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Facts
The assessee, a trust engaged in harvesting and transportation of sugarcane, filed a revised return declaring NIL income but claimed a refund of Rs.1,18,77,593/- for TDS deducted u/s 194C. The CPC processed the return as NIL but disallowed the TDS credit, which was upheld by the Addl./JCIT(A)-1. The trust functions as a middleman, receiving reimbursements and administrative charges, which are then passed on to contractors and used for expenses.
Held
The Tribunal observed that the assessee's modus operandi has been consistent over several previous assessment years, where similar TDS claims were accepted after scrutiny. Citing no change in the assessee's activity for the current year, the Tribunal set aside the Addl./JCIT(A)-1's order and remanded the matter. It directed the Addl./JCIT(A)-1 to re-adjudicate the appeal afresh, considering past assessment orders and allowing the assessee to provide further details and evidence.
Key Issues
The primary issues were the disallowance of TDS credit of Rs.1,18,77,593/-, the non-granting of interest u/s 244A on refund, and the AO/CPC allegedly not providing reasons for disallowing the TDS claim.
Sections Cited
194C, 244A, 143(3), 147, 143(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI R. K. PANDA & SHRI VINAY BHAMORE
Assessment Year : 2018-19 Mula Parisar Serva Seva Vs. Exemption Ward 1(1), Sangh, Nashik. At Post- Sonal, Tal.- Newasa, Dist.- Ahmednagar- 414105. PAN : AAATM7100K Appellant Respondent Assessee by : Shri Mihir Bapat Revenue by : Shri Ramnath P. Murkunde Date of hearing : 19.11.2024 Date of pronouncement : 09.01.2025 आदेश / ORDER
PER VINAY BHAMORE, JM:
This appeal filed by the assessee is directed against the order dated 12.02.2024 passed by Ld. Addl./JCIT(A)-1, Coimbatore for the assessment year 2018-19.
The appellant has raised the following grounds of appeal :- “1) The AO/CPC has erred in not allowing credit for TDS of Rs.1,18,77,593/- as claimed in the return of income and as per 26AS of Rs.1,18,77,593/-. 2) Interest u/s 244A on refund – not grated by A.O. 3) AO/CPC has erred in not providing any reasons in not allowing TDS claim of Rs.1,18,77,593/-.
4) The appellant craves leave to add, alter, amend or revise the above ground of appeal at the time of hearing of the above appeal.”
3. The facts of the case, in brief, are that the assessee is a trust engaged in the activity of harvesting and transportation of harvested sugarcane and making payments to the labour contractors after receiving the same from the sugarcane factory who deducted TDS u/s 194C of the IT Act. The assessee trust has furnished its revised return of income on 30.03.2019 declaring NIL income, although refund of Tax Deducted at Source (TDS) of Rs.1,18,77,593/- was claimed. The above revised return was processed determining Rs.Nil income. However, the credit of TDS was not allowed by CPC which was claimed by the assessee as refund.
4. After considering the submissions of the assessee, Ld. Addl./JCIT(A)-1, Coimbatore dismissed the first appeal filed by the assessee. It is this order against which the assessee is in appeal before this Tribunal.
5. Ld. AR appearing from the side of the assessee submitted before us that the assessee is an old trust registered under Bombay Public Trust Act, 1950. Ld. AR submitted that the assessee trust carries on the activity of Harvesting & Transportation (H&T) work Mula Sahakari Sakhar Karkhana. The actual expenditure on H&T of Mula Sahakari Sakhar Karkhana is paid by the assessee to various contractors executing the harvesting activity as well as transportation activity for Mula Sahakari Sakhar Karkhana. Such expenditure is incurred on behalf of Mula Sahakari Sakhar Karkhana only since they are the direct beneficiary of such sugarcane, as such sugarcane is used for crushing by the sugar factory. Such actual expenditure paid by the assessee is reimbursed to the assessee by Mula Sahakari Sakhar Karkhana and the overheads of assessee are then recouped by Mula Sahakari Sakhar Karkhana by way of supervision/administration/service charges. This amount only shown as income by the assessee in its Profit & Loss Account. During the year under consideration, the assessee incurred such overheads of Rs.25,13,520/- against which income of Rs.25,13,520/- is received by assessee from Mula Sahakari Sakhar Karkhana. It was also submitted by Ld. AR that there is no other activity conducted by the assessee trust and the sole activity is to conduct H&T function on behalf of Mula Sahakari Sakhar Karkhana. It was further clarified by Ld. AR that the assessee trust acts only as a middleman between Mula Sahakari Sakhar Karkhana and the H&T contractors. The gross payment H&T contractors are exactly the same as are claimed by the assessee from Mula Sahakari Sakhar Karkhana. Hence separate receipt and expenditure was not shown by the assessee of this same amount on both sides of Profit & Loss Account. It was further submitted by Ld. AR that whatever amount is reimbursed by Mula Sahakari Sakhar Karkhana, proper TDS was deducted which is appearing in Form 26AS of the assessee trust and the same is also claimed as refund in the income tax return furnished by the assessee trust. Ld. AR also submitted that this practice is followed on year to year basis since long and in support of this contention, copy of assessment orders u/s 143(3) r.w.s. 147 for the assessment years 2009-10, 2010-11, 2011-12, 2012-13, 2013-14 and copy of assessment order u/s 143(3) for the assessment year 2016-17 are furnished before the Bench in paper book. It was submitted by Ld. AR of the assessee that in all the above assessment orders, the Department has accepted this procedure and only made the addition of income tax deducted at source as income of the assessee and no other addition was made by the Department. Accordingly, Ld. AR submitted before the bench that Ld. Addl./JCIT(A)-1, Coimbatore should have had, allowed the claim of the assessee after considering the earlier case records and by maintaining the parity/similarity.
