STOCK HOLDING CORPORATION OF INDIA LTD,MUMBAI vs. DY CIT 8 (2) (2), MUMBAI

Briefly stated facts of the case are that: (i) In the scrutiny assessment order under section 143(3) of the Income-tax Act, 1961 (in short „the Act‟), the Assessing Officer allowed credit of tax deducted at source (TDS) amounting to ₹ 13,37,98,519/-. According to the assessee, it was allowed short credit of TDS. On further appeal, the Ld. First Appellate Authority i.e. Ld. CIT(A) directed the Assessing Officer to verify and allow the credit of TDS as per provisions of law. (ii) The Ld. Assessing Officer in order dated 07/08/2018, while giving effect to the order of the Ld. First Appellate Authority i.e. Ld. CIT(A) , restricted the credit of TDS to ₹ 15, 20, 64, 111/-, which was appearing in form No. 26AS for AY 2011-12 ( i.e. the form prescribed for providing statement of TDS to the assessee for the year under consideration as per section 203AA of the Act ) as against TDS credit of ₹ 17, 39, 68, 882/- claimed by the assessee. The assessee filed copy of TDS certificates amounting to Rs. 2, 64, 87, 104/- for claiming credit of remaining TDS. (iii) Aggrieved with the order of the Assessing Officer (giving effect to the order of the Ld. First Appellate Authority), the assessee filed appeal before the Ld. CIT(A).

Before the Ld. CIT(A), the assessee claimed that as per Annual Tax Statement in form No. 26AS credit of ₹ 15,26,67,613/- is available and out of which amount of ₹ 52,48,263/- had been claimed by the assessee in preceding assessment year(s). It was further submitted that balance TDS credit of ₹ 2, 65, 49, 204/-is not reflected in form No. 26AS of current financial year, however original TDS certificate to the extent of ₹ 2,64,87,104/- were produced

The Ld. CIT(A) directed the Assessing Officer to allow credit as per the form No. 26AS for the year under consideration and withdraw the excess credit (credit of ₹ 52,48,263/- which had already been claimed by the assessee and allowed by the Ld. Assessing Officer in preceding years) allowed to the assessee. Relevant finding of the Ld. CIT(A) is reproduced as under: ―I have considered the submission made by the appellant. The appellant has claimed credit for TDS amounting to Rs. 17,39,68,882/in the return of income. Total amount of TDS reflecting in form 26AS for the relevant assessment year is Rs. 15,26,67,613/out of which amount of Rs. 52,48,263/= has already been claimed by the appellant in the preceding assessment years. Thus, as against claim of credit for amount of Rs. 17,39,68,882/amount reflecting in form 26AS of the assessment year under consideration is Rs. 14,74,19,350/only and balance amount of Rs.2,65,49,532/-is not appearing in form 26 AS of the assessment year under consideration. The appellant has divided credit for this amount in various sub categories and allowability of the claim of the appellant is discussed as under:

We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. The issue in dispute involving ground No. 1 (one) of the appeal, is of the assessment year in which credit of 6 Assessment Year: 2011-12 tax deducted at source has to be given. In the case, before us the assessee has submitted a list of TDS certificates amounting to Rs. 2,64,87,104/- which is available on page 18 of the paperbook . The assessee has also enclosed a copy of all the TDS certificates amounting to ₹ 2,64,87,104/-, which are available from page 19 to 103 of the paperbook. On perusal of the TDS certificates, we find that one TDS certificate relates to either assessment year 2010-11, and the remaining certificates relates to assessment year 2011-12 i.e. the assessment year under consideration or assessment year 2012-13. The TDS certificates filed by the assessee had been issued mainly by the Government Organisation, Semi-government organization or Public Sector Undertakings and similar institutions . The assessee is seeking credit of TDS on the basis of these TDS certificates, whereas the Assessing Officer has allowed the credit on the basis of Form No. 26AS, which is a statement of deduction of tax at source prepared by the Income-tax Department in terms of section 203AA of the Act in respect of the tax deducted in the case of the assessee relevant to the assessment year under consideration i.e. AY 2011-12. 7. The section 199 under chapter XVII B of the Act, has prescribed provision for giving credit of TDS. The provisions of section 199 of the Act, as it existed prior to 01/04/2008 lays down that credit for TDS will be allowed in the assessment year in which income is assessable. The Tribunal, Chandigarh Assessment Year: 2011-12 that (i) the assessee should produce the TDS certificates (ii) show that income subjected to TDS is disclosed in return of income of the assessment year as “assessable”.

