M/S. T vs. AUTO ASSIST (INDIA) LTD.,,CHENNAIVS.ACIT, CORPORATE CIRCLE - 3 (1),, CHENNAI

आदेश आदेश /O R D E R आदेश आदेश

PER MAHAVIR SINGH, VP:

This appeal by the Assessee is arising out of the order of the

Commissioner of Income Tax (Appeals)-11, Chennai in I.T.A.

No.64/18-19, dated 28.03.2019. The assessment was framed by the

Assistant Commissioner of Income Tax, Corporate Circle – 3(1),

Chennai for the Assessment Year 2016 – 2017, u/s.143(3) of the

Income Tax Act, 1961, (hereinafter ‘the Act’) vide order dated

25.12.2018.

:: 2 :: I.T.A. No.1734/Chny/2019 2. The only issue in this appeal of the Assessee is as regards to

the order of the CIT(A) confirming the action of the Assessing Officer

in allowing the short credit for the Tax Deducted at Source [TDS]

amounting to Rs.6,76,061/-. For this, the following three facets

were argued:

I. According to the CIT(A), TDS is allowable only to the extent, income is offered as per Section 199 of the Act, read with rule 37BA of the Income Tax Rules, 1962 (hereinafter ‘the Rules’).

II. The CIT(A) restricting the credit of TDS to the extent claimed in the return of income.

III. The Assessee has offered interest income during the year and claimed TDS of Rs.2,90,623/- as against the total TDS deducted on account of the interest amounting to Rs.4,20,856/- as per Form No.26AS.

:: 3 :: I.T.A. No.1734/Chny/2019 allowed in the impugned assessment year, as per provisions of section 199.

the assessment noticed that the turnover reported in Form No.26AS

is less than the turnover as per the return of income filed by the

Assessee. The Assessee before the Assessing Officer explained that

the amounts credited represented the income receipts for multiple

years and therefore only the income attributable to this assessment

year is offered to tax and in support of the same filed copies of the

invoices before the Assessing Officer. However, the Assessing

Officer noted that the TDS corresponding to the business receipts

amounting to Rs.19,64,09,110/- was claimed in entirety, but

according to him this is not acceptable in view of the provisions of

Section 199 of the Act read with rule 37BA of the Rules. Therefore,

the Assessing Officer restricted the TDS claim pertaining to business

receipts of the financial year 2015 – 2016 relevant to the

Assessment Year 2016 – 2017 for an amount of Rs.38,75,279/-

corresponding to the income offered to tax amounting to

Rs.18,22,76,362/-. The Assessee himself claimed TDS to the extent

of Rs.42,89,605/- which includes TDS of income from other sources

offered to tax. Against the restriction of TDS credited at

:: 4 :: I.T.A. No.1734/Chny/2019 Rs.38,75,279/- as against the claim of the Assessee to

Rs.42,89,605/-, the Assessee preferred an appeal before the CIT(A).

The CIT(A) restricted the TDS claimed to the extent of

Rs.42,89,605/-, as against the revenue declared by the Assessee at

Rs.18,22,76,362/-. The Assessee company has a total TDS credit of

Rs.48,41,750/- in Form No.26AS. The Assessee has declared an

interest income of Rs.42,45,457/- and TDS portion for Rs.4,20,855/-

and the balance TDS credit was Rs.44,20,895/- towards the business

receipts of Rs.19,87,88,005/- as per Form No.26AS but the CIT(A)

had restricted the TDS credit to the extent of Rs.42,89,605/- and for

the balance TDS credit the CIT(A) directed the Assessing Officer to

allow the TDS credit of Rs.1,31,290/- in the year in which the

balance business receipt of Rs.1,65,11,643/- is offered for taxation.