6. Ld. DR appearing from the side of the Revenue relied on the orders passed by the subordinate authorities and requested to confirm the same.
We have heard Ld. Counsels from both the sides and perused the material available on record including the paper books furnished by the assessee. We find that the assessee trust is merely acting as middleman between Mula Sahakari Sakhar Karkhana and H&T contractors. The assessee trust makes payment to the labour contractors for harvesting and transportation work and the same amount is reimbursed to him by Mula Sahakari Sakhar Karkhana and others. For providing such kind of services, the assessee trust is paid some administrative/supervision charges by Mula Sahakari Sakhar Karkhana and others. We further find that during the period under consideration the assessee trust was reimbursed an amount of Rs.58,43,91,944/- and also received an amount of Rs.25,13,520/- as administrative charges. Out of the above amount, Rs.58,43,91,944/- was paid to labour contractors and Rs.25,13,520/- was also spent on various administrative expenses. Thereby Nil income was shown and whole of the TDS which was deducted on reimbursement of harvesting and transportation charges was claimed as refund in income tax return filed by the assessee, which was not allowed as refund by the CPC and the 143(1) was confirmed by Ld. Addl./JCIT(A)-1, Coimbatore. In this regard, we find that the assessee trust is involved in such similar kind of activity since long, even the Department in earlier years starting from the assessment years 2009-10 to 2013-14 have reopened the cases u/s 147 on the basis of claim of huge refund and after scrutiny, accepted the similar activities of the assessee and after making certain small additions, the assessments were finalized. We also find that in assessment year 2016-17, the orders were passed u/s 143(3) accepting the claim of refund by the assessee trust after making certain adjustments. Admittedly, the modus operandi of the assessee trust remains same starting from assessment year 2009-10 to 2018-19, the facts of each assessment years are identical and there appears no change in the practices followed by the assessee trust. In such kind of situation, we are of the considered opinion that the Department cannot take different view in respect of only one assessment year i.e. for the assessment year 2018-19 when there is no change in activity of the assessee trust. We also find that the assessee in ground no.3 raised the question that the Assessing Officer/CPC has erred in not providing any reasons in not allowing the TDS claim of Rs.1,18,77,593/-. But in this regard, we find that Assessing Officer/CPC in his 143(1) intimation has specifically Assessing Officer/CPC has also provided the names of all the four contractors who have reimbursed the amount to the assessee towards harvesting and transportation charges and deducted TDS thereon. From perusal of the above remark, it is very much clear that the Assessing Officer/CPC has specifically mentioned the reason for not allowing the credit of TDS to the assessee and therefore the ground no.3 raised by the assessee in this regard fails and the contention of the assessee that the Assessing Officer/CPC has not provided any reasons for not allowing TDS claim proves to be wrong. Ld. AR of the assessee has produced Form 26AS downloaded on 18th June, 2020 wherein all the TDS entries are appearing. Considering the totality of the facts of the case and in the interest of justice, we deem it appropriate to set-aside the order passed by Ld. Addl./JCIT(A)-1, Coimbatore and remand the matter back to him with a direction to decide the appeal afresh as per fact and law & after considering the orders passed by the Assessing Officer for earlier assessment years starting from assessment years 2009-10 to 2014-15 and for assessment year 2016-17 wherein the claim of the assessee was accepted and refunds were also issued after making certain adjustments. The assessee is also hereby