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Income Tax Appellate Tribunal, MUMBAI BENCH “C” MUMBAI
Before: SHRI S. RIFAUR RAHMAN & SHRI RAVISH SOOD
ORDER PER S. RIFAUR RAHMAN, A.M. The present appeal is filed by the Revenue against the order of the Commissioner of Income Tax (Appeals)-24, Mumbai [in short ‘CIT(A)’] for the assessment year 2016-17 dated 26.08.2019 and arises out of assessment completed u/s 143(3) of the Income Tax Act, 1961 (in short the Act).
Brief facts of the case are, the assessee filed its return of income for the assessment year (AY) 2016-17 declaring total income of Rs.5,00,000/- on M/s City and Industrial Development 2 20.03.2018. The return was processed u/s 143(3) of the Income Tax Act, 1961 (in short the Act). The case was selected for scrutiny under CASS. Accordingly, the notices u/s 143(2) and 142(1) were issued and served on the assessee. The assessee is appointed as a New Town Development Authority for developing the Navi Mumbai Area u/s 113(3A) of the Maharashtra Regional and Town Planning Act, 1966 (MRTP) and a Special Planning Authority for other notified area u/s 40(1)(b) r.w.s. 113(3A) of the MRTP Act for carrying out its activities as New Town Development Authority. As per the provisions of section 113(3A) and 41B r.w.s. 113(3A) of the MRTP Act and various government resolution on notification issued by the Government of Maharashtra.
At the time of assessment, the Assessing Officer (AO) observed that ITS statement generated by the system and noticed that the company had received rent, professional fees, contractual receipt and interest free income, in all aggregating to Rs.509,32,42,297/- for TDS deducted of Rs15,38,15,311/-. The assessee had claimed credit for TDS amounting to Rs.509,32,42,297/- was not included in the total income. When the assessee was askedto explain above said income should not be added back to the total income. In response, the assessee vide letter dated 21.12.2018 submitted that as the tax was deducted using the PAN No. of the assessee and the same was reflected as paid against the assessee and the corresponding income not being chargeable to tax in the hands of the assessee. The refund of the same was claimed by the assessee. Accordingly, the assessee further submitted that merely because the TDS credit was claimed as refund by the assessee, it cannot be said that the income pursuance to the assessee.
M/s City and Industrial Development 3
After considering the submissions of the assessee, the Assessing Officer observed that as per the provisions of section 199 of the Act, any deduction made in accordance with or making 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 the owner of the property or of the depositor or of the owner of the property or the unit-holder or of shareholder as the case may be. As per Rule 37BA(3)(i) of the Income Tax Act, 1962, credit for tax deducted at source and paid to the Central Government shall be given over the assessment year for which such income is assessable. Accordingly, the Assessing Officer rejected the claim for credit of TDS claimed by the assessee.
Aggrieved with the above order, the assessee preferred an appeal before the Ld. CIT(A).
The Ld. CIT(A) after considering the facts on record allowed the appeal of the assessee with the following observations:
“2.5.4. The AO denied the credit of the said TDS claimed on premises that the appellant had not offered the income to tax and consequently, the TDS credit cannot be allowed u/s. 199 r.w.r 37BA(3)(i). The appellant has contended that the TDS credit should be allowed as the payments were received by it as an agent of the Government of Maharashtra and the appellant was not liable to pay any taxes on the same. 2.5.5 I have perused the facts of the case and the impugned assessment order. There is no dispute as regards the fact that the appellant has not offered the income to tax as it was merely acting as the collecting agent for the Government of Maharashtra. However, the appellant has offered the commission income to tax. As the taxes have been deducted on the payments made to the appellant, though the same are not taxable in the hands of the appellant, the appellant has to be granted TDS credit of the same as TDS has been M/s City and Industrial Development 4 deducted using the PAN of the appellant. Moreover, if the TDS credit is not granted to the appellant, the collection of The tax by the exchequer would be unconstitutional. In light of these facts, I hereby direct the AO to allow the credit of TDS as claimed by the appellant after due verification and in accordance with the provisions of the Act. This ground of appeal is allowed.”
7. Aggrieved with the above order the Revenue is in appeal before us raising following ground of appeal :