TaxTMI 
TaxTMI 
2025 (9) TMI 699
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....nst the facts of the case. Relief may please be granted by considering the entire adjustment made to be illegal and void ab initio. 2. In the facts and circumstances of the case and in law, ld. CIT(A) has erred in not providing proper directions to the Assessing officer in relation to the credit of tax deducted at source as appearing in Form 26AS of the assessee company, specifically in relation to the interest earned by the assessee company from HDFC Bank Ltd. On local area development charges collected by the assessee company, even though it was clearly explained that the assessee company was entitled for claiming the entire such credit of tax deducted at source. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by providing appropriate directions to the ld. AO for allowing claim of the TDS credit. 3. The assessee company craves its rights to add, amend or later any of the grounds on or before the hearing." 3. Apropos to the grounds so raised by the assessee the brief fact of the case as culled out from the record are that the assessee - M/s Saurya Urja Company of Rajasthan Limited ....
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....bsp; xx xx 4.1.2 As can be seen section 143(1) (a) speaks about computation of total income or loss after making the adjustments provided therein. Further the first proviso provides for prior intimation in case of such adjustment to the total income. In the case of the appellant, the income returned was accepted u/s 143(1). Thus, there was no adjustment made by CPC to the returned income. Thus, there was no requirement of providing any prior opportunity. The appellant has cited a number of judicial decisions relating to providing opportunity before making any adjustment to the total income. However, as no adjustment has been made to the income returned, hence the said case laws have no relevance to the case of appellant. In view if above, this ground of appeal is dismissed. 4.2 Ground No. 2. Restriction of TDS credit- 4.2.1 In the return of income, the appellant had claimed TDS of Rs. 2.02, 12,215/- whereas in the order u/s 143(1), the credit has been given of Rs. 1:15.45 496 Thus, AO CPC had restricted the credit for TDS of Rs 86,66,719. The working of proport....
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....come on which TDS has been claimed has been offered to tax in the current year under the head revenue from operations and other income. Further, no reason is mentioned in the intimation for not giving credit of TDS of Rs. 43,02,633 These claims of the appellant require factual verification The AD is. Therefore, directed provisions of to make the factual verification and allow credit of TDS as per section 199 x 37BA Therefore, these grounds of appeal are allowed for statistical purposes. 4.3 Ground No. 3- This ground is general in nature and hence not adjudicated. This ground is hence dismissed. 5. In the result, the present appeal is partly allowed." 5. Aggrieved with the part solution so provided by the ld. CIT(A) to the grievance of the assessee, they preferred the present appeal before this tribunal on the grounds as stated herein above. To support of the grounds so raised the ld. AR of the assessee relied upon the detailed written submission so made and same reads as under : "Brief background of the nature of business of the assessee company, including the collection by the assessee company of Local Area Development charges as a "trustee", are set ....
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....s under: - Article 7: Other Charges and Payment Conditions 7.1. Local Area Development Charges The SPD shall pay Rs. 100 Lakhs/100MWac per year to the SPPD for first five years from the date of execution of this Agreement towards the development of the local community. The first installment is due on the date of execution of this Agreement. Thereafter for every subsequent year the due date shall be April 01 of each Financial Year. All payments shall be payable within 30 days of the due date. The amount shall be deposited into a dedicated account of the SPPD. The SPPD would act as the nodal agency for implementation of Local Area Development Activities for and on behalf of the SPDs in the Solar Park. The SPD Committee consisting of representatives from each SPD shall provide overall direction to the Local Area Development Program. 7. The above-mentioned clause, in relation to the collection of local area development charges on behalf of the SPDs, is prevalent in all the ISA entered into by the assessee company. 8. These charges are collected by the assessee company for the purpose of carrying out development work, for the local community, in and around the....
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....its income, both while filing the return of income and also in the Audited Financial Statements, also demonstrated supra. 15. Since there is timing difference, between the collection of such charges and the ultimate expenditure being incurred, such amount is parked with a Scheduled Bank (HDFC Bank in the present case), as part of Fixed Deposits. 16. Interest earned on the Fixed Deposits is also utilised by the assessee company for the purpose of local area development only and no part of it is utilised for the purpose of its own business by the assessee company. This is for the reason that the assessee company keeps the charges collected with itself as a custodian. Accordingly, whatever benefits are derived on such amount, in terms of interest, are also utilised for the local area development itself. 17. Accordingly, assessee company, in other words, has no option, but to utilise even the interest amount, so collected, for the purpose of local area development. Thus, interest earned on the fixed deposits is also not considered by the assessee company as part of its income, while filing the return of income. Such interest income was shown as part of "Unear....
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....lopment charges and considers them as part of its liability. These local area development charges, when collected, are treated as part of the Unearned Income of the assessee company. Such Unearned Income has been disclosed by the assessee company under Note 25 - Other Current Liabilities in its Audited Financial Statements. For the year under consideration, the Unearned Income amounted to Rs. 37,81,83,522 as at the end of the financial year. Relevant screenshot of Note 25 - Other Current Liabilities, forming part of the Audited Financial Statements is set out hereunder. Note 25- Other Current Liabilities Current As at 31.03.2023 (RS. IN LAKHS) As at 31.03.2022 (RS. IN LAKHS) (a) Unearned income 3781.83 3,087.16 (b) Statutory dues - TDS, GST, PF, TCS 76.29 19.04 (c) Staff Balances 0.35 0.59 (d) Other payables (see note 21.1) 244.07 244.07 4,102.54 3,350.86 24. It is pertinent to mention that the copy of the Audited Financial Statements was already submitted to the Hon'ble Bench during the course of the hearing as part of Paper Book 2 (refer Page No. 273). 25. The breakup of the Unearned Incom....
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.... company's balance sheet under current liabilities. 29. Accordingly, the assessee company asserts its entitlement to claim credit for the TDS amount deducted on the interest income. This is because the said income, though reflected as liability, has been utilized entirely for the purposes of the local area development project." 6. The ld. AR of the assessee also filed a detailed paper book in support of the contention so raised in the written submission and the index of the document submitted reads as under :- S. No. Particulars Page No. 1. Copy of Income Tax Return form filed by assessee company for the year under consideration 1-138 2. Copy of ledger accounts of various parties in the books of assessee company for the year under consideration 139-156 3. Copy of Form-26AS of the assessee company for the period under consideration 157-182 4. Copy of ISA entered by the assessee company with one of the SPD's 183-222 5. Copy of ledger accounts of "Unearned Income" in the books of assessee company for the year under consideration 225 6. Copy of Audited Financial Statements of Assessee company for the year u....
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....f income the claim of TDS to the extent of Rs. 86,66,719/- was denied because the income as reported in 26AS and in the return of income so filed were not matched in the income tax returned filed by the assessee. When the matter carried before the ld. CIT(A) he holds that TDS on income which is not offered during the year will not be allowed to the appellant at the same time he noted that the income which is offered by the assessee under the head operations and other income no reasons were granting by the CPC therefore, to verify these two issue he set a side the matter to the file of the ld. AO. Before us the ld. AR of the assessee contended that the ld. CIT(A) has not dealt with the contention of the assessee that income which are in the nature of revenue neutral and in fact is not income of the assessee for which the TDS deducted but the assessee has to compensate that TDS amount to the trust that it holds and therefore, the assessee be also granted an opportunity to prove this contention by placing on record the relevant material so as to avoid the duplication of litigation. Now coming to the issue on hand the bench noted that the assessee M/s Saurya Urja Company of Ra....