TaxTMI 
TaxTMI 
2016 (2) TMI 420
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.... 2 That the learned Commissioner of Income Tax (Appeals) has grossly erred both in law and on facts in holding that the tax credit granted by the learned Assistant Commissioner of Income Tax of tax deducted at source of Rs. 71,20,267/- was in accordance with law, despite the fact the tax deducted at source in respect of which assessee has furnished TDS certificates and were in relation to the assessment year 2011-12, aggregated to Rs. 80,16,290/- which was not disputed and was thus entitled to credit of such TDS u/s 199 of the Act. 2.1 That the learned Commissioner of Income Tax (Appeals) has further erred in failing to appreciate that the credit of the tax granted of Rs. 71,20,267/- instead of Rs. 80,16,290/- was without any basis or material and was thus unsustainable. Infact even the learned Commissioner of Income Tax (Appeals) has given no basis for restricting the credit of the tax deducted at source to Rs. 71,20,267/- and thus levy of interest u/s 234C of Rs. 2,74,677/- and aggregate demand of Rs. 11,37,710/- is unsustainable. 3 That the order passed by the learned Commissioner of Income Tax (Appeals) is not only arbitrary and is without application of min....
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....ary but is without application of mind. 5 That even otherwise the learned Commissioner of Income Tax (Appeals) has overlooked that the assessee had furnished a complete reconciliation to establish that each of credit is duly reflected in 26AS statement and that only a sum of Rs. 4,10,870 alone had not been reflected in 26AS statement in respect of which too the assessee furnished confirmation as well as TDS certificates and the learned Assessing Officer could not be justified in not granting the credit thereof. 6 That further the learned Commissioner of Income Tax (Appeals) has completely overlooked that no interest under section 234C was chargeable and as such interest levied and charged of Rs. 2,74,677/- was erroneous. 3. Brief facts of the case are that during the year, the assessee had filed a return on 27.9.2011 declaring an income of Rs. 8,83,87,370/-, which was revised on 2.2.2013 to an income of Rs. 8,84,12,370/- enhancing the total income by sum of Rs. 25,000/-. The AO in an intimation dated 27.9.2011 u/s 143(1) allowed credit of TDS of Rs. 71,20,267/- as against claim of TDS of Rs. 79,91,290/- and as such with held grant of credit by Rs. 8,71,023/- an....
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....le. 7. The counsel for the assessee submitted that provisions of section 198 mandates that all sums deducted under chapter XVII would be deemed to be income received as such, once the TDS has been deducted. He further submitted that that as per provisions of section 199 of the Act any deduction of tax under chapter XVII and paid to the central government shall be treated as payment of tax on behalf of the person from whose income deduction of tax was made. He also submitted that provision of Rule 37BA is inapplicable where assessee is following cash system of accounting since if TDS is deducted however payment is not received in the subsequent assessment years, the TDS deducted would never be allowed to such an assessee though the assessee is entitled for such TDS as per section 198/199 of the Act. In support he placed reliance on the decision of Ahmedabad Bench in the case of M/s Sadbhav Engineering Ltd. vs. DCIT ITA No(s). 610/Ahd/2008, 1834/Ahd/2009, 2054/Ahd/2009, 1835/Ahd/2009, 2055/Ahd/2009 and 2053/Ahd/209 A.Y(s) 2005-06 to 2007-08 dated 19.12.2015 and Visakhapatnam Bench in the case of ACIT vs. Peddu Srinivasa Rao Vijayawada ITA No. 324/Vizag/2009 A.Y. 2006-07 dated 3.3.....
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.... 1.4.2009 reads as under:- "Credit for tax deducted at source for the purposes of section 199: 37BA.(1) Credit for tax deducted at source and paid to the Central Government in accordance with the provisions of Chapter XVII, shall be given to the person to whom payment has been made or credit has been given (hereinafter referred to as deductee) on the basis of information relating to deduction of tax furnished by the deductor to the income-tax authority or the person authorized by such authority. (2) [(i) Where under any provisions of the Act, the whole or any part of the income on which tax has been deducted at source is assessable in the hands of a person other than the deductee, credit for the whole or any part of the tax deducted at source, as the case may be, shall be given to the other person and not to the deductee: Provided that the deductee files a declaration with the deductor and the deductor reports the tax deduction in the name of the other person in the information relating to deduction of tax referred to in sub-rule (1).] (ii) The declaration filed by the deductee under clause (i) shall contain the name, address, permanent ....
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....100/- for the services rendered in financial year 2010-11 on his client and the said client deposits TDS of Rs. 10/- to the credit of the account of the assessee and issued a certificate of TDS to the assessee and thus, it was submitted that an amount of Rs. 10/- was since deducted in respect of the assessee, the said sum is income of the assessee which is assessable to tax. It was submitted that once an income is assessable to tax, the assessee is eligible for credit despite the fact that remaining amount would be taxable in the succeeding years. We are in an agreement with the above submission that the TDS deducted by the deductor on behalf of the assessee and offered as income is to be allowed as credit in the year of deduction of tax deducted at source. Rule 37BA of the Act provides that credit for TDS should be allowed in the year in which income is assessable. Further clause (ii) of Rule 37BA(3) of the Act provides that where tax has been deducted at source paid to the Central Government and the income is assessable over a number of years, credit for tax deducted at source shall be allowed across those years in the same proportion in which the income is assessable to tax. In ....
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....essees, while making the amendments in section 199 and in amended provisions nothing has been stated about the year in which the credit of TDS is to be claimed. As per amended provisions of section 199, in sub-section 1, it has been stated that any deductions made in accordance with the foregoing provisions of this chapter and paid to the Central Government shall be treated as a payment of tax on behalf of the person from whose income the deduction was made. Therefore, as per the amended provisions, once the TDS was deducted, a credit of the same to be given to the assessees, irrespective of the year to which it relates. The pre-amended and the amended provisions of section 199 are extracted hereunder: "Section 199: Credit for tax deducted - (1) Any deduction made in accordance with the foregoing provisions of this Chapter and paid to the Central Government shall be treated as a payment of tax on behalf of the person from whose income the deduction was made, or of the owner of the security, or depositor or owner of property or of unitholder or of the shareholder, as the case may be, and credit shall be given to him for the amount so deducted on the production of the certificate fur....