India's ITAT grants lower tax rate to GIA, rejects ₹68.75 cr Section 68 addition and orders full TDS credit

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) held that Gemological Institute International, Inc. (GIA), a US tax resident, was entitled to the concessional 10% tax rate under Section 115A of the Income Tax Act on fees for technical services received from India, overruling the 15% rate prescribed in the India‑USA DTAA. The Tribunal found that the transaction fell under the RBI’s automatic route, eliminating the need for separate central government approval.

The Hyderabad Bench of the ITAT dismissed a revenue appeal and upheld the deletion of a ₹68.75 crore addition under Section 68 for a partnership firm. The partner’s capital contribution was proven to arise from the sale of agricultural land to Microsoft Corporation (India) Private Limited, with documentary evidence confirming the source of funds.

In a separate Mumbai Bench decision, the ITAT ruled that an employer’s failure to deposit tax deducted at source (TDS) cannot prejudice an employee’s claim for credit. The employee, Ms. Sophia Rick, was entitled to full TDS credit of ₹3.91 lakh, and the Assessing Officer was directed to grant the credit.