IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH MUMBAI BEFORE HON’BLE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER (Assessment Year: 2023-24)

Eastern Shipping Pvt Ltd Vs. ITO – 6(2)(1)

Godrej Coliseum, Office No. Aayakar Bhavan

801, 8^th Floor, C Wing, Of Mumbai Somaiya Hospital Road, Sion East, Mumbai – 400022.

PAN/GIR No. AAHCE1084E (Applicant) (Respondent)

Assessee by Shri Nitesh Joshi, a/w Shri Ashwin Damania Revenue by Shri Ram Krishna Kedia, Sr. DR Date of Hearing 18.06.2025 Date of Pronouncement 15.09.2025 आदेश / ORDER PER SANDEEP GOSAIN, JM:

The present appeal has been filed by the revenue challenging the impugned order dt. 26.02.2025 passed u/s 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre, Delhi (NFAC) for the assessment year 2023-24. The assessee has raised the following grounds of appeal:

1. The Learned Addl / JCIT (A)-2, Surat (hereinafter referred to as ["the CIT (A) "] erred in dismissing the appellant's claim for tax deducted at source ('TDS") of Rs. 95,799/- for which credit was not granted by the Deputy Director of Income Tax, CPC, Bengaluru ("the Assessing Officer") while processing its return of income vide Intimation passed under section 143(1) of the Income- tax Act, 1961 ("the Act") dated 09.01.2024.

2. The CIT (A) erred in dismissing the appellant's claim for TDS which was not granted in the intimation passed under section 143 (1) of the Act based on Rule 37 BA by applying a proportionate formula.

3. The CIT (A) erred in not considering appellant's ground where it was mentioned that out of the total amount of revenue of Rs. 1,41,86,672/- as per Form 26 AS, an amount of Rs. 89,91,331/- was appellant's agency fees which is as per the financial statements while Rs. 52,49,276/- was receipts on behalf of Foreign Principal's account. Tax was deducted at source at an applicable rate and was claimed by the appellant being an agent of Foreign Principal. The appellant submits that since TDS has been deducted on invoices raised on behalf of the Foreign Principals under the PAN of the appellant and the same appears in Form 26AS of the appellant, credit thereof ought to be granted to the appellant. By denying such credit to the appellant, the credit of such TDS has not been given to anyone which can never be the intention of the legislature as the said TDS would not remain available to anyone.

4. The appellant submits that the CIT (A) failed to appreciate that Rule 37BA will apply for grant of credit to a person different from the payee only when the requisite procedure (viz. filing of declaration by the deductee and reporting by the deductor in the name of the other person) has been complied with and not when such procedure has not been complied with, in which case the payee ought to continue to get the credit for TDS based on entry in Form 26AS.

5. The Learned CIT (A) erred in not considering appellant's submissions where it was mentioned that an online reply was filed on e-filing portal on 07.12.2023 in response to notice under section 139 (9) of the Act, where the appellant had disagreed for the proposal by the Tax Department to treat the return filed by the appellant as defective.

6. The CIT (A) erred in rejecting appellant's ground merely for a reason that income on which TDS is deducted has not been offered as an income in appellant's Profit & Loss Account. The Learned CIT (A) failed to appreciate that while the total receipts as per Form 26 AS is Rs. 1,41,86,672/-, out of above, a sum of Rs. 89,91,331/- was reflecting in Profit & Loss Account as Sale of Services - Operational & Commission and the balance amount of Rs. 51,95,341/- consists of receipts earned on behalf of Foreign Principal on which tax was deducted at source. Said amount is credited to the profit and loss account and by way of an accounting (journal) entry is transferred to Balance Sheet item and hence entire credit of TDS as claimed ought to be granted to the appellant.

7. The CIT (A) erred in not appreciating the business