2017 (8) TMI 1287 - AT - Income Tax

Tribunal directs AO to verify TCS credit claim, appeal allowed for statistical purposes.

The Tribunal directed the AO to verify if any other individual claimed the TCS credit; if not, the assessee's claim should be allowed. The appeal was ... Whether Credit of TDS and TCS is allowed to assessee, collected on behalf of the mining department - Rejection on basis that such credit is to be given in the hands of the lessees of the Mines. - Held that:- There is no ambiguity so far as the provision of law is concerned under section 206C(1C) of the Act mandate every person, who grants a lease or licence or enters into a contract or otherwise transfers any right or interest either in whole or in part in any mine or quarry, to another person, other than a public section company for the use of such mine or quarry for the purpose of business shall, at the time of debiting of the amount payable by the licensee or lessee to the account of the licensee or lessee or at the time of receipts of such amount from the licensee or lessee in cash or by the issue a cheque or draft or by any other mode, whichever is earlier, collect from the licensee or lessee of any such licence, contract for lease of the nature specified u/s 206C(1C). Admittedly, the assessee does not fall in the category mentioned here in above neither the assessee is a licensee or lessee nor the assessee is given contract to use the mines for business. However, it is not clear whether the individuals who had paid the excess royalty also claimed credit of tax collected at source. The case of the assessee is that it deposited amount at the instance of the Mining Department, Government of Rajasthan and the said department issued the certificate in favour of the assessee. Thus the issue is restored to the file of AO to verify, whether any other individual claimed credit of tax on the payment of excess royalty, if not then the claim of the assessee may be allowed, in the interest of justice, as the Revenue is not legally entitled to withhold such tax, which is deposited by a wrong person. However, the Revenue would be at liberty to claim tax liability if any arising out of such transaction from the appropriate person. Appeal of the assessee is allowed for statistical purposes. Issues Involved:1. Validity of the order passed by the Ld. CIT(A).2. Denial of credit for TDS and TCS amounts.3. Duty of the assessee to rectify the mismatch of TDS.Issue-wise Detailed Analysis:1. Validity of the Order Passed by Ld. CIT(A):The appellant contended that the order passed by the Ld. CIT(A) is void-ab-initio. However, this issue was not pressed during the hearing, and thus, no further analysis was provided on this ground.2. Denial of Credit for TDS and TCS Amounts:The primary contention was regarding the denial of credit for TDS amounting to Rs. 53,877 and TCS amounting to Rs. 6,99,667. The assessee argued that the Ld. CIT(A) and AO rejected the claim on technical grounds, which should not obstruct substantive justice. The assessee relied on the decision in Maruti Civil Works vs. ITO, asserting that the TCS was collected and deposited by the State Government, and thus, the credit should be granted to the assessee. The Ld. Departmental Representative opposed this, stating that the claim was contrary to legal provisions.The Tribunal referred to a similar case decided by the S.M.C., which supported the assessee’s claim for TCS credit. It was noted that the State Government had collected TCS and issued the certificate in the assessee's name. The Tribunal found merit in the argument that denying credit would result in unjust enrichment for the government. However, the Ld. CIT(A) had held that TCS credit should be claimed by the lessee of the mine, not the toll contractor (the appellant), as per Section 206C(1C).The Tribunal concluded that the assessee, being neither a licensee nor a lessee, did not fall under the category specified in Section 206C(1C). However, considering that the TCS was deposited at the instance of the mining department and the certificate was issued in the assessee’s name, the Tribunal restored the issue to the AO to verify if any other individual claimed the TCS credit. If not, the assessee’s claim should be allowed to ensure substantive justice, preventing the revenue from withholding tax deposited by a wrong person.3. Duty of the Assessee to Rectify the Mismatch of TDS:This ground was not pressed by the assessee during the hearing and thus was not analyzed further.Conclusion:The Tribunal directed the AO to verify whether any other individual claimed the TCS credit. If no other claim exists, the assessee’s claim should be allowed. The appeal was allowed for statistical purposes, ensuring that the revenue does not unjustly withhold tax deposited by a wrong person. The order was pronounced on June 16, 2017.