SAMEER SHRIKANT PISE,PUNE V. DCIT CIRCLE 12, PUNE

ITA 1078/PUN/2025

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Sameer Shrikant Pise, the appellant, contested the adjustments made by the Centralized Processing Center (CPC) under Section 143(1)(a) of the Income Tax Act, 1961, regarding his salary income earned in the UK during his employment with Skoda Auto Volkswagen India Pvt. Ltd. and Volkswagen Group Technology Solutions India Pvt. Ltd. The CPC included this income in the assessee's total taxable income and denied the FTC claimed for taxes paid in the UK. The assessee argued that the adjustments were made without opportunity and that the issues were debatable, thus not permissible under Section 143(1). The ITAT found merit in restoring the matter to the JAO for a detailed examination and proper adjudication.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 398469 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Other Referred Cases: Sameer Malhotra v ACIT Circle 80(1) New Delhi, City Manager Association vs. DCIT, CPC Bengaluru, Paris Elysees India Private Limited vs. Deputy Commissioner of Income Tax, ACIT vs. Rajesh Jhaveri Stock Brokers (P.) Ltd, Anjum M.H.Ghaswala vs. Motorola Inc. vs. DCIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AKHILESH SRIVASTVA
• Assessee Lawyers: V. BALAJI; VIRTUAL
• Keywords: Reasonable cause; Salary income; TDS; Rectification of order; Liquidation; FORM 26AS
• Section: 143(3); 154; 234B

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL PUNE “B” BENCH : PUNE BEFORE DR. MANISH BORAD, ACCOUNTANT MEMBER AND SHRI VINAY BHAMORE, JUDICIAL MEMBER I.T.A.No.1078/PUN/2025 (A.Y. 2017-18) Sameer Shrikant Pise, House No.59, Rohan Seher, Pancard Club Road, Pune. PAN : AHTPP 0431 A vs. DCIT, Circle-12, Pune. (Appellant) (Respondent) For Assessee : Shri V. Balaji, CA (virtual) For Revenue : Shri Akhilesh Srivastva - Addl.CIT Date of Hearing : 05.06.2025 Date of Pronouncement : 06.06.2025 ORDER PER DR. MANISH BORAD, AM: This appeal filed by the assessee is directed against the order passed by the Ld. Commissioner of Income Tax (Appeals), Ranchi [“CIT(A)”] dated 28/02/2025 for the A.Y. 2017-18. 2. The assessee has raised the following grounds of appeal:- “Ground No. 1: On facts and circumstances of the case and in law, the Learned Additional/Joint Commissioner of Income Tax, Ranchi [Ld. ADDL/JCIT(A)] ought to have held that the addition/adjustment of salary income of Rs. 36,67,617 (for employment exercised in the United Kingdom) in the Intimation is not a permissible adjustment under Section 143(1) of the Income Tax Act, 1961 (the Act). It is prayed that the position taken by the Appellant in the Return of Income of not offering salary income of Rs. 36,67,617 to tax is supported by the Order of the Hon'ble ITAT in the case 2 ITA.No.1078/PUN/2025 of Sameer Malhotra v ACIT Circle 80(1) New Delhi (ITA No. 4040/Del/2019) and hence, it is clearly a debateable issue and no adjustment in respect of debateable issues can be made in the Intimation under Section 143(1) of the Act as held in the following Judicial Precedents relied upon during Appellate Proceedings before the Ld. ADDL/JCIT(A): City Manager Association vs. DCIT, CPC Bengaluru, (ITA No.1345/Ahd/2019) Paris Elysees India Private Limited vs. Deputy Commissioner of Income Tax (ITA No. 357/JPR/2022) ACIT vs. Rajesh Jhaveri Stock Brokers (P.) Ltd 291 ITR 500 It is, therefore, prayed that the Learned Jurisdictional Assessing Officer (Ld. JAO) be directed to delete the adjustment/addition of salary income of Rs. 36,67,617 made in the Intimation under Section 143(1) of the Act. Ground No. 2: On facts and circumstances of the case and in law, the Ld. ADDL/JCIT(A) has erred in not directing the Ld. JAO to delete the addition/adjustment of salary income of Rs. 36,67,617 (for employment exercised in the United Kingdom) made in the Intimation under Section 143(1) of the Act. It is prayed that the Ld. JAO be