DEPUTY COMMISSIONER OF INCOME TAX, JAIPUR vs. RAJASTHAN AVAS VIKAS & INFRASTRUCTURE LIMITED, JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR Jh fot; iky jko] U;kf;d lnL; ,oa Jh foØe flag ;kno] ys[kk lnL; ds le{k BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA No. 486/JP/2018 fu/kZkj.k o"kZ@Assessment Year : 2014-15 cuke The DCIT, M/s Rajasthan Awas Vikas & Infrastructure Vs. Circle- 6, Ltd., Jaipur. Lalkothi, Tonk Road, Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AABCA 3281 B vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : None jktLo dh vksj ls@ Revenue by : Shri Anoop Singh (Addl.CIT) lquokbZ dh rkjh[k@ Date of Hearing : 29/05/2018 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 30/05/2018 vkns'k@ ORDER

PER: VIJAY PAL RAO, J.M.

This appeal by the Revenue is directed against the order dated 31.01.2018 of CIT (A), Jaipur for the A.Y. 2014-15. The Revenue has raised the following grounds:- “ (i) Whether on the facts and circumstances of the case and in law the Ld. CIT(A) was justified in derecting to allow TDS credit of Rs. 14,16,550/- deducted by the bank on interest on FDRs without appreciating the fact that the said income is

ITA No. 486/JP/2018 DCIT vs. M/s Rajasthan Awas Vikas & Infrastructure Ltd.

not includable in assessee's total income and that the TDS payment is not form assessee's income.

(ii)Whether on the facts and circumstances of the case and in law the Ld. CIT(A) was justified in deleting the disallowance of Rs. 2,52,907/- made for depositing the employees' contribution to PF ESI beyond the prescribed time limit provided in the respective Acts.

(iii) Whether on the facts and circumstances of the case and in law the ld. CIT(A) was justified in holding that the employees' contribution to PF & ESI are governed by the provisions of Section 43B and not by section 36(1)(va) r.w.s. 2(24)(x) of the Income Tax Act, 1961.

(iv) The appellant craves its rights to add, amend or alter any of the grounds on or before the hearing."

was called for hearing despite notice of hearing was sent through RPA.

Accordingly, we proposed to here and disposed off the appeal ex-parte.

respect of interest on FDR which was allowed the ld. CIT(A).

material on record. The assessee claimed credit of TDS of Rs.

14,16,550/-. The AO noted that the credit of TDS in question is claimed

by the assessee in respect of the interest on FDR however, no such

income has been shown by the assessee. Accordingly, the AO proposed

ITA No. 486/JP/2018 DCIT vs. M/s Rajasthan Awas Vikas & Infrastructure Ltd.

to disallow the claim of TDS credit. The assessee contended before the

AO that the amount of interest of FDR is not an income chargeable to

tax and therefore, the TDS credit of Rs. 14,16,550/- cannot be denied

when the corresponding interest income is not an income chargeable to

tax. The AO did not accept the explanation of the assessee and

disallowed the claim of TDS credit in question. On appeal, the ld. CIT(A)

has considered and decided this issue in para 2.3 as under:-

“2.3 I have perused the facts of the case, the assessment order and the records of the appellant. This issue arose in the earlier years also and was decided by the Honble ITAT both for A.Y. 2009-10 and 2010-11 and 2011-12 and 2012-13 . The relevant portions of the order for A.Y. 2009-10 and 2010-11 (ITA Nos. 247 & 248/JP/2014, 18 MARCH 2016) and 2011-12 and 2012-13 (ITA No. 391 & 392/JP/2016 A.Y. 2011-12 &2012-13, dated 12.05.2017) is reproduced below:- ITA Nos. 247 & 248/JP/2014, 18 MARCH 2016 4.3. We have heard rival contentions and perused the material available on record. In our view the issue involved in the present appeal had already been adjudicated in the 7 ITA No. 247 & 248/JP/2014 Rajasthan Avas Vikas & Infrastructure Ltd. Vs. DCIT matter of CIT vs. Relcom (2015) 62 Taxmann.com 190 (Delhi) wherein it was held as under :- “6. Having heard the submissions made on behalf of the revenue and after a perusal the orders passed by the CIT(A) and the ITAT, we are of opinion that the said orders do not call for any interference and were warranted and justified in the facts and circumstances of the case. Before we proceed to elaborate on our reasons for the same, a perusal of Section 199 of the Act is necessary. Section 199 reads as 3

