TaxTMI 
TaxTMI 
2018 (4) TMI 995
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.... 2. Assessee is an individual and as a Proprietrix of M/s. Pooja Marketing Agencies. She is dealer in IMFL for the company of M/s. Shaw Wallace Distilleries Ltd., (SWDL). Assessee receives various cash benefits under various schemes floated by SWDL, on which that company deducts TDS as per the rules. During the year under consideration, assessee has received an amount of Rs. 5,09,59,555/-, which was reflected in the P&L A/c. Assessee has claimed corresponding expenditure of Rs. 5,16,24,223/- during the year on which there is no dispute that assessee claimed TDS of Rs. 32,56,819/- in the return of income. However, subsequently, TDS certificates for an additional amount of Rs. 45,08,544/- issued by SWDL were received and assessee claimed the....
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....re is no escapement of income and assessee was following the receipt basis of accounting and whatever amounts have been received from the SWDL have been in turn utilised for the scheme and has passed on to various dealers and therefore, bringing the gross receipts to tax is not correct. Ld.CIT(A), however, did not agree and confirmed the addition on the reason that assessee is following the Mercantile System of Accounting and assessee duly bound to declare all credits. His order in para 6.2 is as under: "6.2. I have considered the arguments of the assessee and have gone through the details filed. It is undisputed that the assessee is following mercantile system of accounting. It is also not in dispute that SWDL credited an amount o....
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....ing Officer has rightly brought the difference amount to tax during tile year under consideration. Therefore, the addition made by the Assessing Officer is upheld". 4. Aggrieved, assessee has raised as many as 14 grounds, mostly which are submissions on the issue. 5. In the course of present appeal, Ld. Counsel did not press for the issue of reopening, however, mainly reiterated that all the receipts were duly accounted in three assessment years and in case, the receipts are to be brought to tax in this year, the corresponding expenditure booked for the year ending 31-03-2006 to an extent of Rs. 3,19,35,728/- should have been allowed by the AO/CIT(A), as that expenditure was also reflected in the P&L A/c of that year and there was cor....
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....been duly received by the Government. The relevant observation of the Tribunal are extracted hereunder: "The deposit on which interest was earned by the assessee is mandatory as per statutory requirement. Therefore, the interest income earned on the deposit is not out of surplus fund of the assessee but due to the statutory requirement under which the deposit was made for availing the credit facility of installation of machinery. When the interest income is in the nature of capital then the assessee has rightly deducted the same from the cost of the assets and while doing so the assessee has offered the said income though capitalized for assessment. When the interest income is not directly liable for tax as the same is incidental i....
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....ent. Even if the income earned by the assessee has not been offered for tax being not liable for tax, the assessee is entitled for credit of TDS made in respect of that income. Accordingly, assessee is entitled for credit of TDS relating to interest income." 10. From a careful perusal of the legal propositions laid down through the aforesaid orders by the Tribunal and the relevant provisions of the Act, we are of the view that once the TDS was deducted and paid to the Central Government, a credit of the same should be given to the assessees in order to avoid all sorts of complications in the year of deduction of the TDS. Therefore, we find no infirmity in the order of the CIT(A) who has rightly directed the A.O. to allow the credit....
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....s. 8.22 Crores was claimed by the assessee, but there is no dispute with reference to the receipt of Rs. 5.09 Crores by assessee during the year, which assessee has duly accounted for. On this issue, assessee has approached the CIT u/s. 264. Once the claim was rejected by AO u/s. 264, surprisingly the CIT also initiated proceedings u/s. 263 but later on dropped the proceedings as recorded in the assessment order itself. In those circumstances, we are unable to understand how proceedings u/s. 147 can be initiated on the so called escapement of income. 7.1. As already stated above, assessee has corresponding expenditure on the scheme, which was claimed in the respective assessment years. In case the receipts accounted by assessee in AY. 20....