directed to delete the adjustment/addition of salary income of Rs. 36,67,617 made in the Intimation under Section 143(1) of the Act. Ground No. 3: Without prejudice to Ground Nos. 1 and 2 above, on the facts and circumstances of the case and in law, the Ld. ADDL/JCIT(A) has erred in not directing the Ld. JAO to allow Foreign Tax Credit of Rs. 9,88,899 on salary income of Rs. 36,67,617 doubly taxed in India as well as the United Kingdom. It is prayed that the JAO be directed to allow the Foreign Tax Credit of Rs. 9,88,899. Around 4: On the facts and circumstances, the Ld. ADDL/JCIT(A) erred in directing the Ld. JAO to allow TDS credit after reconciling the Form 26AS data with the TDS credit allowed by the CPC. It is prayed that the Ground relating to TDS credit was not pressed before the Ld. ADDL/JCIT(A) as TDS credit was allowed in the Rectification Order under Section 154 of the Act. Hence, the Ld. JAO be directed not to give effect to the directions of the Ld. ADDL/JCIT(A) relating to TDS credit. The Appellant craves leave to add, amend, alter, substitute, withdraw all or any of the above Grounds of Appeal anytime either before or during the hearing of the Appeal.” 3 ITA.No.1078/PUN/2025 3. Brief facts of the case are that the assessee is a salaried individual and employed with Skoda Auto Volkswagen India Pvt. Ltd. till 31/07/2016 and thereafter, with Volkswagen Group Technology Solutions India Pvt. Ltd. The assessee was sent on an assignment to United Kingdom (UK) from 01/08/2014 to 31/07/2016. During the year under appeal, the assessee has claimed to be ‘Resident and Ordinarily Resident’ in India. The assessee was also resident of UK as per the UK domestic tax laws upto 30/07/2016 and during the year received salary in UK of Rs. 36,67,607/-, on which tax at source was deducted at Rs. 9,88,899/- by employer at UK. For the year under appeal, the assessee has furnished income tax return on 29/07/2017 declaring income of Rs. 34,68,870/- which includes the salary income from the employer in India at Rs. 33,29,468/-. However, tax at source of Rs.9,90,880/- deducted by the present employer on the salary given in India at Rs. 33,31,968/-; tax was also deduced at Rs.9,06,520/- on the salary income of Rs.36,67,607/- received by the assessee while working in UK. In all, the assessee declared the income of Rs. 34,68,870/- and as against the tax liability of Rs. 8,91,631/- claimed TDS of Rs. 19,02,270/-. In the income tax return in schedule-FA, the assessee has declared salary income received from the employer in UK. However, when the return was processed u/s. 143(1)(a) of the Act, the income earned in UK, which was 4 ITA.No.1078/PUN/2025 claimed to be exempted by the assessee as it was already subject to tax in UK. The CPC denied the said exemption and added it to the income of the assessee, thereby calculating the total taxable income at Rs. 71,28,490/- and also allowed TDS at Rs.12,07,009/- as against the claim made at Rs.19,02,270/-. No claim of Foreign Tax Credit (FTC) of Rs.9,88,899/- was allowed by CPC. 4. Aggrieved with the said adjustments made by the CPC, the assessee preferred appeal before the Ld.CIT(A). The assessee has furnished various details before the Ld.CIT(A). The findings of the Ld.CIT(A) relevant to the said issue reads as under:- “6. Decision: I have carefully considered the facts of the case and order passed by CPC against which appeal has been preferred. I have gone through appellant's submission, Form 35, documents uploaded by the appellant, intimation u/s 143(1) and provisions of relevant section and rules. 