Aggrieved, the Assessee came in appeal before the Tribunal.

of the case. We noted that the undisputed fact is that the Assessee’s

total business revenue is at Rs.19,87,88,005/- which includes the

income of future years to the extent of Rs.1,65,11,643/-. The

Assessee has also an interest income of Rs.42,44,457/- and the TDS

portion of interest received is at Rs.4,20,855/-. The balance TDS

credit on Rs.44,20,895/- is towards the business receipts of

Rs.19,87,88,005/- [which includes the business receipts of future

years amounting to Rs.1,65,11,643/-]. The Assessing Officer and

:: 5 :: I.T.A. No.1734/Chny/2019 the learned CIT(A) allowed the TDS credit for the portion of interest

received at Rs.4,20,855/- and the TDS credit to the extent of

Rs.42,89,605/- in relation to the business receipts of

Rs.18,22,76,362/- declared by the Assessee in the return of income.

explained that for the Financial Year 2015 – 2016 relevant to the

Assessment Year 2016 – 2017, the turnover, i.e. business receipts

declared is to the tune of Rs.18,22,76,362/- and interest income

earned and declared is Rs.42,44,457/-. The business receipts as per

Form No.26AS is Rs.20,29,96,863/- comprising of interest income of

Rs.42,08,858/- and business receipts of Rs.19,87,88,005/-. The

learned Counsel for the Assessee stated that the Assessing Officer

has given proportionate credit for TDS for an amount of

Rs.41,65,734/- as against the amount claimed in the return of

income at Rs.42,89,605/-, thereby denying TDS credit of

Rs.1,23,871/-. The learned Counsel for the Assessee explained that

the Assessing Officer is of the view that as per Section 199 of the

Act, read with rule 37BA of the Rules, TDS can be allowed to the

credit of the Assessee, only to the extent of income that is offered to

tax. The learned Counsel for the Assessee stated that this approach

is erroneous and is not applicable to the Assessee’s case for the

reason that the requirement of income being assessed in the year on

the TDS claim has been withdrawn by the Finance Act, 2008;

:: 6 :: I.T.A. No.1734/Chny/2019 wherein the existing Section 199 of the Act was substituted by a new

Section; wherein from the old Section, a portion deleted was “and

credit shall be given to him for the amount so deducted on

the production of the certificate furnished under section 203

in the assessment made under this Act for the assessment

year for which such income is assessable.”

Sub-section (3) of Section 199 of the Act which is the enabling

Section to frame the Rules for the purpose of this Section, does not

apply in the present case. It was argued that the Rules that may be

prescribed include the rules for the purpose of giving credit to the

person, other than this rather to in Sub-section (1) and Sub-Section

(2) and also the assessment year for which such credit is given. He

explained that a plain reading of the Sub-section makes it clear that

the rules regarding the Assessment Year for which such credit is to

be given, is restricted to a person other than those referred to in

Sub-section (1) and Sub-section (2), meaning that this is not

applicable when no person other than the person in whose account

the TDS is credited is claiming credit for TDS. The learned Counsel

for the Assessee submitted that there are numerous decisions which

states that the provisions of the rules cannot overrule the provisions

of the Act. He specifically stated that where the provision is omitted

in the Act, the requirement of income being offered to assessment, is

:: 7 :: I.T.A. No.1734/Chny/2019 a condition to obtain credit of TDS, a rule cannot be quoted to deny

the Assessee, what the Act has given. The leaned Counsel for the

Assessee relied on the decision of the Hyderabad Bench of this

Tribunal in the case of Zelan Exports Vs. Deputy Commissioner of

Income Tax reported in [2015] 63 Taxmann.com 334 (Hyderabad –

Trib.) and the decision of the Hon’ble High Court of Andhra Pradesh

in the case of IVRCL-KBL(JV) Vs. The Assistant Commissioner of

Income Tax, Hyderabad reported in [2016] 67 Taxmann.com 224

(Andhra Pradesh).

of income of the Assessee, the learned Counsel for the Assessee

relied upon the decision of the Delhi Bench of this Tribunal in the

case of Escorts Limited Vs. Deputy Commissioner of Income Tax,

Circle – 11(1), New Delhi reported in [2007] 15 SOT 368 (Delhi) and

in the case of the Income Tax Officer Vs. Krishraj Hotels and Motels

(P) Limited reported in [2012] 27 Taxmann.com 178 (Delhi – Trib.).

9 (i) In view of the above, the learned Counsel for the Assessee

stated that the Assessing Officer cannot deny the credit on TDS for

an amount of Rs.48,41,750/- for the amount that appears in the

Form No.26AS and therefore the CIT(A) as well as the Assessing

Officer erred in restricting the credit on TDS to the claim made in the

income tax return.

:: 8 :: I.T.A. No.1734/Chny/2019 (ii) That the credit on TDS cannot be denied to an Assessee

merely because the Assessee has claimed a lesser amount of TDS in

the return of income, because the amount of TDS remitted to the

Government account cannot be denied to the Assessee. Therefore, it

was urged to give full credit of TDS of Rs.48,41,750/-.

