INDIGO INFRAPROJECTS PRIVATE LIMITED,DELHI vs. ACIT, CIRCLE 10(1), DELHI

ORDER

PER KUL BHARAT, JM :

1. The present appeal filed by the assessee for the assessment year 2019- 20 is directed against the order of Ld. CIT(A), National Faceless Appeal Centre (“NFAC”), Delhi dated 21.06.2022. The assessee has raised following grounds of appeal:- 1. “That the order is bad in law and fact of the case.

2. That in view of the matter, action of Ld. CIT(A) in confirming the disallowance made by CPC and further making addition of Rs. 16,34,060/- on account of employee's contribution to ESI and EPF is not sustainable on various legal and factual ground.

3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in taking a view that amendment in section 36(1)(va) of the Act is retrospective in nature.

4. That Ld. CIT(A) has erred in confirming the action of CPC by not allowing the claim of brought forward TDS of Rs.9,94,719/- as per Section 1999 read with rule 37BA though the related income is properly declared in the Income Tax Return and was also appearing in previous Form 26AS of that earlier Assessment Year.” 2. At the outset, Ld. Counsel for the assessee submitted that under the instruction, he does not wish to adjudicate Ground Nos. 1 to 3. Therefore, these grounds of appeal raised by the assessee are dismissed as not pressed.

3. The only effective ground raised by the assessee is Ground No.4 that reads as under:-

4. “That Ld. CIT(A) has erred in confirming the action of CPC by not allowing the claim of brought forward TDS of Rs.9,94,719/- as per Section 1999 read with rule 37BA though the related income is properly declared in the Income Tax Return and was also appearing in previous Form 26AS of that earlier Assessment Year.” 4. Facts giving rise to the present appeal are that the assessee filed its return of income on 31.10.2019 declaring total income of Rs.2,68,90,230/-. The said return was revised thereby, the assessee claimed refund of Rs.26,13,650/-. However, Central Processing Centre (“CPC”) made adjustment and made addition of Rs.16,34,060/- and Rs.9,94,719/- by passing the order u/s 143(1) of the Income Tax Act, 1961 (“the Act”). The assessee had made application for rectification which was rejected vide order dated 11.05.2021.

5. Aggrieved against this, the assessee preferred appeal before Ld.CIT(A) who also dismissed the appeal of the assessee.

6. Aggrieved against the order of Ld.CIT(A), the assessee is in appeal before this Tribunal.

7. Apropos to Ground No.4, Ld. Counsel for the assessee reiterated the submissions as made in the written submission. For the sake of clarity, the relevant contents of the written submissions are reproduced as under:-

“Ground No.4 - That Ld. CIT(A) has erred in confirming the action of CPC by not allowing the claim of brought forward TDS of Rs.9,94,719/- as per section 199 read with rule 37BA though the related income is properly declared in the Income Tax Return and was also appearing in previous Form 26AS of that earlier Assessment Year. During the year under consideration, appellant has made a claim of brought forward TDS in income tax return since income corresponding to brought forward TDS offered to tax in concerned assessment year only. But while processing the return of income by the CPC u/s 143(1) of the Income Tax Act, 1961 (copy enclosed), Brought forward TDS claim of Rs. 9,94,719/- has not been allowed on account of mis-match of year of reporting of TDS as per Form 26AS. Although, the appellant has duly reported the TDS, in both years return of income, in accordance with section 199 read with rule 37BA of the Income Tax Act, 1961. So, the appellant filed the rectification under section 154 of the Income Tax Act, 1961 against the intimation order under section 143(1) of the Income Tax Act, 196f. But CPC again rejected the claim of the appellant and passed the rectification order (copy enclosed). Extract of Section 199 of Income Tax Act, 1961- Credit for Tax Deducted at Source (TDS) (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 Page | 3 or of the unit-holder, or of the shareholder, as the case may be. (2) Any sum referred to in sub-section (1A) of section 192 and paid to the Central Government shall be treated as the tax paid on behalf of the person in respect of whose income such payment of tax has been made. (3) The Board may, for the purposes of giving credit in respect of tax deducted or tax paid in terms of the provisions of this Chapter, make such rules as may be necessary, including the rules for the purposes of giving credit to a person other than those referred to in sub-section (1) and sub-section (2) and also the assessment year for which such credit may be given. Relevant extract of Rule 37BA - Credit for tax deducted at source for the purposes of section 199 is as follows: (3) (i) Credit for tax deducted at source and paid to the Central Government, shall be given for the assessment year for which such income is assessable. ii) Where tax has been deducted at source and 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 the instant case, TDS of Rs. 9,94,719/- on the income of Rs. 4,97,35,943/- has already been deducted in AY 2018-19 but that corresponding income was not offered tax in AY 2018-19 as the invoice were raised in AY 2019-20, so appellant has carried forward the TDS deducted in AY 2018-19 to AY 2019-20. Below is the list of parties whose brought forward TDS has been claimed in AY 2019-20: S.No. Name of Parties TAN TDS TDS TDS Brought Corresponding deducted claimed in carried Forward income in AY AY 18-19 forward to TDS offered to tax 2018-19 AY 2019- claimed in in AY 2019-20 20 in AY AY 2019- 2018-19 20 Return