6.1 The two major grounds of appeal are regarding CPC not giving credit of TDS -and charging of interest u/s 234. In view of the above submissions of the Appellant and facts and circumstances of the case, the Assessing Officer is directed to verify the factual correctness of the claims of the appellant and allow the eligible amount of TDS to the Appellant. In doing so, the assessing officer should give due opportunity to the appellant to reconcile the 26 AS data vis-a-vis TDS credit allowed to the appellant by the CPC. Accordingly, this ground of appeal is partly allowed. Regarding the issue of charging of interest u/s 234 of the Act, it is held that charging interest under sections 234 is consequential in nature and mandatory. This has been held by the Hon'ble Supreme Court in the case of Anjum M.H.Ghaswala reported in 252 ITR 01. Following this decision, in the case of Motorola Inc. vs. DCIT (2005) 96 TTJ (Del) (SB) 1, the ITAT, Delhi Special Bench has held that levying of interest u/s 234B was mandatory in the sense that it cannot be waived or reduced by the I.T. authorities. The appellant has contended 5 ITA.No.1078/PUN/2025 that interest under section 234A, 234B and 234C of the Act, is not chargeable in case of Appellant being under liquidation under the provisions of Insolvency and Bankruptcy Code, 2016. The AO is directed to verify the issue, its applicability in the case of the appellant and take action as per law. Accordingly, this ground of appeal is partly allowed.” 5. Aggrieved by the order of Ld.CIT(A), the assessee is now in appeal before this Tribunal and referring to the grounds of appeal, paper book and written submissions filed before the lower authorities. Ld. Counsel for the assessee firstly, stated that CPC erred in making prima-facie adjustments in the order passed u/s. 143(1)(a) of the Act on the issue which is debatable in the nature. Secondly, he stated that no opportunity was given by the CPC prior to making the alleged adjustments and, therefore, such intimation u/s. 143(1)(a) deserves to be quashed. Thirdly, it has been contended that the income earned from salary while working in UK has been double taxed because on the salary income, the employer in India has deducted tax and the employer in UK also deducted tax. Therefore, in case the income from salary received in UK is included in income of the assessee the tax deducted in India of Rs.18,97,400/- as well as the Foreign Tax Credit (FTC) of Rs. 9,88,899/- also deserves to be allowed to the assessee. Lastly, it was stated that short TDS credit has been given by the CPC in spite of TDS credit appearing in Form 26 data and the same should be allowed. Learned counsel for the assessee, while concluding, submitted that the matter may be 6 ITA.No.1078/PUN/2025 restored to the jurisdictional AO (JAO) with necessary direction. 6. On the other hand, ld.DR raised no objection, if the issue is restored to the file of the JAO for denovo adjudication. 7. We have heard rival contention and perused the record placed before us. We note that the assessee a salaried employee worked for part of the year in UK and earned salary of Rs. 36,67,617/-, on which tax at source was deducted by the employer in UK at Rs.9,88,899/-. The details for the said income are appearing in Form No. 67 filed by the assessee placed at page Nos. 101 & 102 of the paper book. The assessee also furnished Tax Residency Certificate (TRC) issued by the UK tax authorities placed at page No.9 of the paper book. We further notice that the assessee after returning back from UK, joined in Volkswagen Services Pvt. Ltd., Pune and for the remaining period of the year, received salary of Rs. 33,29,468/-. However, the employer by abundant caution deducted tax at source of Rs. 9,06,520/- on the salary received by the assessee in UK of Rs. 36,67,607/- along with the tax deducted at source of Rs. 9,90,880/- on the salary received by the assessee in India from the present employer at Rs. 33,31,968/-. The assessee in the income tax return, offered salary income of Rs.33,31,968/- to tax and claimed TDS of Rs.18,97,400/- deducted under the head ‘salary’ in the 7 ITA.No.1078/PUN/2025 total claim of TDS of Rs. 19,02,270/-. The assessee in the income tax return has also disclosed the salary income received while working in UK at Rs. 36,67,607/-. The assessee has also furnished Form No.67 on 14/03/2024 giving particulars of salary income received in UK and tax deducted at source in UK at Rs. 9,88,899/-. However, the CPC based on the tax deducted by the employer in India included the income received in UK as part of the total income earned in India and calculated it at Rs.69,89,087/-. However, CPC first of all gave short TDS credit of Rs. 12,07,009/- as against the claim made in the ITR at Rs. 19,02,270/-. Further, the assessee has not been allowed FTC of Rs. 9,88,899. 