In a major relief to Nokia India, the Delhi Bench of Income Tax Appellate Tribunal (ITAT) deleted the disallowance as distributors furnished ITR and duly paid tax.
The assessee has submitted a certificate from HCL Ltd. and from HCF Infotech Ltd. that they have filed their return of income and have disclosed the payments received from the assessee by way of discount in their return of income. Copy of the certificate was sent to the AO by the ld. DRP. The A.O. was directed to verify whether the assessee falls within the second proviso of section 40(i)(ia) or not. T
The DRP held that the assessee is covered by the second proviso, no disallowance to the extent such income has been disclosed by HCL & HCL Infotech Ltd in their return, and to the extent tax has been paid on Such income should be made.
The assessee submitted that in accordance with the second proviso to section 40(a)(ia) read with the first proviso to section 201(1) of the Act (inserted vide Finance Act 2012), no disallowance under section 40(a)(ia), of the Act shall trigger in the facts of the present case, where the recipient payee (i.e. the distributors) has furnished its return of income disclosing the underlying income in its return of income and has duly paid tax thereon.
The assessee contended that the assessee cannot be treated to be in default in view of the curative provisions of Section 40(a)(ia) of the Act and disallowance proposed in the draft assessment order ought to be deleted. In accordance with the directions disused by the Hon’ble DRP, we request your good self to kindly verify the attached declarations and provide necessary relief to the assessee.
The coram of Judicial Member, Amit Shukla and Accountant Member, Dr. B. R. R. Kumar held that the taxes had been duly received by the state from the recipient and any further action to recover the same from the assessee would amount to double taxation.
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