TaxTMI 
TaxTMI 
2025 (7) TMI 308
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....ce made u/s 14A of the Act and also AO has allowed excess TDS claimed by the assessee without enquiring the claim. Accordingly, he issued show-cause notice to the assessee and the relevant notice was reproduced at page 2 of the impugned order. In response, assessee submitted that the assessee has not earned any exempt income and assessee also submitted computation of income and audited Balance Sheet before him, also submitted that since assessee has not earned any exempt income during the year, no disallowance can be made u/s 14A of the Act and relied on several decisions which were reproduced in the impugned order. After considering the above submission, ld. PCIT rejected the same and by heavily relying on the CBDT Circular No.5 dated 11.02.2014 observed that CBDT Circular is applicable retrospective in nature. Since AO has not made necessary enquiries, therefore, he directed the AO to make proper enquiry and after due verification on the issue of disallowance under Rule 8D as per law. Further ld. PCIT observed that assessee has reported turnover/sale of Rs. 25,05,58,794/-, however as per Form 26AS, TDS was deducted u/s 194 (1A) of the Act for the value of Rs. 51,14,99,819/- on wh....
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....uired, such nexus is rather notional or conceptual, rather than specific or immediate. When the law has used the words in section 199 of the Income-tax Act that "credit shall be given to the tax deducted at source" on production of the certificate for the assessment year for which such income is assessable; it implied that the nexus between TDS and the corresponding income element would remain rather notional/conceptual. In this connection, reference is made to the Mumbai Tribunal decision in the case of Toyo Engineering India Ltd. vs. JCIT SR 27 reported in (2006) 5 SOT 616 (Mum), copy enclosed The provisions of section relating to deduction of tax at source are not charging sections or computation section unless and until it is followed by an assessment order making a charge of tax. The deduction of tax is not a levy of tax. Deduction of taxis tax at source is merely one of the mode of collection of tax. The amount on which TDS is deducted is subject to charge as per the provisions of the Act. There are few instances which can further elaborate this view. For example, the recipient maintains account on cash basis which may not match with the amounts certified in the TDS ....
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....ccount may not be made." 3. After considering the submissions of the assessee, ld. PCIT observed that as a principle of matching, TDS claimed only on the revenue that has been offered for taxation. In this case, TDS has been made on the amount of Rs. 51,14,99,819/- but the revenue was offered to tax only to the extent of Rs. 25,05,98,794/- and the whole TDS amount was claimed on such revenue. Since the AO has not verified the above claim of the assessee, he directed the AO to make fresh assessment on the issue discussed above and complete assessment after due verification. 4. Aggrieved with the above order, assessee is in appeal before us raising following grounds of appeal :- "1. That having regard to the facts and circumstances of the case and in law, the assessment order passed by Id. AO u/s 143(3) is neither erroneous nor prejudicial to the interest of revenue and Ld. Pr. CIT (Central) erred in invoking the provisions of section 263 of the Income Tax Act and also erred in cancelling the order passed by ld. AO u/s 143(3) for fresh assessment without properly appreciating the facts. 1.1 The Ld. Pr. CIT (Central) has erred both on facts and in law in ignori....
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....ing regard to following judgments of jurisdictional high court's which have held the amendment to section 14A prospective i.e. from AY 2022-23 and the said judgments have been rendered prior to passing of the order by PCIT, which rather makes the order so passed by learned PCIT as erroneous being against the judicial mandate of jurisdictional high court * Copy of judgment of Hon'ble High Court of Delhi in the case of PCIT vs Era Infrastructure (India) Ltd. in ITA No. 204/2022 (Pages 92 to 99 of PB). * Copy of judgment of Hon'ble High Court of Delhi in the case of Cheminvest Ltd. vs CIT reported in 378 ITR 33 (Pages 86 to 91 of PB). 4.4 Contention No. 4: The issue of excess TDS was already gone into by learned AO during the course of assessment proceedings and even in preceding AY 2017-18 (as tabulated above), and it is an accepted fact that assessee being builder, follows POCM to book its Revenue and as such, receipts appearing in 26AS being TDS deducted by customers on payments being made, is not comparable with revenue shown in P&L Account. Reliance is placed on the order of Hon'ble ITAT Delhi in the case of Lloyd Insulation (India) Ltd.....
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....said method consistently and the assessee has filed reconciliation of turnover before the AO during assessment proceedings. Since the assessee follows the method of POCM, there will be always a mismatch of TDS amount and the turnover declared by the assessee. The income declared by the assessee based on the percentage of completion, the assessee will declare the revenue on the basis of abovesaid method. The customers may remit the payment and deduct TDS which may not match the income declared by the assessee. Considering the method adopted regularly by it. In our considered view, ld. PCIT could have asked the assessee to submit the reconciliation of the above and decide the issue by himself instead of remanding the matter back to the AO. By merely remitting these issues back to the AO, the ld. PCIT has failed in his duty and mere initiation of proceedings u/s 263 is not enough, he has to give clear finding on the basis of prejudicial to the interest of Revenue. As held in the case of PCIT vs. V-Con Integrated Solutions Pvt. Ltd. (supra), it was held as under :- "The assessee does not have control over the pen of the Assessing Officer. Once the Assessing Officer carries out....