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2022 (8) TMI 1189 - AT - Income TaxTax liability confirmed while processing of return of income by CPC - wrong reporting of income - whether relief could be claimed only by filing revised return for which statutory timeline has already expired? - whether service receipts are not even taxable in the hands of the Appellant by applying the beneficial provisions of Article 12 of the India-USA Double Taxation Avoidance Agreement? - HELD THAT:- As per India US Tax Treaty, the service rendered by the assessee do not specify the ‘make available clause of India US Tax Treaty’. It is also emerges from the record that for the Assessment Year 2018-19 a similar adjustment i.e. taxing a service receipt 40% was levied by CPC, Bangalore in the case of assessee’s group company i.e. Heidrick and Struggles Pvt. Ltd. Singapore, Heidrick and Struggles Pvt. Ltd. UK, the said assessee has preferred an application for rectification wherein the rectification applications have been allowed by the CPC on 27/02/2020 and 30/01/2020. It is not in dispute that as per India US Tax Treaty the impugned income is not chargeable to tax as per the provisions of Article 12 of India USA Tax Treaty. As in the case of Madhabi Nag [2016 (1) TMI 684 - ITAT KOLKATA] Tribunal held that the revenue authorities ought not to have rejected the application u/s 154 of the Act on the ground that the assessee has not filed the revised return of income. Further in the case of CIT v. Bharat General Reinsurance Co. Ltd. [1970 (12) TMI 5 - DELHI HIGH COURT] the Hon’ble High Court held that merely because the assessee wrongly included the income in its return for a particular year, it cannot confer jurisdiction on the department to tax that income in that year even though legally such income did not pertain to that year. In our opinion, the addition has been made only due to wrong reporting of income by the assessee which cannot be sustained. Therefore, in our opinion, the Ld.CIT(A) has committed an error in dismissing the appeal filed by the assessee. Accordingly, we allow the Assessee’s Grounds of Appeal No. 1 and 2. Directing the CPC to brand TDS Credit - As assessee submitted that the assessee is eligible for claiming TDS credit amounting to Rs. 2,78,10,114/- as appearing in the Form No. 26AS of the Company. During the recall order dated 24/10/2019, the assessee was granted TDS credit of Rs. 2,55,55,337/- only vis-à-vis the TDS Credit claim in the assessee return of income Rs. 2,78,10,114/-. In our opinion, the issue involved in Ground No. 3 deserves to be set aside to the file of CPC, Bangalore with a direction to grant eligible TDS credit in accordance with law. Accordingly, Ground No. 3 is allowed for statistical purpose.
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