IN THE INCOME TAX APPELLATE TRIBUNAL,
DELHI BENCH: ‘A’ NEW DELHI

BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
AND

SHRI O.P. KANT, ACCOUNTANT MEMBER
[Through Video Conferencing]

ITA No.7453/Del./2017
Assessment Year: 2014-15

M/s. Building Design Vs. DCIT,

Partnership Ltd., CPC,

201, South Ex Plaza, Bengaluru

1/389, Masjid Moth, South

Ext. Part-II,

New Delhi

PAN :AADCB5345H

(Appellant) (Respondent)

Appellant by Sh. Ved Jain, Adv. &
Sh. Ashish Goyal, CA

Respondent by Sh. Satpal Gulati, CIT(DR)

Date of hearing 23.03.2021
Date of pronouncement 27.04.2021

ORDER

PER O.P. KANT, AM:

This appeal by the assessee is directed against order dated
13/09/2017 passed by the Learned CIT (Appeals)-42, New Delhi
[in short ‘the Ld. CIT(A)’] for assessment year 2014-15 in relation
to order dated 20/10/2016 under section 154 of the Income-tax
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Act, 1961 (in short ‘the Act’) passed by the Deputy Commissioner
of Income Tax, Central Processing Centre (CPC), Bangalore. The
grounds raised by the assessee are reproduced as under:

1. That the Ld. AO erred in taxing the same income of
assessee twice, once at special rate of 15% under
Double Taxation Treaty between UK and India as per
Article 13 of the said treaty and again as normal
business income at the rate of 40% being the rate
applicable to foreign companies.

2. That Ld. AO erred in rejecting the request of the
assessee u/s 154 of the Income Tax Act to rectify the
said order.

3. That it is gross injustice to the assessee who is being
forced to pay tax twice on the same income resulting in
aggregate tax rate of 55% on the income.

2. Both parties have been heard through Video Conferencing

facility. The Learned Counsel of the assessee has also filed a

paper-book containing pages 1 to 95.

3. Briefly stated facts of the case as culled out from the order

of the lower authorities and the paper-book of the assessee are as

under:

(i) that the assessee is a foreign company and does not

have any Permanent Establishment (PE) in India.

During the year under consideration, the assessee

earned income of ₹ 26,43,090/- which has been

claimed by the assessee as in the nature of “Fee for

Technical Services”(FTS) as specified under Article
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13 of India UK Double Tax Avoidance Agreement

(DTAA) as well as under the Income Tax Act.

(ii) the assessee filed its return of income for the year

under consideration electronically on 30/09/2014.

In the return of income, the assessee offered the said

income under the head “profit and gains of business

and profession”. The same income was also offered

for tax at a special rate under schedule “SI” of the

return of income (paper-book at page 35)

(iii) On page 40 of the paper-book, the assessee has filed

activity chart in relation to the return of income

filed. According to this chart, the assessee filed

return of income on 30/09/2014 and thereafter, the

assessee was communicated on 30/11/2014 that

the ITR filed by the assessee was

defective/incomplete. Thereafter, the assessee filed

another return of income on 30/03/2015, wherein

also the assessee while computing total income,

shown the income of ₹ 26,43,090/- under the head

profit in gains of the business (page 55 of the paper-

book) but under the schedule “SI” shown the nil

income. The assessee was again communicated on

23/06/2015 regarding defects in the return of

income filed as evident from the activity reported on

page 40 of the paper-book.

(iv) In view of no response from the assessee, the return

which was considered as defective was taken up for

processing on 6/03/2016 (activity reported on page
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40 of the paper-book). In view of same income

offered by the assessee at two places in the return of

income, the Assessing Officer at CPC processed the

return of income vide intimation under section

143(1) of the Act dated 10/03/2016 and computed

tax liability on the income declared under the head

profit and gains of business and profession and also

computed tax at special rate of 15%. Total tax

liability of ₹14,15,190/-was raised on the assessee.

(v) The assessee sought rectification of the order under

section 143(1) on 27/09/2016 before the Central

Processing Centre. The Deputy Commissioner of

Income-tax, CPC, rejected the rectification and after

taking into consideration the prepaid taxes, raised

the outstanding tax liability of ₹ 13,99,730/-.

(vi) Aggrieved, The assessee filed appeal before the Ld.

CIT(A), who dismissed the appeal of the assessee on

the ground that there was no error in the order

under section 143(1) of the Act and whatever

mistake was in the return of income filed by the

assessee, which could be corrected by way of filing a

revised return.

