TaxTMI 
TaxTMI 
2022 (9) TMI 705
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....ave also subjected it to TDS, which has been remitted to the Government Treasury". 2. "On the facts and in the circumstances of the case and in the law, the Ld CIT(A) erred in allowing relief to the assessee when the assessee has failed to show the relevant amounts as advances in the balance sheet as liabilities and failure of doing the same can construe to the only finding that income has accrued to the assessee". 3. "On the facts and in the circumstances of the case and in the law, the Ld CIT(A) erred in holding that since the assessee is a step through society and since it was to distribute the accounts to concerned members, there would be no income in the hands of the assessee". 4. "On the facts and in the circumstances of the case and in the law, the Ld CIT(A) erred in relying upon the Apex court decision in the cases Shoorji Vallabhdas 46 ITR 144(SC), Morvi Insdustries 82 ITR 835 & Godhra Electricity Co 225 ITR 746, without considering the fact of the case". 5. "On the facts and in the circumstances of the case and in the law, the Ld CIT(A) erred in relying upon the Bombay High court decision in the case of CIT Vs Neon Solution Pvt. Ltd., w....
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....e was not liable to the same. 5. The Revenue is in appeal before us as against the order of the Ld.CIT(A) upon deletion of the impugned addition made by the Assessing Officer. 6. The Ld.DR for the Revenue contended that the Ld.CIT(A) has erred in deleting the addition made by the Assessing Officer on the ground that the same does not pertain to the income of the assessee. The Ld.DR further stated that the Ld.CIT(A) has failed to consider the fact that the TDS of Rs.78,37,644/- was deducted as per form 26AS for the impugned year. The same was not reconciled and that it becomes irrelevant whether the assessee has taken credit for such TDS or not. The Ld.DR relied on the order of the Assessing Officer. 7. The Ld.AR for the assessee, on the other hand, contended that addition cannot be made merely by considering Form 26AS. The Ld.AR further stated that the assessee has not taken credit of the said TDS and was not aware of the parties, who have credited the said TDS amount. The Ld.AR also stated that the Assessing Officer had made the said addition without proper enquiry as to who has credited the same. The Ld.AR relied on the decision of the Ld.CIT(A). 8. We have heard the ....
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....d after recoupment of actual expense incurred has to be Nil (once again working attached). The Royalty income could be ascertained/ accrued and accounted for only when the party to whom the Royalty income belongs is identified based on usage reports received by the company. Till the above excercise is complete no income accrues to the Company. As the Company is governed by the provisions of the Copyright Act 1957, the company is obliged to pay the income received from the Broadcasters/licensees to the copyright owner (member) and unless the usage report is received and verified and music labels properly identified and signed off, the right to book income in the Company's books does not arise; and hence the same is, appropriately and as per Accounting Standard, accounted in the period this exercise is complete. At times, the user may book a TDS entry in his books in one assessment year, but send the payment and usage reports to the Company in the next assessment year: after a delay of 5-6 months. If any party / licencee has accrued royalty in its books and deducted TDS then the Company claims it in the year in which income is considered/booked by the C....
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....income, even though there would be TDS qua such income. h. Thus, the basic finding of the learned AO (based on which the impugned addition has been made) is flawed and unfounded. The learned AO has failed to appreciate that merely because there was TDS made by some parties, would not mean that they had acknowledged the receipt of services by the Appellant and hence the Appellant was dutybound to declare such income. i. It is submitted that there is a total lack of understanding of the nature of activity of Appellant on the part of the learned AO. As explained above. TDS made by parties with whom there were disputes would not tantamount to acknowledgement of receipt of services by such parties. On the contrary, such parties were in default of Copyright Infringement and unauthorized user and hence the Appellant could neither acknowledge TDS from such pat-ties, nor could it accept payments from such parties. j. Thus, the very basis adopted by the learned AO to make the impugned addition is grossly flawed and no addition based on this premise is tenable. k. Your Honor may kindly also recollect the Method Of accounting for revenue recognition followed....
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....llant. 3. Even the Law has recognized the fact that the TDS may be made in one year but the related income may accrue and may be declared in another year or years. This is recognized by Rule 37BA and sub rule (3i) Reads as under: "Where tax has been deducted at source and paid to the Central Government and /[he 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." 4.4.6 It is also submitted that since the Appellant did not claim credit for any part of the impugned TDS, neither the income equal to TDS amount nor any part of related receipt would partake the character of income in the hands of the Appellant for the year in reference." 9. From the above submission of the assessee it is evident that the assessee has also tried to reconcile the TDS amount which were not taken credit of Rs.7,83,76,440/-. 10. The assessee has also submitted that the assessee was a mere facilitator and collected the royalty income on behalf of its members and subsequently distributed the net income to the concerned members. The assessee further stat....