year, the TDS of ₹ 393375 is deducted by Bangalore Metrorail Corporation Ltd. The receipt of ₹ 182,92,865/– has been offered by the assessee as income chargeable to tax at special rates. However, as per finding of the learned CIT (A) in para number 5.2.1 the same income is not appearing in the return of the assessee. The learned CIT – A has denied the credit for the reason that above receipt of Rs 1,82,09,865 received from Bangalore Metrorail Corporation Ltd on which tax deduction at source credit of ₹ 3 93 375/– has been claimed is not offered for taxation. Therefore, in the interest of justice we set-aside the issue back to the file of the learned assessing officer with a direction to examine, whether the income of Rs.182,09,865/– is taxable in India or not, if the same is taxable in India, for which year the same income is offered, the tax credit is required to be granted for that year. If the above amount is not chargeable to tax in India at all, then, the refund of ₹ 3 93 375/– is required to be issued in favour of the assessee. Therefore, the learned assessing officer may proceed in accordance with the provisions of section 4, 5, 9 and 199 of The Act and rule 37BA of the I T Rules. Needless to say, the assessee may Page | 6 ITA No.835/MUM/2023 Schindler China Elevator Company Ltd.; A.Y. 2017-18 be granted an opportunity of hearing before deciding the issue. Accordingly, ground number 1 and 2 of the appeal of the assessee are allowed with above direction. 010. Accordingly, appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 29.05.2023. Sd/- Sd/- (KULDIP SINGH) (PRASHANT MAHARISHI) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Mumbai, Dated: 29.05. 2023 Sudip Sarkar, Sr.PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A) 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Mumbai