1 The section 199 of the Act however has been substituted by the Finance Act, 2008 with effect from 01/04/2008 and as per the substituted provisions, the credit has to be given as per the provisions made in the Income-tax Rules, 1962 (in short „the Rules‟). In terms of, Rule 37BA the 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. In case the income is assessable over a number of years, credit for tax deducted at source shall be allowed across the years in the same proportionate, in which the income is assessable to tax.

2 For ready reference, the relevant provision for credit of tax deducted at source during relevant period i.e. section 199 of the Act, is reproduced as under: ―(1) Any deduction made in accordance with the foregoing provisions of this Chapter and paid to the Central Government shall be treated as payment of tax on behalf of the person from whose income the deduction was made, or of the owner of the security, or o 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.

The relevant rule i.e. Rule 37BA in this respect is also reproduced for ready reference: ―Credit for tax deducted at source for the purposes of section 199. (1) Credit for tax deducted at source and paid to the Central Government in accordance with the provisions of Chapter XVII, shall be given to the person to whom payment has been made or credit has been given (hereinafter referred to as deductee) on the basis of information relating to deduction of tax furnished by the deductor to the income-tax authority or the person authorised by such authority. (2) (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. (3) (i) Credit for tax

The assessee has relied on the decision of the Pune Bench of Tribunal in the case of M/s Mahesh Software Systems P. Ltd. in ITA No. 1288/PUN/2017 for assessment year 2011-12. In the said case the assessee raised bills of ₹ 84,10,000/- on M/s Ashoka Leyland on 28/03/2011 and recorded this invoice in assessment year 2011-12, whereas M/s Ashok Leyland though deducted the tax at source on the said bill, however deposited it with the exchequer in the month of April 2011. The Tribunal (supra) after analyzing section 199 and Rule 37BA concluded as under: ―7. The AO has relied on sub-rule (1) of section 37BA for denying the benefit of TDS during the year under consideration. This part of the Rule provides that the credit for TDS shall be given to the person to whom payment has been made or credit has been given on the basis of information relating to TDS furnished by the deductor. What is 10 Assessment Year: 2011-12 material for sub-rule (1) is the beneficiary of credit for the TDS, being the person to whom payment has been made, which in the instant case is the assessee. The ld. CIT(A) has, in addition, relied on sub-rule (4) of Rule 37BA, which again provides that the credit for TDS shall be granted on the basis of information relating to deduction of tax at source furnished by the deductor. How, this rule prejudices the claim of the assessee is anybody‘s guess. Obviously, the information about the TDS by Ashok Leyland is not denied. Both the sub-rules simply provide for granting of the benefit of TDS. The point of time at which the benefit of TDS is to be given, is governed by sub-rule (3) of Rule 37BA, which unequivocally provides through clause (i) that the ‗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‘. It is, ergo, abundantly clear from the mandate of Rule 37BA(3)(i) that the benefit of TDS is to be given for the assessment year for which the corresponding income is assessable. Since the income of Rs.84.10 lakh, on which tax of Rs.8,41,050/- was deducted at source, is patently assessable in the year under consideration, we hold that the benefit of the TDS should also be allowed in the same year, namely, the year under consideration. We, therefore, overturn the impugned order and direct accordingly.‖

Thus, the Tribunal (supra) has held that the benefit of the TDS has to be allowed in the same year in which the income is assessable irrespective of the year in which tax has been deposited by the deductor.

Further, Tribunal Mumbai Bench in the case M/s Greatship (India) Ltd in ITA No. 5562/Mum/2018 for assessment year 2015-16, in identical circumstances, observed as under:

Also, as a word of caution, the A.O shall take necessary steps in order to ensure that no TDS credit of the aforesaid amount of Rs. 45,41,995/- is/was availed by the assessee in the immediately succeeding year i.e A.Y 2016-17 in which the same is reflected in its ―Form 26AS‖.

