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Judgment
PER RENU JAUHRI:
These two appeals filed by the assessee are directed against the Final Assessment Order (FAO) passed u/s 143C(13) r.w.s. 147/143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 15.02.2019 pursuant to the directions of the Hon’ble Dispute Resolution Panel (DRP) vide order dated 14.01.2019 u/s 144C(5) of the Act [Assessment Years (AYs.) 2011-12. & 2015-16].
In 2172/Del/2019 [Assessment Year: 2011-12], the grounds of appeal are as under:
“1 That on the facts and circumstances of the case and in law, the impugned assessment order passed by the Learned Deputy Commissioner of Income-tax, Circle 3(1)(1), Intl. Taxation, New Delhi ("Ld. AO") pursuant to the directions issued by the Learned Dispute Resolution Panel-II ('Ld. DRP') under Section 147/143(3) read with section 144C(13) of the Income-tax Act, 1961 ('the Act') is wrong, bad in law and void ab initio.
2)That on the facts and circumstances of the case and in law, the Ld. AO erred in initiating reassessment proceedings under Section 148 of the Act for the reason that reassessment proceedings were barred by limitation in view of proviso to Section 147 of the Act as there was no failure on the Assessee's part to disclose fully and truly all material facts necessary for its assessment.
3)That on the facts and circumstances of the case and in law, the Ld. AO erred in initiating reassessment proceedings under Section 148 of the Act in the absence of any fresh/tangible material.
4). That without prejudice to Ground no. 1 to 3 above, on the facts and circumstances of the case and in law, the Ld. AO as well as the Ld. DRP grossly erred in treating the amount derived by the Appellant on account of distribution revenue from Turner International India Private Limited as royalty under Section 9(1)(vi) of the Act and also as per the provisions of India-USA Double Taxation Avoidance Agreement.
5). That without prejudice to the grounds above, on the facts and circumstances of the case and in law, the Ld. AO/ Ld. DRP, erred in disregarding the resolution arrived at between the competent authorities of India and the USA for earlier years with regard to the taxability of distribution revenue as business profits.
6). That on the facts and circumstances of the case and in law, the Ld. AO erred in not allowing the credit of tax deducted at source to the extent of INR 11,06,666/- duly withheld on revenue offered to tax in India.
7). That on the facts and circumstances of the case and in law, the Ld. AO erred in not allowing the credit of self assessment tax amounting to INR 7,48,100.
8). That on the facts and circumstances of the case and in law, the Ld. AO erred in levying interest under Section 234B of the Act.
9). That on the facts and circumstances of the case and in law, the Ld. AO erred in initiating penalty proceedings under Section 271(1)(c) of the Act.
That the above grounds of appeal are without prejudice to each other and the Appellant reserves its right to add, alter, amend or withdraw any ground of appeal either before or at the time of hearing of this appeal.”
In 2173/Del/2019 [Assessment Year: 2015-16], the grounds of appeal are as under:
“1.That on the facts and circumstances of the case and in law, the impugned assessment order passed by the Learned Deputy Commissioner of Income-tax, Circle 3(1)(1), Intl. Taxation, New Delhi ("Ld. AO") pursuant to the directions issued by the Learned Dispute Resolution Panel-II ('Ld. DRP') under Section 143(3) read with section 144C(13) of the Income-tax Act, 1961 ('the Act') is wrong and bad in law.
2.That on the facts and in circumstances of the case and in law, the Ld. AO as well as the Ld. DRP grossly erred in treating the amount derived by the Appellant on account of distribution revenue from Turner International India Private Limited ("TIIPL) as royalty under Section 9(1)(vi) of the Act and also as per the provisions of India-USA Double Taxation Avoidance Agreement ('DTAA').
3.That on the facts and circumstances of the case and in law, the Ld. DRP and the Ld. AO erred in treating TIIPL as the Permanent Establishment ('PE') of the Appellant in India under Article 5(4) of the DTAA
4.That without prejudice to the grounds above, on the facts and circumstances of the case and in law, the Ld. AO/Ld. DRP, having held that the Appellant has a PE in India, ought to have taxed the distribution revenue under Article 7 of the DTAA instead of royalty, in terms of Article 12(6) of the DTAA.