Representative relied upon the orders of the Assessing Officer and

that of the CIT(A) and also relied on the decision of the Tribunal,

Kolkata Bench in the case Garden Reach Shipbuilders and Engineers

Limited, Kolkata Vs. The Commissioner of Income Tax, Kolkata in

I.T.A. No.710/Kol/2014 dated 22.03.2017

of the Act by virtue of which TDS has been claimed by the Assessee,

the requirement of income being assessed in the year of TDS claimed

has been withdrawn by the Finance Act, 2008; wherein the existing

Section 199 of the Act was substituted by a new Section of 199 of

the Act. The earlier Sub-section (1) of Section 199, prior to

amendment read as under:

“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 depositor or owner of property or of unit holder or of the shareholder, as the case may be, and credit shall be given to

:: 9 :: I.T.A. No.1734/Chny/2019 him for the amount so deducted on the production of the certificate furnished under section 203 in the assessment made under this Act for the Assessment Year for which such income is assessable.”

The substituted Sub-section (1) of Section 199 omitted the line

regarding giving of credit for the assessment year for which such

income is assessable. The present position of the Sub-section (1) is

as under:

“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.”

Further, we noted that Sub-Section (3) of Section 199 of the Act,

which is the enabling Section to frame the Rules for the purpose of

this section, does not apply in this case. Sub-section (3), post the

amendment reads as under:

“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 sub-section (1) and sub- section (2) and also the assessment year for which such credit may be given.

The Rules that may be prescribed include the Rules for the purposes of giving credit to a person other than those referred to in sub- section (1) and sub-section (2) and also the assessment year for which such credit is given. A plain reading of the sub-section makes it clear

:: 10 :: I.T.A. No.1734/Chny/2019 that the rules regarding the assessment year for which such credit is to be given, is restricted to a person other than those referred to in sub- section (1) and sub-section (2), meaning that this is not applicable when no person other than the person in whose account the TDS is credited is claiming credit of TDS. The power of the CBDT to frame Rules under this Section is restricted to make rules for the purpose of giving credit to a person, other than a person from whom amounts, tax is deducted at source.

We further note that the Commentary to the Finance Act, 2008

reads as under:

“Sub-section (3) provides that 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 the following rules:

(a) Rules for the purposes of giving credit to a person other than those referred to in sub-section (1) and sub-section (2), (b) Rules for the assessment year for which such credit may be given, and (c) Such other rules as may be necessary.”

Hyderabad Bench of this Tribunal in the case of Zelan Exports Vs.

Deputy Commissioner of Income Tax (supra); wherein it is held as

under:

“According to the pre-amended provisions of Section 199, the credit of deduction made in accordance with the relevant provisions of this Chapter and paid to the Central Government, shall be given for the amount so deducted on the production of the Certificate furnished under Section 203 for the assessment made under this Act for the assessment year for which such income is assessable. But in the amended

:: 11 :: I.T.A. No.1734/Chny/2019 provisions, the words in the assessment year for which such income is assessable’ has been omitted. Meaning thereby, that the Legislature was quite conscious about the facts and hardships faced by some Assessees, while making the amendments in Section 199 and in amended provisions nothing has been stated about the year in which the credit of TDS is to be claimed. As per the amended provisions of Section 199, in sub-section (1), it has been stated that any deductions 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. Therefore, a per the amended provisions, once the TDS was deducted, a credit of the same to be given to the Assessees, irrespective of the year to which it relates.”

discussing on the provisions of Section 199(3) of the Act has

considered this issue in the case of IVRCL-KBL (JV) Vs. The Assistant

Commissioner of Income Tax, Circle – 7(1), Hyderabad (supra) and

held as under:

“8. While examining the applicability of the Rules, it must be borne in mind that the Rules made by the CBDT, in the exercise of the powers conferred under Section 199(3) of the Act, must be read harmoniously with all the clauses of Section 199 and the other provisions of the Act. It is settled law that Rules, made under the Act, should be interpreted in conformity with the provisions of the Act, (Ispat Industries Limited Vs. Commissioner of Customer [2006] 12 SCC 583), and not the other way around. A rules should be read as supplemental to the provisions of the parent Act. It cannot be interpreted in a manner as to come into conflict with the parent Act, in which case the Act will prevail. (STO, Moradabad Vs. H. Farid Ahmed and Sons [1976] 1 SCC 245). A piece of