ITA No. 486/JP/2018 DCIT vs. M/s Rajasthan Awas Vikas & Infrastructure Ltd.

follows: "199. Credit for tax deducted. (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 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 subsection (1) and sub-section (2) and also the assessment year for which such credit may be given." 7. The revenue relies on the phrase "shall be treated as a payment of tax on behalf of the person from whose income the deduction was made" to contend that the assessee's TDS claim cannot be based on the receipts of M/s REPL. However, the assessee fairly admitted throughout the proceedings for its TDS claim of Rs. 1,20,73,097/- that the benefit of such claim has not been availed by M/s. REPL. Therefore, the revenue, having assessed M/s REPL's income in respect to such TDS claim cannot now deny the assessee's claim on the mere technical ground that the income in respect of the said TDS claim was not that of the assessee, given that M/s Relcom (the assessee) and M/s REPL are sister concerns and M/s REPL has not raised any objection with regard to the assessee's TDS claim of Rs. 1,20,73,097/-. 8. This Court's reasoning is supported by a ruling of the Division Bench of the Andhra Pradesh High Court in CIT v. Bhooratnam & Co. [2013] 357 ITR 396/216 Taxman 6/29 taxmann.com 275 where the Court noted as follows: 4

ITA No. 486/JP/2018 DCIT vs. M/s Rajasthan Awas Vikas & Infrastructure Ltd.

"In our view, the CIT (Appeals) and the Tribunal have rightly held that the assessee is entitled to the credit of the TDS mentioned in the TDS certificates issued by the contractor, whether the said certificate is issued in the name of the Joint Venture or in the name of a Director of the assessee company. They have considered the terms of the agreement dated 12-03-2003 among the parties to the joint venture and held that credit 8 ITA No. 247 & 248/JP/2014 Rajasthan Avas Vikas & Infrastructure Ltd. Vs. DCIT for TDS certificates cannot be denied to the assessee while assessing the contract receipts mentioned in the said certificates as income of the assessee. The income shown in the TDS certificates has either to be taxed in the hands of the joint venture or in the hands of the individual co-joint venturer. As the joint venture has not filed return of income and claimed credit for TDS certificates and the TDS certificates have not been doubted, credit has to be granted to the TDS mentioned therein for the assessee. The Revenue cannot be allowed to retain tax deducted at source without credit being available to anybody. If credit of tax is not allowed to the assessee, and the joint venture has not filed a return of income, then credit of the TDS cannot be taken by anybody. This is not the spirit and intention of law."(Emphasis Supplied) 9. At this stage, it is also relevant to note the provisions of Rule 37BA of the Income Tax Rules, 1962, which envisions grant of TDS credit to entities other than the deductee (herein, M/s REPL). We must clarify that we are not oblivious of the fact that Rule 37BA is not directly applicable in the facts of this case. The reliance placed on Rule 37BA is merely to demonstrate that in not all circumstances is TDS credit given to the deductee. In the present case the amount was deposited as FDR’s by the assessee on behalf of State of Rajasthan with the Bank of Rajasthan and on the FDR’s deposit the interest has been accrued . The TDS was deducted by the Bank on the interest accrued on the FDRs. In our view, the Revenue is taking the hyper technical 5

ITA No. 486/JP/2018 DCIT vs. M/s Rajasthan Awas Vikas & Infrastructure Ltd.

