M/S EKA SOFTWARE SOLUTIONS PRIVATE LIMITED ,BANGALORE vs. INCOME TAX OFFICER WARD-2(1)(4), BANGALORE

This appeal by the assessee is directed against the order of CIT(A)-2, Bengaluru, dated 30.10.2018 for Assessment Year 2014-15.

2.1 The assessee, a company, engaged in the development and licencing of software products and providing consulting and related services, filed its return for Assessment Year 2014-15 on 29.10.2014 declaring NIL income. The case was taken up for scrutiny for this Assessment Year and the assessment was concluded under section 143(3) of the Income Tax Act, 1961 (in short ‘the Act’) vide order dated 29.11.2016 accepting the returned income at NIL and issuing refund of Rs.1,78,222/-.

2.2 The assessee filed an appeal before the CIT(A)-2, Bengaluru, against the order of assessment dated 29.11.2016 for Assessment Year 2014-15. Before the CIT(A), it was submitted that in the Return of Income for Assessment Year 2014- 15, the assessee had erroneously claimed TDS credit of only for Rs.1,78,222/- instead of the actual TDS credit of Rs.7,71,796/- as appearing Form 26AS. It is contended that in the order of assessment, the Assessing Officer (AO) ought to have allowed TDS credit for the entire amount of TDS credit of Rs.7,71,796/- as appearing in the Form 26AS. The CIT(A), observing that the assessee had raised the issue for the first time before him without filing any revised return of income before the AO, as warranted by the decision of the Hon’ble Apex Court in the case of Goetze India Ltd., (284 ITR 323) (SC), held that the assessee;s claim cannot be allowed and dismissed the assessee’s appeal vide order dated 30.10.2018.

3.1 Aggrieved by the order of CIT(A)-2, Bengaluru, dated 30.10.2018 for Assessment Year 2014-15, the assessee has filed this appeal before the Tribunal, wherein it has raised the following grounds:-

3.2 In these grounds (supra), the assessee contends that the CIT(A) erred in refusing to consider the claim put forth by the assessee for grant of additional TDS credit to the extent of Rs.5,93,574/- (i.e., 7,71,796/- less Rs.1,78,222/-) which ought to have been allowed by the AO since the Form 26AS reflected that the assessee had TDS credit of Rs.7,71,796/-. According to the learned AR for the assessee, the CIT(A), in the impugned order, has dismissed the assessee's appeal by merely holding that the assessee's additional claim for TDS credit, as reflected in Form No.26AS, was rightly ignored by the AO in view of the decision of the Hon'ble Apex Court in the case of Goetze (India) Ltd., (Supra) since the said claim was neither made in the original return of income filed nor by way of filing a revised return of income.

3.2.2 It is contended that the CIT(A) instead of considering the assessee's claim for additional TDS credit as reflected in Form No.26AS on merits, summarily dismissed the assessee's claim holding the action of the AO in ignoring the assessee's claim to be in order, in view of the decision of the Hon'ble Apex Court in the case of Goetze (India) Ltd., (284 ITR 323). The learned AR contended that the decision of the Hon'ble Apex Court in the case of Goetze (India) Ltd., (Supra) does not place fetters on the appellate authorities to entertain fresh claims put forth by the assessee which are a part of record and/ or are material for the purpose of assessing the correct tax liability of an assessee in accordance with law. It was further submitted that the Hon'ble Apex Court in the case of NTPC Ltd., (229 ITR 383) had held that a taxpayer may make a fresh claim or modify a claim at any stage of proceedings so that the assessing authority can correctly assess the tax liability in accordance with law. In this regard reliance was also placed on the following judicial pronouncements:-

(i) CIT Vs. Motor Industries Co. Ltd., (229 ITR 137) (Kar) (ii) CPG Consultant India Pvt. Ltd. (ITA No.1596/Bang/2016 da. 31/5/2017); (iii) Pruthvi Brokers & Shareholders Pvt. Ltd., (2011) 349 ITR 336 (Bom)

3.3 The learned DR for Revenue supported the orders of the authorities below.

3.4.1 We have considered the rival contentions and perused the material on record; including the judicial pronouncements cited. The facts of the case, as emerge from the record, are that in the order of assessment dated 29.11.2016 for Assessment Year 2014-15 the assessee was granted refund, only to the extent of TDS claimed in the Return of Income. Before the CIT(A), the assessee contended that the assessee had erroneously claimed TDS credit to the extent of Rs.1,78,222/- only and since the 26AS showed TDS credit of Rs.7,17,796/-, the same should have been allowed by the AO. Non grant of the same by the AO has resulted in short credit to the extent of Rs.5,93,574/-.

3.4.2 On a perusal of the impugned order, we find that the CIT(A) rejected considering the assessee's claim on this issue without dealing with the grounds raised on the merits of the issue. The CIT(A) dismissed the assessee's claim and upheld the action of the AO by relying on the decision of the Hon'ble Apex Court in the case of Goetze (India) Ltd., (Supra). In our considered view, this judgment of the Hon'ble Apex Court in the case of Goetze (India) Ltd., (Supra) does not place fetters on the appellate authorities to entertain fresh claims put forth by the assessee on issues which are a part of record, and/or are material for the purpose of assessing the correct tax liability of the assessee in accordance with law. We are therefore, of the considered opinion that it was incumbent for the CIT(A) to have examined the assessee's claim for grant of additional TDS credit of Rs.5,93,574/- in view of the grounds raised before him and particularly when the relevant material is part of the records of the Department. In coming to this view, support is drawn from the ratio laid down in the decision of the Hon'ble Apex Court in the case of NTPC Ltd., (229 ITR 383); of the Hon'ble Karnataka High Court in the case of CIT Vs. Motor Industries Co. Ltd., (229 ITR 137) and of the co-ordinate bench of this Tribunal in the case of CPG Consultants India Pvt. Ltd., Vs. DCIT (ITA No.1596/Bang/2016 dt. 31/5/2017). In this factual and legal matrix of the case, as discussed above, we set aside the impugned order of the CIT(A) on this issue and after admitting the grounds raised by the assessee on its claim for being granted additional TDS credit of Rs.5,93,574/-, said to be reflected in 26AS, restore the matter to the file of the CIT(A) for examination, verification and adjudication on merits, after affording both the assessee and the AO adequate opportunity of being heard in the matter and to file details/submissions required in this regard which shall be duly considered. Consequently, the grounds raised by the assessee are allowed for statistical purposes.