:: 12 :: I.T.A. No.1734/Chny/2019 subordinate legislation should be read in the light of the statutory scheme of the Act. (Bombay Dyeing and Mfg. Co. Limited Vs. Bombay Environmental Action Group [2006] 3 SCC 434). Rules made for carrying out the purposes of the Act cannot be so framed as not to carry out the purposes of the Act, and cannot be in conflict therewith. (Laghu Udyog Bharati Vs. Union of India [1999] 105 Taxmann 630 (SC)). An expression used in a rule must, unless there is anything repugnant in the subject or context, have the same meaning as is assigned to it under the Statute. (Onkarlal Nandlal Vs. State of Rajasthan [1985] 4 SCC 404). Rules should be consistent with the provisions of the Act. (State of U.P. Vs. Babu Ram Upadhya AIR 1961 SC 751). A statutory rule cannot enlarge or restrict the meaning of a Section. If a rule goes beyond, or is contrary to, what the Section contemplates, the rule must yield to the Statute. (Central Bank of India Vs. Workmen AIR 1960 SC 12). It is necessary, therefore, to read Rule 37BA(2)(i) of the Rules in conformity with Sections 194C and 199(1) of the Act.”

view that the provisions of the Rules cannot overrule the provisions

of the Act and where the Act is omitted, the requirement of the

income being offered to the assessment, as a condition to obtain

credit for TDS, a rule cannot be quoted to deny the TDS credit to the

Assessee, what the Act has given to him.

Meaning thereby, as per the amended provisions, once the TDS

was deducted, a credit of the same has to be given to the Assessee,

irrespective of the year to which it relates.

involved is 2015 – 2016 relates to the Assessment Year 2016 – 2017

:: 13 :: I.T.A. No.1734/Chny/2019 and the turnover of the Assessee is Rs.18,22,76,362/- and the

interest income earned is Rs.42,44,457/-. As per Form No.26AS, the

business receipts is Rs.19,87,88,005/- and the interest income is of

Rs.42,08,858/-, thereby the total turnover is Rs.20,29,96,863/- and

the TDS as per Form No.26AS is Rs.48,41,750/-. The Assessee

claimed TDS of Rs.42,89,605/- and out of which TDS to the interest

income is amounting to Rs.4,20,856/- and for business receipts it is

Rs.44,20,895/- towards the total business receipts of

Rs.19,87,88,005/-. Thereby, the Assessee in the return of income

made a short claim of Rs.2,90,623/- from the interest income and

the Assessing Officer restricted the TDS claim at Rs.38,75,279/- as

against the total TDS of Rs.42,89,605/- from the business receipts.

Thereby, the Assessing Officer denied the full claim on the TDS to

the extent of Rs.44,20,895/- on the business receipts and

Rs.4,20,856/- against the interest income.

the TDS was deducted, credit of the same is to be given to the

Assessee, irrespective of the year to which it relates. Hence, we

direct the Assessing Officer to allow the TDS credit as per the Form

No.26AS after verification of the TDS Certificates.

extent claimed in the return of income, we noted that the Assessee

:: 14 :: I.T.A. No.1734/Chny/2019 claimed TDS on the interest at Rs.2,90,623/- as against the TDS

deducted on account of interest amounting to Rs.4,20,856/- as per

Form No.26AS. We direct the Assessing Officer to allow the entire

interest, as the Assessee has disclosed the income, i.e. interest

income amounting to Rs.42,44,457/-. We direct the Assessing

Officer accordingly.

No.:1734/CHNY/2019 is partly allowed.

Order pronounced in the court on 6th May, 2022 at Chennai.

Sd/- Sd/- (महावीर िसंह ) (मनोज कुमार अ�वाल) (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) उपा�य� /VICE PRESIDENT लेखा सद�य /ACCOUNTANT MEMBER

चे�ई/Chennai, �दनांक/Dated, the 6th May, 2022 IA, Sr. PS आदेश की �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकर आयु� (अपील)/CIT(A) 4. आयकर आयु�/CIT 5. िवभागीय �ितिनिध/DR 6. गाड" फाईल/GF