Case Number: ITA 2992/DEL/2022
Appellant: Eastman Industries Ltd., New Delhi
Respondent: ACIT, Circle-7(1), New Delhi
Assessment Year: 2020-21
Result: Final Tribunal Order
Case Filed on: 2022-12-23
Date of Order: 2023-08-18
Pronounced on: 2023-08-18
This case involves Eastman Industries Ltd. (Appellant) and the Assistant Commissioner of Income Tax (ACIT) (Respondent). The appellant filed appeals against the orders passed by the National Faceless Appeal Centre (NFAC) for the assessment years 2018-19, 2019-20, and 2020-21. The primary issues in these cases were the disallowance of Employees’ Provident Fund (EPF) and Employees’ State Insurance (ESI) contributions and the denial of foreign tax credit due to late filing of Form 67.
The appellant contended that the disallowance of EPF/ESI contributions was incorrect. The issue at hand was whether the date of payment of salaries should be considered for calculating the delay in the deposit of EPF/ESI under the respective acts. The appellant argued that this should be taken into account.
The appellant also argued that the denial of foreign tax credit on the grounds that Form 67 was filed beyond the due date was unjustified. The appellant contended that this requirement should be considered directory rather than mandatory, as there is no provision in Rule 128(9) for disallowance of FTC due to late filing of Form 67.
In addition to the common grievances, for the assessment year 2020-21, the appellant also contested the denial of TDS credit due to punching an incorrect TAN in the return of income.
The tribunal, presided by Accountant Member Shri N. K. Billaiya and Judicial Member Shri Yogesh Kumar US, considered the submissions from both parties and reviewed the materials on record. The tribunal noted the following findings:
The tribunal observed that the issue was covered by the decision of the Hon’ble Supreme Court in the case of Checkmate Services Private Limited (448 ITR 518). However, in the interest of justice and fair play, the tribunal deemed it fit to restore this issue to the files of the AO to consider the date of payment of salaries and decide the matter afresh as per the provisions of the law. This grievance was allowed for statistical purposes.
The tribunal found that the requirement to file Form 67 before filing the return should not be treated as mandatory, as Rule 128(9) does not provide for disallowance of FTC due to a delay in filing Form 67. The tribunal deemed it fit to restore this issue to the files of the AO, directing them to decide the claim of foreign tax credit after admitting/accepting Form 67 as per the provisions of the law. This grievance was also allowed for statistical purposes.
The tribunal noted that the TDS credit should not have been denied for a technical reason when the TDS credit was duly reflected in Form 26AS. Therefore, the tribunal directed the AO to allow the credit of TDS reflected in Form 26AS as per the provisions of the law.
The Income Tax Appellate Tribunal (ITAT) allowed the appeals filed by Eastman Industries Ltd. for statistical purposes, directing the AO to reconsider the disallowance of EPF/ESI contributions based on the date of payment of salaries and to decide the claim of foreign tax credit after admitting Form 67. Additionally, for the assessment year 2020-21, the tribunal directed the AO to allow the TDS credit reflected in Form 26AS.
In conclusion, the ITAT set aside the impugned orders and allowed the appeals filed by Eastman Industries Ltd. for statistical purposes. The tribunal emphasized that the disallowance of EPF/ESI contributions and the denial of foreign tax credit should be reconsidered based on the provisions of the law. The order was pronounced on 18th August, 2023.
Order
ITA No. 2990/DEL/2022, 2991/DEL/2022, and 2992/DEL/2022 are three appeals by the assessee preferred against three separate orders of NFAC dated 25.10.2022 pertaining to A.Y. 2018-19, 2019-20, and 2020-21.
Disallowance of EPF/ESI Contributions
The first common grievance in the captioned appeals relates to the disallowance on account of late deposit of employees’ contribution of provident fund, though the quantum may differ in the impugned appeals. The tribunal restored this issue to the files of the AO to consider the date of payment of salaries and decide the matter afresh as per the provisions of the law.
Denial of Foreign Tax Credit
The second common grievance relates to the denial of foreign tax credit on the ground that the assessee has filed Form 67 beyond the due date in respect of the claim of foreign tax credit. The tribunal directed the AO to decide the claim of foreign tax credit after admitting/accepting Form 67 as per the provisions of the law.
Denial of TDS Credit for Assessment Year 2020-21
In ITA No. 2992/DEL/2022, in addition to the aforementioned common grievances, the assessee is also aggrieved by the denial of TDS credit for punching an incorrect TAN in the return of income. The tribunal directed the AO to allow the credit of TDS reflected in Form 26AS as per the provisions of the law.
Result
In the result, the captioned appeals filed by the assessee are allowed for statistical purposes.
Order pronounced in open court on 18.08.2023
Accountant Member: Shri N. K. Billaiya
Judicial Member: Shri Yogesh Kumar US
Dated: 18.08.2023.
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR
Assistant Registrar, ITAT, New Delhi
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