plea of not returning the TDS to the assessee on the pretext that the amount has been deposited with the bank on behalf of State of Rajasthan. Since the State of Rajasthan is not a taxable entity, therefore, refund of TDS cannot be given to the State of Rajasthan. It is not disputed that the assessee after realizing the interest income from the bank has given back the amount to the State of Rajasthan . Similarly it is also undisputed that the refund of TDS has not been claimed by the the State of Rajasthan and is only claimed by the Assessee being the nodal agency of the State of Rajasthan for this project . In our view, no prejudice will be caused to any person if the TDS is refunded to the assessee being the nodal agency with the undertaking to return the amount to the State of 9 ITA No. 247 & 248/JP/2014 Rajasthan Avas Vikas & Infrastructure Ltd. Vs. DCIT Rajasthan. In view of thereof and also in view of the judgment referred hereinabove, the TDS deducted by the Income Tax Department is directed to be paid to the assessee and we accordingly hold the same. In this view of the matter, the appeal of the assessee is allowed. 5. Similar ground is raised in the assessee’s appeal in ITA No. 248/JP/2014 for the assessment year 2010-11. Since we have decided the assessee’s appeal in ITA No. 247/JP/2014 in its favour, on the same reasoning we decide the appeal of the assessee for the A.Y. 2010-11 in favour of the assessee. 6. In the result, both the appeals of assessee are allowed. ITA No. 391& 392/JP/2016 A.Y. 2011-12 & 2012-13 2.4 The facts of the instant case are pari materia to the facts of the case before the Coordinate Bench in respect of assessee’s own case for A.Ys 2009-10 and 2010-11. The Revenue has not brought to our notice any contrary authority on the said issue. Hence, we do not see a reason to deviate from the view taken by the Coordinate Bench in assessee’s own case.

ITA No. 486/JP/2018 DCIT vs. M/s Rajasthan Awas Vikas & Infrastructure Ltd.

2.5 Undisputedly, the interest income has not been brought to tax by the Revenue accepting the assessee’s contention that the receipt of funds and interest thereon is in the fudiciary capacity on behalf of the State of Rajasthan. The State of Rajasthan being not a taxable entity, there should not be any TDS at first place. For reasons best known to the assessee and the bank, the TDS has been deducted. Given that interest income is not taxable either in the hands of the assessee or the state of Rajasthan, the TDS has to be refunded. Since the assessee is acting as the nodal agency and all funds have been routed through it, the refund of TDS has to be routed through it to the State of Rajasthan. Accordingly, we direct the Revenue to refund the TDS of Rs. 38440/- to the assessee with the undertaking to return the said amount to the State of Rajasthan. ITA No. 392/JP/2016 ITA No. 391 & 392/JP/2016 Rajasthan Avas Vikas & Infrastructure Ltd Vs ACIT 8 2.6 In ITA No. 392/JP/2016, the facts are pari-materia to the facts of the case in above appeal in ITA No. 391/JP/2016. Accordingly, our findings and directions contained therein shall apply mutatis mutandis to this appeal as well. In the result, both the appeals of assessee are allowed. In view of the decisions as above the ground of appeal of the assessee is allowed.”

Thus, it is clear that the ld. CIT(A) has allowed the claim of the

assessee by following decisions of Coordinate Benches of this Tribunal

in assessee’s own case for the assessment years 2009-10 to 2012-13.

