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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SRI MAHAVIR SINGH
O R D E R भहावीय स िंह, उऩाध्मक्ष के द्वाया / PER MAHAVIR SINGH, VP: This appeal of the assessee is arising out of order of the Commissioner of Income Tax (Appeals)]-16, Mumbai [in short CIT(A)], in appeal No. CIT(A)-16/IT-10138/ITO-19(2)(1)/2017- 18 vide dated 29.11.2019. The Assessment was framed by the Income Tax Officer, Ward-9(2)(1) Mumbai (in short ITO/ AO) for the A.Y. 2015-16 vide order dated 31.10.2017 under section 143(3) of the Income-tax Act, 1961 (hereinafter ‘the Act’).
The assessee has raised two inter-connected issues in this appeal and the issue is regarding the order of CIT(A) upholding the order of the Assessing Officer in taxing the amount of ₹42,63,641/- being interest income not realized or has not accrued during the year and hence not taxable. Alternatively, the assessee requested that in case the interest is assessed as 2 Bhide Education Pvt. Ltd.; AY 15 -16 income, the TDS credit claimed by the assessee in the original returned of income be allowed. For this, assessee has raised the following five grounds:-
“A) Taxing amount of Rs. 42,63,641/- being Interest Income
The learned Commissioner of income Tax (Appeals) - 16, Mumbai [CIT(A)] erred on facts and in law in partially upholding the order passed by the Income-tax Officer - 9(2)(1) , Mumbai (AO) u/s. 143(3) of the Income-tax Act, 1961 [the Act] taxing an amount of Rs. 42,63,641 being interest income without realising that the interest had not accrued during the year and hence, not taxable in the hands of appellant company;
2. The appellant prays to your honours to delete additions upheld by Ld. CIT(A) of Rs. 42,63,641/- being interest income added by the Ld. AO to the total income; B) Disregarding TDS credit claimed in the Original return of income
3. WITHOUT PREJUDICE TO GROUNDS NO 1 and 2, the learned C1T(A) erred in not observing that the TDS credit is allowable in accordance with provisions of section 205 of the Income-tax Act, 1961. The Ld. CIT(A) has made an observation in his order that since the interest income is added to the total income, TDS credit shall be allowed in accordance with the law.
4. However, due to generic language used in the order, the Ld. AO has refused to allow the credit of tax deducted at source; 3 Bhide Education Pvt. Ltd.; AY 15 -16 5. The appellant prays to your honours to provide a specific direction to the Id. AO to allow credit of tax deducted at source as per section 205 of the IT Act, 1961.”
At the outset, the learned Counsel for the assessee Shri. Saurabh Bhat stated that he will not press the first issue as regards to the taxability of interest income but he stated that the TDS credit claimed by the assessee in the original return of income should be allowed. The learned counsel for the assessee stated that the CIT(A) has given direction in this regard vide Para 4.3 as under:-
4.3 Ground NO. 3 4.3.1 Vide this ground the appellant has agitated against Non credit of TDS claimed in the Original return. The Assessing Officer is directed to verify the claim of the appellant and give credit of TDS as per provision of law.
4. The learned Counsel then before me submitted the copy of the order giving effect to the order of CIT(A) which is at page 161 of the assessee’s paper book. The relevant order dated 17.01.2020 vide letter No. ITBA/COM/F/17/2019- 20/1023982075(1) has disallowed the credit for TDs by observing as under: - “The Ld. CIT(A) vide appeal order in Appeal No. CIT(A)-16/IT - 10138/ITO 9(2)(1)/201718 dated 29.11.2019 has directed the Assessing Officer to verify the claim of the assessee regarding credit for TDS claimed in the original return of income and give credit for the same as per the provisions of law.
4 Bhide Education Pvt. Ltd.; AY 15 -16 The claim of the assessee has been verified from the record and system. It is noted that in the original return assessee had claimed TDS of Rs. 4,26,364/-. However, neither in the 26AS Form nor in the e-TDS data of system, the TDS deducted/credited is not reflecting. Further, the assessee has not submitted any proof for deposit of TDS amount in the account of Government. Therefore, the claim of assessee for grant of credit for TDS of Rs. 4,26,364/- which has never been deposited with the Government, cannot be allowed.”
