TDS deducted on offshore supply contracts in India, assessee eligible for refund of TDS Credit: ITAT directs AO to quantify refunds [Read Order]

The Income Tax Appellate Tribunal (ITAT) while directing the Assessing Officer (AO) to quantify the refund held that TDS deducted on offshore supply contracts in India, assesses eligible for refund of TDS Credit.

The assessee ABB AB, a tax resident of Sweden within the meaning of DTAA between India and Sweden. The assessee is engaged in power and automation technologies for utility and industry customers and filed the return of income for the Assessment Year 2012-13 disclosing total income and claimed a refund.

Subsequently, the case was selected for scrutiny and Notice under Section 143(2) of the Act was issued. In the assessment proceedings, the Assessing Officer has accepted the returned income but allowed the TDS credit to the only a certain extent and passed order under Section 143(3) of the Act.

The Assessing Officer has denied the TDS credit claimed by the assessee, whereas the assessee in the return of Income has claimed TDS credit of Rs.30,21,93,607. But the Assessing Officer has granted credit to the extent of Rs.1,71,15,646/- which resulted in short TDS credit of Rs.28,50,77,961/-.

The assessing officer has restricted the claim of TDS to the extent of advances received from Power Grid Corporation of India Limited (PGCIL) and there is no income out of offshore supply equipment accessible in the current year.

The learned Authorized Representative of the assessee emphasized that the payments received by the assessee company for offshore supply contract is not applied in India as the title in the equipment has passed on to the company by the PGCIL outside India and the payments for offshore supply was received by the company outside India.

The tribunal consisting of Technical Members, G. Manjunatha and Judicial Member, Pawan Kumar Gadale, while allowing the appeal by the assessee held that since, the offshore supply contracts are not taxable in India but TDS was deducted in India therefore assessee is eligible for refund of TDS Credit.

“Considering the facts, submissions and judicial decisions are of view that the AO first has to quantify and examine the refund. Accordingly, in the interest of Justice, we restore the disputed issue for limited purpose to the file of Assessing Officer to examine and verify the correctness of claim and to consider the ratio of judicial decisions,” the tribunal said.