TaxTMI 
TaxTMI 
2017 (6) TMI 545
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....e Income Tax Act, 1961 ('the Act') is bad in law and therefore needs to be quashed. 2. On the facts and circumstances of the case and in law, the ld. CIT(A) had erred in not allowing the TDS credit of Rs. 3,16,001/- as claimed by the appellant." 3. Briefly stated facts are that the assessee company is an investment company having investment in shares, mutual funds and immovable properties etc. The assessee filed its return of income for the AY 2010-11 on 14-10-2010 and assessment was finally completed under section 143(3) of the Act by the AO vide order dated 03-12-2012. Later on, the AO noticed that the assessee company has offered income under the head of income from house property after deducting the amount of unrealized rent under Rule 4 of the Income Tax Rules 1962 (hereinafter, the rules) and claimed TDS credited on both, realized as well as unrealized rent. The AO restricted the allowances of TDS credited to the extent of actual amount of rent received. The AO rectified this mistake under section 154 of the Act. Aggrieved, assessee preferred the appeal before CIT(A), who also confirmed the action of the AO by observing in Para 7.6 and 7.7 as under: - "7.....
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....0/-. It was claimed that the assessee has claimed deduction on account of unrealized rent amounting to Rs. 33,30,657/- under the provisions of section 23(1) of the Act read with Rule 4 of the Rules. The learned counsel for the assessee first of all stated that this is highly debatable issue and it cannot be rectified under section 154 of the Act. For this proposition the learned Counsel for the assessee relied on the decision of Hon'ble Supreme Court in the case of T.S. Balram, ITO vs. Volkart Bros. (1971) 82 ITR 50 (SC), wherein it is held as under: - " A mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on points on which there may conceivably be two opinions. As seen earlier, the High Court of Bombay opined that the original assessments were in accordance with law though in our opinion the High Court was not justified in going into that question. In In Satyanarayan Laxminarayan Hegde and ors. v. Millikarjun Bhavanappa Tirumale(1) this Court while Spelling out the scope of the power of a High Court under Art. 226 of the Constitution ruled that an error which has to be estab....
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..... Accordingly I am of the view that that the Unrealized rent is duly offered to tax by the assessee at first instance, and then the same is claimed as deduction from Rental Income u/s 23(1) of the Act r.w. Rule 4 of the rules. I also find that that the TDS amount, which corresponds to claim of unrealized rent is duly offered to tax the entire Amount of TDS (of Rs. 5,86,412/-, including TDS on unrealized rent) as Rental income for the year by the assessee u/s 198 of the Act which reads as under: - "Section 198. All sums deducted in accordance with the foregoing provisions of this Chapter shall, for the purpose of computing the income of an assessee, be deemed to be income received." In this regard, Ld Counsel refered to Section 199 of the Act r.w. Rule 37BA for claim of TDS credit, which reads as under:- Credit for tax deducted "Section 199. (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 of the depositor or of the owner of property or of the unit-....
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....ource and paid to the Central Government and the income is assessable over a number of years. credit for tax deducted at fount shall be allowed across those years in the same proportion in which, the income is assessable to tax-. (4) Credit for tax deducted at source and paid to the account of the Central Government shall be granted on the basis of- (i) the information relating to deduction of tax furnished by the duductor to the income tax authority or the person authorized by such authority; and (ii) the information in the return of income in respect of the claim for the credit, subject to verification in accordance with the risk management strategy formulated by the Board from time to time. The assessee duly fulfills all the conditions as laid down in section 198 r.ws. 199 r.w. Rule 378A of the Act. I find that TDS had been deducted and paid to the Central Government by the deductee and Payment/ Credit of Rent Income has been included in the accounts of the assessee. The deductor had duly filed requisite TDS returns as per Rules and also issued TDS certificate to the assessee and the same was furnished to the AO. Amount of TDS claimed, corresponding to claim of unrea....
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....since deducted in respect of the assessee. the said sum is income of assessee which is assessable to lax. 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 objected as income is to he allowed as audit in the year of deduction of tax deducted at source. Ride 37BA of the Act provides that credit for TDS should he allowed in the year in which income is assessable. Further clause (ii) of Rule 37BA(3) of 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 our considered opinion this rule is only applicable where entire compensation is received in advance but the same is not assessable to tax in that year but is assessable in a number of and however, such rule has no applicability. where assessee follows cash system of accounti....