Income Tax Appeal Case ITA 1783/DEL/2022: DCIT vs Siemens International Trading Ltd – Assessment Year 2017-18
The Income Tax Appellate Tribunal (ITAT), Delhi Bench ‘D’, presided over by Shri G. S. Pannu, President, and Shri Challa Nagendra Prasad, Judicial Member, delivered a significant judgment in the case bearing I.T.A. No. 1783/Del/2022. This appeal was filed by the Deputy Commissioner of Income Tax, Circle: 3(1)(2), International Taxation, New Delhi (the appellant), against Siemens International Trading Ltd, Shanghai, China (the respondent), pertaining to the assessment year 2017-18. The judgment, pronounced on the 26th of September, 2023, dismissed the appeal lodged by the Revenue.
The core issue revolves around the appellant’s claim for the credit for Tax Deducted at Source (TDS) denied by the Assessing Officer. The appeal brings to light the conflict between the Revenue’s interpretation of the taxable income and the TDS credit eligibility, alongside the nuances of international transactions and taxation laws.
Background
The appellant, DCIT, Income Tax Circle-3(1)(2), International Taxation, Delhi, challenged the order of the ld. Commissioner of Income Tax (Appeals)-43, New Delhi, dated 2.05.2022, which allowed the claim for credit for TDS to the assessee, Siemens International Trading Ltd, Shanghai, for the assessment year 2017-18.
The central contention was the denial of refund claimed by the assessee amounting to Rs.1,26,71,067/-, being TDS, on the grounds that the income corresponding to the TDS was not offered to tax in India. The assessee had declared NIL income and sought a refund for TDS, asserting that the scope of work limited to the delivery of railing stock entirely made in China and supplied offshore did not generate any taxable income in India.
Arguments and Judgment
Neither the assessee nor any adjournments appeared before the tribunal, leading to a hearing and disposal of the appeal on merits based solely on the submissions by the Revenue’s representative. The Assessing Officer’s refusal to grant TDS credit was primarily based on the assertion that the income from the offshore supply of equipment, which amounted to Rs.58.58 crores, was not taxed in India despite TDS being deducted by the payer.
The CIT (Appeals)’s decision to allow the TDS credit was based on precedents from the assessee’s earlier assessments and the established principle that if tax has been deducted, the deductee is entitled to claim credit, independent of whether the income is taxable in India. This decision highlights the tribunal’s acknowledgment of cross-jurisdictional taxation issues and the rights of taxpayers to claim TDS credit.
Conclusion
The Tribunal’s judgment absorbed the intricacies of international taxation and upheld the decision of the CIT (Appeals) allowing the credit for TDS to Siemens International Trading Ltd. It dismissed the appeal by the Revenue, setting a precedent for similar cases concerning the eligibility for TDS credit, especially in situations involving international transactions where the income is not taxable in India. This case sheds light on the broader implications of TDS credit eligibility and the interpretation of taxable income within the ambit of international taxation laws.