8. Before us, the first contention of the assessee is that the intimation by the CPC u/s. 143(1)(a) of the Act is invalid as the adjustment has been made is a debatable issue. We, however, find that the processing under CPC does not involve any human intervention and returns are processed as per the commands in built in the computer system by the concerned authorities. It is an accepted fact that there are multiple issues debatable in the nature based upon the judgments of the Hon'ble Courts which also vary from State to State. In our considered view, it is not practically possible for the CPC to earmark each and every debatable issue in the system and take out all those cases either for necessary verification of JAO 8 ITA.No.1078/PUN/2025 or to refer them to scrutiny u/s. 143(3) of the Act. In case, there are certain adjustments made by the CPC, which the assessee finds them to be debatable in nature, the remedy is available with the assessee to file appeal before the first appellate authority or at the higher forms as the case may be. We, therefore, fail to find merit in the ground No.1 raised by the assessee. 9. Ground No.2 is regarding not providing of opportunity before making the prima-facie adjustments and also not granting opportunity for claiming FTC of Rs. 9,88,899/-. We find that the CPC has made certain adjustments without considering the details mentioned by the assessee in the income tax returns in Schedule-FA. The Ld.CIT(A) has already given directions in the impugned order to the Ld.AO to verify the correctness of the claim of the assessee. Considering the facts and circumstances of the case, Ground No.3 and 4 raised by the assessee and the details discussed (supra), we are of the considered view that the issues raised in this appeal deserve to be restored to the file of the JAO for carrying out denovo adjudication of the issues regarding salary income to be taxed in India, allowing of tax deducted at source which the Indian employer deducted an Indian salary as well as salary received in UK and also deal with the connected issues raised in the instant appeal in light of our discussion made hereinabove. Needless to mention that Ld.JAO shall grant proper and 9 ITA.No.1078/PUN/2025 reasonable opportunity of hearing to the assessee to furnish all necessary details. Assessee is also directed not to take unnecessary adjournments unless otherwise required for reasonable cause. In the light of the above, the effective ground Nos. 2 to 4 are allowed for statistical purposes. 10. In the result, appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 06.06.2025. Sd/- Sd/- [VINAY BHAMORE] [MANISH BORAD] JUDICIAL MEMBER ACCOUNTANT MEMBER Pune, Dated : 06th June, 2025 vr/- Copy to 1. The appellant 2. The respondent 3. The CIT(A), Pune concerned. 4. D.R. ITAT, “B” Bench, Pune. 5. Guard File. By Order //True Copy // Sr. Private Secretary, ITAT, Pune Benches, Pune. 10 ITA.No.1078/PUN/2025 S.No Details Date Initi als Designat ion 1 Draft dictated on 05.06.2025 Sr. PS/PS 2 Final Draft placed before author 06.06.2025 Sr. PS/PS 3 Draft proposed & placed before the Second Member .06.2025 JM/AM 4 Draft discussed/approved by Second Member .06.2025 AM/AM 5 Approved Draft comes to the Sr. PS/PS .06.2025 Sr. PS/PS 6 Kept for pronouncement on .06.2025 Sr. PS/PS 7 Date of uploading of Order .06.2025 Sr. PS/PS 8 File sent to Bench Clerk .06.2025 Sr. PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order "