The learned Counsel for the assessee stated that the TDS has been deducted by Kamlashmi Realities on interest paid and assessee drew my attention to page 143 of assessee’s paper book, wherein confirmation for the period 01.04.2014 to 31.03.2015 of Kamlashmi Realities is enclosed. The relevant confirmation of accounts reads as under: - Date Particulars Credit Amount 30-Jun-2014 Interest Paid 10,74,409 Being interest for the period 1.4.2014 to 30.06.2014 30-Sep-2014 Interest Paid 11,08,389 Being interest for the period 1.7.2014 to 30.09.2014 31-Dec-2014 Interest Paid 10,44,661 Being interest for the period 1.10.2014 to 30.12.2014 31-Mar-2015 Interest Paid 10,36,182 Being interest for the period 1.1.2015 to 31.03.2015 @18% on amt 23346067/- for 90 days tds 103618A10% on amt 1036182/- 6. The total TDS on the above interest paid was deducted to the tune of ₹4,26,364/-. The learned Counsel for the assessee, in view of the above stated that, once the payee party has deducted the TDS and in case it not even deposited, the 5 Bhide Education Pvt. Ltd.; AY 15 -16 assessee is entitled for claim of TDS. For this proposition, the learned Counsel for the assessee relied on the decision of Hon’ble Gujarat High Court in the case of Devarsh Pravinbhai Patel vs. ACIT vide dated 24.09.2018 in civil application no. 12965 of 2018, wherein exactly on the same circumstances allow the claim with the following:-
“3. We have heard learned counsel for the parties and perused documents on record. Basic facts are not in dispute. In case of the petitioner the employer for the assessment year 201213 while paying salary had deducted tax at source to the tune of Rs.2,68,498/ but had not deposited such tax with the Government revenue. The short question is under such circumstances can the Department seek to recover such amount from the petitioner or whether the petitioner is correct in contending that he had already suffered the deduction of tax, the mere fact that the deductee did not deposit such tax with the Government revenue could not permit the Income tax Department to recover such amount from the petitioner.
The issue is no longer res integra. The Division Bench of this Court in case of Sumit Devendra Rajani (Supra) examined the statutory provisions and in particular Section 205 of the Income tax Act, 1961. The Court concurred with the view of the Bombay High Court in case of Asst. CIT VS. Om Prakash Gattani, reported in (2000) 242 ITR 638 and observed as under :
“10. We are in complete agreement with the view taken by the Bombay High Court and Gauhati High Court. Applying the aforesaid two decisions of the Bombay 6 Bhide Education Pvt. Ltd.; AY 15 -16 High Court as well as Gauhati High Court, the facts of the case on hand and even considering Section 205 of the Act action of the respondent in not giving the credit of the tax deducted at source for which form no.16 A have been produced by the assessee – deductee and consequently impugned demand notice issued under Section 221(1) of the Act cannot be sustained. Concerned respondent therefore, is required to be directed to give credit of tax deducted at source to the assessee deductee of the amount for which form no.16 A have been produced.
In view of the above and for the reasons stated petition succeeds. It is held that the petitioner assessee deductee is entitled to credit of the tax deducted at source with respect to amount of TDS for which Form No.16A issued by the employer deductor – M/s. Amar Remedies Limited has been produced and consequently department is directed to give credit of tax deducted at source to the petitioner assessee – deductee to the extent form no.16 A issued by the deductor have been issued. Consequently, the impugned demand notice dated 6.1.2012 (Annexure D) is quashed and set aside. However, it is clarified and observed that if the department is of the opinion deductor has not deposited the said amount of tax deducted at source, it will always been open for the department to recover the same from the deductor. Rule is made absolutely to the aforesaid extent. In the facts and circumstances of the case, there shall be no order as to costs.”
7 Bhide Education Pvt. Ltd.; AY 15 -16 5. Facts in both case are very similar. Under the circumstances, by allowing these petitions we hold that the Department cannot deny the benefit of tax deducted at source by the employer of the petitioner during the relevant financial years. Credit of such tax would be given to the petitioner for the respective years. If there has been any recovery or adjustment out of the refunds of the later years, the same shall be returned to the petitioner with statutory interest.”
In view of the above, the learned counsel for the assessee stated that even Hon’ble Gauhati High Court has considered similar issue in the case of ACIT vs. Om Prakash Gattani [2000] 242 ITR 638 (Gauhati). Once, this issue is covered, the learned Counsel for the assessee stated that the Tribunal can direct the Assessing Officer to allow the credit of this TDS.
When these facts were confronted to the learned Sr. Departmental Representative, he fairly agreed that the similar direction can be given to the Assessing Officer as is given by Hon’ble Gujarat High Court in the case of Devarsh Pravinbhai Patel (supra).