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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI B.R. BASKARAN, AM & SHRI N. K. CHOUDHRY, JM
Dhananjay G. Mishra ACIT, Circle-20(1), W-1402, World Crest, Senapati Piramal Chambers, Lalbaug, Bapta Marg, Lower Parel, The Mumbai-400013. Vs. World Towers Delisle Road, Mumbai-400013. PAN No. AFLPM1475K Appellant) : Respondent) Appellant/Assessee by : Shri Satish Mody, Adv. Respondent/Department by : Smt. Mahita Nair, CIT-DR Date of Hearing : 21.09.2023 Date of Pronouncement : 22.09.2023 O R D E R Per N. K. Choudhry, JM:
The Assessee/Appellant herein has preferred this appeal against the order dated 03.05.2023 impugned herein passed by National Faceless Appeal Centre, Delhi, {in short ‘NFAC’} under section 250 of the Income Tax Act 1961 (in short ‘the Act’).
Dhananjay G. Mishra . 2. In the instant case, the AO vide order dated u/s 154 r.w.s. 143(1) of the Act made the disallowance of TDS credit of Rs. 573900/- on the ground that YMS i.e. proprietorship concern ended in 31.10.2015 and new concern i.e. YMSPL has succeeded.
The Ld. Commissioner on appeal affirmed the said disallowance by holding as under:
Findings and decision:- I have carefully considered the facts of the case as well as submissions filed by the appellant. It is clear that the proprietorship concern of the Appellant has been closed and it's business has been taken over by the company YMSPL. The Appellant's case For Assessment year 2015-16 was also decided by the undersigned, holding as under:- “5.2 The main issue involve in this appeal is the disallowance of TDS credit of Rs. 24, 41,710/-. As per records YMS i.e. proprietorship concern was over as on 31.10.2015 but the contracts continued in the name of YMS and receipts were generated in name YMS instead of YMSPL. During the course of appellate proceedings, appellant filed submissions and case laws in support of its contentions which were found non-tenable and irrational. When the YMS has been put to an end and succeeded by a new company the contracts should be revised and the TDS should be deducted in the name of the new company. The provisions of Rule 37BA(2)(i) have been legislated specifically to deal with such a situation, and they read as under:- "(i) Where under any provisions of the Act, the whole or any part of the income on which tax has been deducted at source is assessable in the hands of a person other than the deductee, credit for the whole or any part of the tax deducted at source, as the case may be, shall be given to the other person and not to the deductee: Provided that the deductee files a declaration with the deductor and the deductor reports the tax deduction in the name of the other person in the information relating to deduction of tax referred to in sub-rule (1)]
(ii) The declaration filed by the deductee under clause (i) shall contain the name, address, permanent account number of the person to whom credit is to be given, payment or credit in relation to which credit is to be given and reasons for giving credit to such person. (iii) The deductor shall issue the certificate for deduction of tax at source in the name of the person in whose name credit is shown in the information relating to deduction of tax referred to in sub-rule (1) and shall keep the declaration in his safe custody." As per these provisions, the credit for this TDS of Rs. 24,41,710/- should have been claimed by the company YMSPL. The deductee should have given a declaration in this respect to the deductors, and they would have incorporated the information relating to the company YMSPL in the information of TDS certificates, thereby enabling the company to claim the credit for this TDS. Thus, the appellant has not complied with these statutory provisions, and consequently the credit for this TDS cannot be allowed. It is reiterated that this credit can be allowed in the hands of the new company YMSPL on the compliance of the above-mentioned conditions, but it cannot be allowed in the hands of the appellant in any case. The provisions of Rule 37BA(2)(1) make it amply clear. Therefore, the grounds of appeal no. 1, 2 and 3 are hereby disallowed. Consistently following the same approach in the current year also, it is held that the entire income of the business is assessable in the hands of the successor company YMSPL, since the proprietorship concern YMS has been wound up on 31.10.2015. Accordingly, the addition of Rs.22,98,480/- made by the CPC taking the profit rate @ 8% is hereby deleted. In any case the addition is on a debatable issue and clearly falls outside the scope of section 143(1) of the Income-Tax Act. However, the Appellant will not get credit for the TDS corresponding to these receipts of Rs. 2,86,26,927/- as per the provisions of rule 37BA of the Income-Tax Rules. This is also consistent with the decision of the undersigned in the Assessment year 2016-17. The grounds of appeal no. 1, 2 and 3 are thus partly allowed as above.”
We have given thoughtful consideration to the determination made by the Ld. Commissioner and observe that while following the earlier Dhananjay G. Mishra . decision taken by himself for the AY 2015-16 case, the Ld. Commissioner hold that since the proprietorship concern YMS has been would up on 31.10.2015, the Assessee will not get credit for the TDS corresponding to the receipts of Rs. 2,86,26,927/- as per the provisions of rule 37BA of the Income-Tax Rules 1962. The Assessee before us claimed that the appeal of the Assessee may be dismissed but in accordance with law. As it is not in controversy that the proprietorship concern “YMS” is no more in existence and therefore, the Assessee is not entitled for any kind of credit of 573900/- qua TDS corresponding to the receipts of Rs. 2,86,26,927/- as per the provisions of Rule 37B of the Income-tax Rule.
In the result, appeal filed by the Assessee stands dismissed.