I. EXECUTIVE SUMMARY

1. The ATIR, ------------, allowed the appeal filed by -------------- against the order passed by the DCIR u/s 170(4) of ITO, 2001.

2. The dispute concerned the taxpayer’s claim for tax credits relating to taxes deducted/collected by various withholding agents. The taxpayer had claimed total tax credits of Rs ----------M in its return. During verification, the tax department found Rs 80M of tax deductions/collections to be verifiable from the IRIS portal. However, the DCIR allowed credit of only Rs 28M, refusing credit for approximately Rs 52M million on the ground that the taxes had been reported under different sections of the law in the IRIS system from those declared by the taxpayer in its return.

3. The taxpayer contended that the taxes had in fact been deducted from its payments and were fully verifiable through the IRIS portal. The incorrect section references in the computerized payment receipts (CPRs) were attributable to errors by the withholding agents and could not lawfully deprive the taxpayer of its substantive right to tax credit u/s 168 of ITO, 2001.

4. The Tribunal examined the working of the IRIS system and observed that an incorrect reference to a statutory section in a CPR does not change the nature or character of the underlying payment. In the present case, the Department had not disputed that the relevant taxes were actually deducted and that the amounts were verifiable. The Tribunal further found that the taxpayer was a non-resident and that several section references appearing in the IRIS portal were evidently incorrect, including references to provisions applicable to resident persons or transactions that the taxpayer had not undertaken.

5. The Tribunal held that the taxpayer's claim of tax credit was supported by verifiable tax deductions, and that the incorrect reporting of the applicable sections by withholding agents constituted, at most, a procedural lapse. Such a technical error could not override the taxpayer’s substantive entitlement to credit u/s 168.

6. Accordingly, the Tribunal held that the refusal to allow the tax credit was based merely on technicalities and was contrary to the requirements of Section 168 and the principle of substance over form. The impugned order was therefore annulled, and the taxpayer’s appeal was accepted, allowing the taxpayer to claim the genuine and verifiable tax credits despite the incorrect section references appearing in the IRIS records.

II. DETAILS

A. Authentication

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B. Reference of issue

1. Further to KQU -------------, being an important matter, we would inform you about --------------------------------- (Attachment 3762.1) in the ensuing paragraph, with emphasis in bold & Underline for quick reading.

2. This appeal is filed by ------------------ against order (impugned order) bearing barcode no. , issued for TY ----- by DCIR u/s ----- of ITO.

C. Brief Facts

1 to  6

D. Learned Counsels for the Appearance Parties

The hearing of the case was fixed for ------, before this Bench. Mr ------------------- (learned AR) and Mr --------------- (learned DR) represented the taxpayer and the tax department, respectively.

E. Learned Counsel of the Authorized Representative Submissions

-----------------

F. Learned Counsel of the Departmental Representative Submissions

The learned DR supported the order of DCIR and argued that error in the taxpayer's own declaration has rightly been identified by the DCIR therefore there is no legal infirmity in disallowing credit when taxpayer's own declaration is faulty.

G. ATIR Deliberations

1 to 5

H. ATIR Decision

In view of the above facts and circumstances, it is evident that the order to refuse tax credit is merely based on technicalities and incorrectly and illegally denies genuine, verifiable tax credits to the taxpayer. This is against the mandatory requirements of Section 168, completely ignores the ----------------

 and reflects an unwarranted confiscation of the taxpayer's money for frivolous reasons. Therefore, the impugned order is annulled, and the appeal of the taxpayer is accepted.

III. FURTHER DETAILS & SERVICES

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Best regards for Here & Hereafter
Asif S Kasbati (FCA, FCMA & LLB)

Managing Partner 

Kasbati & Co (1400+ Tax, Levies, Companies, Economy, Inflation, HR, Banking, Finance, etc

Quick Commentary Service Provider and High Level 440+ Tax & Levies Laws Consultants) 

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