There is no denial of the fact that the interest income on which the TDS

in question was deducted by the bank was in respect of the funds

received by the assessee from HUDCO in the fiduciary capacity on

ITA No. 486/JP/2018 DCIT vs. M/s Rajasthan Awas Vikas & Infrastructure Ltd.

behalf of the State Government for disbursement. The fact in the year

under consideration are same as it was for the earlier assessment year

followed by the ld. CIT(A). Accordingly, in view of the findings of

Coordinate Benches of this Tribunal in assessee’s own case for the

assessment years 2009-10 to 2012-13, we do not find any error or

illegality in the impugned order of the ld. CIT(A) qua this issue.

on account of PF and ESI beyond the prescribed time limit provided in

the respective Acts which was allowed by the ld. CIT(A).

authorities below. The ld. CIT(A) has considered this issue in para 3.3

as under:-

“ 3.3 I have perused the facts of the case, the assessment order and the submissions of the appellant. Admittedly, contribution to PF & ESI has been paid by the appellant, in all instances, before the due date of filing the return of income u/s 139(1). This fact is therefore, not in dispute. Reliance is placed on the relevant judgments on this issue of the jurisdictional High court and the Apex court as listed below:- “CIT Vs. Vinay Cements [213 CTR 268 (SC) CIT Vs. State Bank of Bikaner & Jaipur [(2014) 43 taxmann. corn 411 (Raj)]: Held "23. Thus, it is viewed that where the PF and/or EPF, CPF, GPF etc.,

ITA No. 486/JP/2018 DCIT vs. M/s Rajasthan Awas Vikas & Infrastructure Ltd.

if paid after the due date under respective Act but before filing of the return of income under Section 139(1), cannot be disallowed under Section 438 or under Section 36(I)(va) of the IT Act." CIT Vs. Udaipur Dugdh Utpadak Sahakari Sangh Ltd. 265 CTR (Raj.) 59: Section 36(I)(va) and 438 of the Income Tax Act, 1961 - Business Expenditure - Assessee entitled to deduction in respect of contribution to ESI and PF as the same has been deposited prior to the filing of return of income u/s 139(1). CIT Vs. Jaipur Vidyut Vitran Nigam Ltd. 265 CTR (Raj.) 62: Section 36(l)(va) and 438 of the Income Tax Act, 1961 - Business Expenditure - Disallowance - Assessee entitled to deduction in respect of payment for GPF, CPF and ESI as the same has been deposited prior to the filing of return of income u/s 139(1). Alom Extrasions (2009) 319 ITR 306 (SC): Business expenditure-Deduction on actual payment-Contribution to provident fund- Existing provision creating difficulties- Amendment to remove difficulty-Has retrospective effect- Finance Act, 2003, making amendment but as if with effect from April 1, 2004-To be read as having retrospective effect from April 1,1988-Income-tax Act, 1961, s. 438. M/s Supersonic Turner Pvt. Ltd vs. ACIT [ITA No. 853/JP/2012]: DCIT Vs. Royal India Jewellery Manufacturing Private Limited [ITA No.582/JP/2008 dated 13/02/2009]: In view of the above and judgments relied on, the claim of the appellant is allowable. Accordingly, this disallowance made by the 9

ITA No. 486/JP/2018 DCIT vs. M/s Rajasthan Awas Vikas & Infrastructure Ltd. Assessing Officer is, directed to be deleted. This ground is allowed.” Further, as it is clear that this issue is covered by the decisions of

jurisdictional High Court in case of CIT vs. State Bank of Bikaner &

Jaipur 43 taxmann.com 411 as well as in case of CIT vs. Jaipur Vidyut

Vitran Nigam Ltd. 265 CTR 62. Accordingly, in view of the binding

precedent of the Hon’ble jurisdictional High Court we do not find any

error or illegality in the impugned order of the ld. CIT(A) qua this issue.

In the result, the Revenue appeal is dismissed.

Order pronounced in the open court on 30/05/2018.

Sd/- Sd/- ¼fot; iky jko½ ¼foØe flag ;kno½ (Vikram Singh Yadav) (Vijay Pal Rao) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 30/05/2018. *Santosh. आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- DCIT, Circle-6, Jaipur. 2. izR;FkhZ@ The Respondent- M/s Rajasthan Awas Vikas & Infrastructure Ltd., Jaipur. 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत. 6. xkMZ QkbZy@ Guard File {ITA No. 486/JP/2018} vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेज. त्महपेजतंत