5.That without prejudice to the grounds above, on the facts and circumstances of the case and in law, the Ld. AO/ Ld. DRP, erred in disregarding the resolution arrived at between the competent authorities of India and the USA for earlier years with regard to the taxability of distribution revenue as business profits.
6.That on the facts and circumstances of the case and in law, the Ld. AO erred in not allowing the credit of tax deducted at source to the extent of INR 1,73,82,259/-duly withheld on revenue offered to tax in India.
7.That on the facts and circumstances of the case and in law, the Ld. AO erred in initiating penalty proceedings under Section 271(1)(c) of the Act.
That the above grounds of appeal are without prejudice to each other and the Appellant reserves its right to add, alter, amend or withdraw any ground of appeal either before or at the time of hearing of this appeal.”
ITA No. 2172/Del/2019
Brief facts are that the assessee’s appeal for A.Y. 2011-12 was originally decided by the co-ordinate bench vide order dated 31.05.2022. Thereafter, a Miscellaneous Application [M.A.] No. 226/Del/2022 was filed by the assessee on the ground that out of the 8 grounds of appeal, the co-ordinate bench had, in respect of Ground No. 6, erroneously held that the issue was covered and decided in A.Y. 2014-15. Accordingly, vide M.A. order dated 08.01.2026, the order dated 31.05.2022 in ITA No. 2172/Del/2019 was recalled for the limited purpose of disposing ground no. 6 of the original grounds of appeal.
The Ground No. 6, which is required to be adjudicated now is reproduced below:
“6). That on the facts and circumstances of the case and in law, the Ld. AO erred in not allowing the credit of tax deducted at source to the extent of INR 11,06,666/- duly withheld on revenue offered to tax in India.”
The relevant facts are that credit of TDS of Rs.1,73,82,259/- was claimed by the assessee on the ground that the corresponding revenue had been offered to tax in India. It has been pointed out that the facts in this year are different from A.Y. 2014-15. We have heard the rival submissions and perused the material available on record. After considering the facts, we hereby direct the Ld. AO to verify the claim of the assessee and allow credit for tax withheld on income which has been offered to tax in India.
In the result, the appeal of the assessee on this ground is allowed for statistical purposes.
IN ITA No. 2173/Del/2019
Brief facts are that the assessee filed its return declaring income of Rs. 26,02,32,937/- on 22.06.2016.
The assessee’s appeal against the assessment order was decided by the co-ordinate bench vide order dated 31.05.2022. However, a miscellaneous application [MA, in short] was filed by the assessee on the ground that with regard to grant of TDS in respect of the income offered to tax in India, the co-ordinate bench had wrongly observed that the issue in Ground No. 6 was covered by the order in A.Y. 2014-15 and decided against the assessee. Accordingly, vide order dated 09.01.2026, in M.A. No. 227/Del/2022, the co-ordinate bench has recalled its order dated 31.05.2022 in ITA No. 2173/Del/2019 for the limited purpose of disposing the Ground No. 6
The ground for adjudication before us is reproduced below:
“6.That on the facts and circumstances of the case and in law, the Ld. AO erred in not allowing the credit of tax deducted at source to the extent of INR 1,73,82,259/-duly withheld on revenue offered to tax in India”
We have heard the rival submissions and perused the material on record. We note that this ground is identical to the ground No. 6 in ITA No. 2172/Del/2019 for A.Y. 2011-12, which has been adjudicated hereinbefore.
As the facts and circumstances in this year are identical, we hold that the above decision will apply in this year as well and therefore the matter is restored to the Ld. AO for the limited purpose of verification of assessee claim that the tax withheld was in respect of income offered to tax in India and allow the credit for TDS accordingly.
In the result, both the appeals are allowed for statistical purposes.