The above transactions have duly been incorporated in AY 2018-19 income tax return and is also appearing in Form 26AS of AY 2018- 19. Therefore, claim of brought forward TDS by the appellant in income tax return for AY 2019-20 cannot be denied mere on the ground that it is not appearing the Form 26AS of AY 2019-20 as appellant has duly taken care of the requirements of rule 37BA of Income Tax Rules, 1962 read with section 199 of the Income Tax Act, 1961 for carrying forward and brought forward of TDS.

Further, the appellant has duly submitted the above table and explanation before the Hon'ble Commissioner of Income Tax (Appeals) but Hon'ble CIT(A) also rejected the claim of the appellant by stating that "The corresponding receipts of Rs.4,97,35,943/-, as against the carry forward TDS of Rs.9,94,719/- being claimed now, are not seen reflected over and above the receipts of F.Y. 2018-19 and the appellant has not furnished any breakup of gross receipts for F.Y. 2017-18 and 2018-19 to collate the details".

In this regard, it is submitted that we have submitted the copy of income tax return and form 26AS for AY 2018-19 and income tax return for AY 2019-20 which clearly shows the details of TDS brought forward and carried forward along with the corresponding receipts/income.

Though we are summarizing the income and related TDS as per ITR and Form 26AS for AY 2019-20 and AY 2018-19 as follows: AY 2019-20 Reconciliation

Particulars Amount Related TDS Income as per Financials 50,46,29,109 Income actually shown in Current AY ITR Less: Income on which no TDS deducted 67,62,986 (A) Income on which TDS deducted 49,78,66,123 99,61,731 Income as per Form 26AS 42,52,15,254 85,08,614 Income as appearing in form 26AS of AY 2019-20 excluding interest income Less: Income as appearing in form 26AS in AY 2019-20 which are 1,62,24,832 3,24,497 carried forwards to AY 2020-21 (B) Income as per Form 26AS 40,89,90,422 81,84,117 8,88,75,701 17,77,614 (A-B) Income related to the brought forward TDS recognized 4,97,35,943 9,94,719 (i) during the current AY (ii) TDS not deposited by the deductor but claimed in ITR 3,91,39,756 7,82,892 (i+ii) 8,88,75,701 17,77,611

Note:-Brought forward TDS of Rs.40,000/- is further carried forward to AY 2020-21 from last year (i.e. AY 2018-19) AY 2018-19 Reconciliation

Particulars Amount Related TDS Income as per Financials 44,58,03,844 Income actually shown in Current AY ITR Less: Income on which no TDS deducted 4,90,93,212 (A) Income on which TDS deducted 39,67,10,632 79,62,423 Income as per Form 26AS 44,84,46,601 90,09,142 Income as appearing in form 26AS of AY 2019-20 excluding interest income Less: Income as appearing in form 26AS in AY 2018-19 excluding 5,17,35,969 10,34,719 interest income (B) Income as per Form 26AS 39,67,10,632 79,74,423 TDS of Rs.12,000/- not claimed in ITR (A-B) - -12,000

From the above table, it can be fairly concluded that the corresponding income of Rs.4,97,35,943/-, as against the carry forward TDS of Rs.9,94,719/- being claimed now, is over and above the income as appearing in Form 26AS of F.Y. 2018-19. PRAYER

Considering the above facts, your Honour is requested to allow the claim of brought forward TDS made by the appellant in its Return of Income for assessment year 2019-20."

9. We have heard Ld. Authorized Representatives of the parties and perused the material available on record and gone through the orders of the authorities below. It is stated by the Ld. Counsel for the assessee that it has offered the income corresponding to brought forward TDS to tax in concerned Assessment Year. However, the CPC did not allow benefit of brought forward TDS amounting to Rs.9,94,700/-. Considering the totality of the facts and provision of section 199 of the Act and Rule 37BA of the Income Tax Rules, 1962, it would sub-serve the interest of justice, if the matter is restored to the AO who would verify the correctness of the claim of the assessee regarding the income corresponding to brought forward TDS was offered to tax in the concerned Assessment Year. However, no credit was claimed in respect of the TDS under consideration in the relevant year. If the AO finds that no credit was taken related to the income offered in that particular Assessment Year, he would allow the set off of TDS brought forward amounting to Rs.9,94,700/-. Ground No.4 raised by the assessee is hence, allowed for statistical purposes.

Order pronounced in the open Court on 16th March, 2023.