(vii) As the period for filing revised return was already

expired, the assessee preferred appeal before the

Income-tax Appellate Tribunal (in short ‘the

Tribunal’), raising the grounds as reproduced above.
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4. Before us, the learned Counsel of the assessee submitted
that the assessee is governed by the provisions of section
115A(1)(b) read with section 44AD and is liable to pay tax at the
rate of 25% plus surcharge plus cess, however, under Article 13
of India UK Tax Treaty, the rate of tax on FTS is provided at 15%.
The rate specified under the Article 13 of India UK treaty, being
more beneficial to the assessee, the income is liable to be tax at
the rate of the 15% and accordingly, the assessee while filing
return of income deposited tax of ₹ 4,08,358/- along with the
interest. The assessee filed a copy of computation of total income
and tax thereon on page 2 of the paper-book. The learned
Counsel submitted that income of the assessee has been taxed
twice. He further submitted that it is the duty of the income tax
authorities to assess the correct income. He referred to CBDT
Circular No.14 (XL-35) dated 11th April 1955, wherein the
Assessing Officers were directed not to take advantage of
assessee’s ignorance or mistake. The learned Counsel also
submitted that time limit for filing revised return had already
expired and therefore the assessee is unable to comply with the
direction of the Learned CIT(A) for filing the revised return.
5. The Learned DR, on the other hand, submitted that the
assessee is solely responsible for the mistake in the return of
income filed and the Assessing Officer has processed the return
as per the information provided by the assessee. According to
him, there is no mistake in the intimation order under section
143(1) of the Act.
6. We have heard rival submission of the parties and perused
the relevant material on record. On perusal of the original as well
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as return of income filed in compliance to defective memo under
section 139(9), we find that the assessee was having very casual
approach towards filing returns of income. The return of income
filed by the assessee on 30/09/2014 contains parts A and B.
After these two parts, there is a verification by the assessee and
thereafter different schedules are available in the return of
income. On perusal of Part A-BS (Balance-sheet as on 31st March
2014) of the return of income, we find that assessee has reported
nil figures. Similarly, in part A-P & L (profit and loss account for
financial year 2013-14) also the assessee has reported nil figure.
In part B-TI (computation of total income) also the assessee has
reported nil income. In clause 14 of Part B -TI, the assessee has
reported income chargeable to tax at special rates. In schedule ‘SI’
also the assessee declared income of Rs.26,43,090/- and
computed tax at the rate of 1% under DTAA amounting to ₹
3,96,464/-. In another return filed in compliance to notice u/s
139(a), which has been verified on 30/03/2015, we find that no
details in respect of assets and liabilities and profit and loss
accounts are filed except gross and net receipts of ₹ 26,43,090/-.
In the part A-TI (computation of income), the assessee declared
[in the row 2(i)] profit and gains from business other than
speculative business at ₹ 26,43,090/-. The assessee also declared
income chargeable to special rates as per schedule ‘SI’ at ₹
26,43,090/-. The Learned Counsel has claimed before us that
income of the assessee was liable under section 44D has been but
in the return of income filed on 30/03/2015 in the row 34(vi) (on
page 58 of the paper-book) the income again section 44D reported
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as nil. Thus, definitely, return of income has been filed in
negligent and casual manner with errors and omissions.
6.1 Further, on perusal of the order under section 143(1) dated
10/03/2016 , available on page 78 to 83 of the paper-book, we
find that in row having serial No. 10, income chargeable to tax at
a special rate has been reported NIL in both columns, i.e., as
provided by the taxpayer as well as computed under section
143(1) of the Act. Despite nil income reported in both columns,
against Serial No. 10, the Assessing Officer in serial No. 22 has
computed tax at special rate of ₹ 3,96,464/- in both the columns
for taxpayer as well as under section 143(1) of the Act. Thus,
there is an apparent mistake of computing tax at a special rate
without any income reported for tax at a special rate.
6.2 In view of this apparent mistake in the order under section
143(1), the finding of the Ld. CIT(A) that there is no mistake in
the order of the Assessing Officer, is not correct. It is evident that
the assessee is at fault for not reporting the income in proper
columns, but the Assessing Officer, has also committed apparent
mistakes of computing tax without considering the income for
special rate. In view of the above observation and in the interest
of the substantial justice, we set aside the order of the Learned
CIT(A) on the issue in dispute and restore the matter back to the
file of the Assessing Officer for deciding the rectification
application of the assessee on merit keeping in view the cardinal
principle that assessee cannot be taxed twice for the same
income, one under the head “profit and gain of business and
profession” and other under “special rate specified in DTAA”. It is
needless to mention that the assessee shall be provided adequate
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opportunity of being heard. The grounds of the appeal of the
assessee are accordingly allowed for statistical purposes.
7. In the result, the appeal of the assessee is allowed for
statistical purposes.

Order pronounced in the open court on 27th April, 2021

Sd/- Sd/-
(BHAVNESH SAINI) (O.P. KANT)
JUDICIAL MEMBER ACCOUNTANT MEMBER

Dated: 27th April, 2021. Asst. Registrar, ITAT, New Delhi

RK/-(DTDS)

Copy forwarded to:

1. Appellant

2. Respondent

3. CIT

4. CIT(A)

5. DR