In view of above precedents, we summarise the position of law on the issue that during relevant period Credit for TDS has to be allowed in the assessment year, in which the corresponding income is assessable. It is not relevant in which financial year, the tax has been deposited in Govt. account or in which year TDS certificate has been issued. The relevant thing which has to be verified is for which year the deductor has credited the income to the assessee in the TDS certificate issued and if the income is credited for relevant

When we analyze the facts of the instant case in above legal background, we find that the TDS certificates under reference filed by the assessee before the Ld. Assessing Officer can be divided in three categories. First category, where the TDS has been deducted by the deductor for assessment year 2010-

One TDS certificate, available on page 30-31 of the paperbook , falls in this category. In this TDS certificate, date of credit or payment is not mentioned and only date of deposit of TDS of Rs. 26,956 and Rs. 34,072 in Government Account is mentioned as on 05/03/2010 and 05/04/2010 respectively. In the circumstances, it needs verification as to in which year the corresponding income was assessable in the hands of the assessee.

As far as second category of TDS certificates are concerned, we find that in those certificates income has been credited or paid to the assessee in the assessment year under consideration and tax has also been deducted in assessment year under consideration i.e. AY 2011-12 , however same has been deposited in subsequent assessment year i.e. AY 2012-13. If the income corresponding to the TDS is assessable in the year under consideration, then the assessee is eligible for credit of TDS in the year under consideration, irrespective of the year in which TDS was deposited by the deductor. For example, TDS certificate available on page 35 of the paperbook, wherein amount of ₹ 5, 04, 345/-has been credited in the account of the assessee on 31/03/2011, however tax has been deposited in government account on 24/05/2011. In such category of TDS certificates, following the finding of the 13 Assessment Year: 2011-12 Tribunal in the case of Mahesh Software Systems Private Limited (supra) , the corresponding income is assessable in assessment year under consideration i.e. AY 2011-12. The section 205 of the Act also support this view. According to the section 205 of the Act, where tax is deductible at the source under the provisions of the act, the assessee shall not be called upon to pay tax himself to the extent to which tax has been deducted from that income. Thus, in order to call bar of section 205 into operation, it is necessary to establish the tax has in fact deducted at source and credit of the tax deducted at source must be granted to the payee, even if the payer or deductor has not deposited the tax into Government Account.

The third category of TDS certificates, where income has been credited or paid by the deductor in financial year corresponding to assessment year 2012- 13 and tax has also been deducted in the financial year corresponding to assessment year 2012-13. In those cases, the deductor has credited the income to the assessee for assessment year 2012-13, whereas assessee has claiming the credit of said TDS in assessment year 2011-12. We do not understand as how and on what basis the assessee has credited the income corresponding to those TDS certificate in the year under consideration. No documentary evidence in this regard as the corresponding income is assessable or capable of being assessed in the year under consideration, have been filed before lower authorities or before us and therefore onus is on the assessee to establish that said income corresponding to those TDS certificate was assessable in the year under consideration.

In view of our finding above, we set aside the finding of the Ld. CIT(A) on the issue in dispute and restore the issue of verification of TDS certificates amounting to ₹ 2,64,87,104 as to in which assessment year income corresponding to the TDS is assessable and allow credit accordingly. For verification of the assessment year in which income is „assessable‟, the Assessing Officer may carry out the inquiries which he deems fit in the circumstances including verifying the previous year relevant to the assessment year in which corresponding bills/invoices are issued by the assessee, the previous year in which services corresponding to bills issued were rendered, when the entries of such bills / invoices were made in the books of accounts of the assessee , the previous year in which such bills/invoices were sent to the TDS deductor etc. We have also noticed difference in amount of TDS credit denied by the Ld. AO and amount challenged in Ground No. 2 of the appeal. The Assessing Officer shall reconcile those amounts and ensure that if credit of particular TDS amount is allowed in the year under consideration, than no credit of said TDS is allowed in any other assessment years. It is the responsibility of the assessee also not to claim the same TDS twice. The ground No. 1 of the appeal of the assessee, is accordingly allowed for statistical purposes.

As far as ground No. 2 of the appeal is concerned, we are of the opinion that in ground No. 1 of the appeal, the assessee itself is claiming for allowing credit on the basis of the year in which income is assessed. The claim of the assessee in ground No.2 is in contradiction with the claim of the assessee in ground No. one of the appeal. When, the assessee has already claimed TDS

In the result, the appeal of the assessee is partly allowed for statistical purposes.

In the result, the appeal of the assessee is allowed partly for statistical purposes. Order pronounced in the open court on 5th January, 2022. (AMARJIT SINGH) ACCOUNTANT MEMBER