TATA SERVICES LTD,MUMBAI vs. ACIT 2(3)(2), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI, BENCH “E”, MUMBAI BEFORE SHRI G.S. PANNU, VICE PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA No. 50/Mum/2018 (Assessment year: 2014-15)

Tata Services Ltd Vs ACIT-2(3)(2), 24, Homi Mody Street Fort, Aayakar Bhawan, Mumbai 400 001 M.K.Road, PAN : AAACT3991J Mumbai-400020 APPELLANT RESPONDEDNT

Appellant by Shri M.M. Golwala Respondent by Shri D.G. Pansari Date of hearing 26-08-2019 Date of pronouncement 19-09-2019

O R D E R Per Pawan Singh, Judicial Member: 1. This appeal filed by the assessee is directed against the order of

CIT(A)-6, Mumbai dated 12-10-2017, which in turn arises out of

the assessment order passed u/s 143(3) 27-12-2016. The assessee

has raised the following grounds of appeal:-

“1) The learned Commissioner of Income Tax (Appeals) erred in not ordering deletion of the entire addition on account of erroneous transactions for the year appearing in the AIR statement- Rs.31,27,929/- a. (i) In particular, the learned Commissioner of Income Tax (Appeals) erred in confirming the addition of Rs.5,94,046/-, which is not at all the income of the appellant. (ii) The learned Commissioner of Income Tax (Appeals) failed to consider that an addition could not be made merely on the basis of AIR information erroneously provided to the tax department. b. The learned Commissioner of Income Tax (Appeals) ought to have deleted Rs. l1,50,6807-, already accounted as income from services in 1

ITA No. 50/Mum/2018 Tata Services Ltd Assessment Year 2013-14, and in respect of which the Assessing Officer made a double addition. c. The learned Commissioner of Income Tax (Appeals) ought to have deleted Rs.8,93,946/-- as the same has already been offered and taxed in the current year itself. d. Without prejudice, the learned Commissioner of Income Tax (Appeals) following his own decision ought to have deleted Rs.4,89,257/-, also being income offered to tax in the current Assessment Year and duly taxed, but in respect of which deductors have passed the TDS entry in the subsequent Assessment Year. 2) The learned Commissioner of Income Tax (Appeals) erred in holding that addition made u/s.l15JB was consequential to the additions made in respect of issues referred to in Ground No. l, under the normal provisions of law which is completely misconceived, and erroneous in law, having regard to decisions of the Supreme Court. 3) The learned Commissioner of Income Tax (Appeals) erred in not determining the MAT credit available, and set off brought forward MAT credit from earlier years, against the tax payable in current year, as per section I15JAA. 4) The learned Commissioner of Income Tax (Appeals) erred in not directing the Assessing Officer to grant credit for the following tax deducted at source claimed by it: a. Rs. l1,50,680/-, wherein income has been accounted in the preceding year, but TDS credit is reflected in Form 26AS of the current year. The learned Commissioner of Income Tax (Appeals) failed to consider that the said amount of Rs. 11,50,680/- had been claimed in the preceding year but no credit had been allowed by the Department. b. Without prejudice to Ground No.4 (a) above, if credit of the said amount is not to be granted in the current year, then the appellant submits that the Assessing Officer be directed to grant credit in the preceding year i.e. Assessment Year 2013-14. c. Credit for Rs.8,93,946/- not claimed at the time of filing the return, but claimed during assessment proceedings, and in respect of which income was duly offered and taxed in the current year. 2

ITA No. 50/Mum/2018 Tata Services Ltd d. Credit for Rs.4,89,257/- claimed at the time of filing the return and in respect of which income was duly offered and taxed in the current year but deductors have passed TDS entries in the subsequent Assessment Year. 5) The Commissioner of Income Tax (Appeals) erred in not directing the Assessing Officer to allow interest for the months of December 2016 and January 2017, mandatorily allowable under section 244A and erroneously not granted by the Assessing Officer.” 2. The brief facts of the case are that the assessee company is engaged in

the business of providing services to Tata group companies, filed its

return of income on 09-10-2014 declaring total income at Rs.18,36,480

was file for the assessment year 2014-15. In a scrutiny assessment, the

assessing officer determined total income at Rs.64,61,040/- and book

profit u/s 115JB at Rs.30,36,930/-, vide order dated 27-12-2016 by

making disallowance u/s 14A of Rs.14,96,633/- and Rs. 31,27,929/-

being amount of excess TDS claimed. Aggrieved, the assessee filed

appeal before CIT(A). The Ld.CIT(A) deleted the disallowance u/s

14A. However, he sustained the addition of Rs.31,27,929/- on account

of TDS in the normal computation as well as in the computation while

computing book profit u/s 115JB. Further aggrieved, the assessee is in

appeal before the Tribunal. Further, aggrieved by the order of ld

CIT(A) the assessee has filed this appeal before this Tribunal.

for the assessee and the ld. departmental representative (DR) for the

revenue and perused the material available on record. Ground No. 1 (a) 3

ITA No. 50/Mum/2018 Tata Services Ltd pertains to confirming the addition of Rs.5,94,046/-. The Ld.AR of the

assessee submits that during the course of assessment proceedings, the

assessing officer asked for a reconciliation of TDS claimed in return

with TDS appearing in form 26AS. The same was furnished vide letter dated 2nd November, 2016 (pages 4 to 9 of PB). As some of the parties

mentioned below had made mistakes while filing their e-TDS returns,

erroneous TDS entries were appearing in the AIR statement against the

PAN of the assessee, as under:-

TAL Manufacturing Solutions Ltd Rs. 30,000 Automotive Stampings Ltd Rs. 6,277 Tata Capital Financial Services Ltd Rs.5,47,755 Cavincare Ltd Rs. 4,832 Sesa Sterlite Ltd Rs. 5,182 Rs.5,94,046 Total

the income of the assessee. Out of the above five parties (refer page 8

of PB), the largest one is Tata Capital Financial Services Ltd of

Rs.5,47,755/-. The assessee did not claim any TDS credit. The said

erroneous entry by the relevant party has now been corrected in a

revised e-TDS return filed by them. The extract of 26AS prior to the rectification (page 10 of compilation) downloaded on 28th September,

2016 shows an entry (No.69) wherein tax deducted by the said party

was appearing as Rs.5,47,755/-. The amount was added by the

ITA No. 50/Mum/2018 Tata Services Ltd Assessing Officer in the assessment order. After the party filed a

revised e-TDS return, the assessee downloaded the latest Form AS (page 12 of PB), extracted on 11th January, 2019, wherein on page 13

of PB, it will be seen that entry No.69 is reversed in entry No.70, on

account of rectification carried out by the said party. The Ld.AR

submits that in the light of the same, this amount of Rs.5,47,755/-

needs to be fully deleted. For remaining other four parties totalling

Rs.46,261/-, the Ld.AR of the assessee submits that it has written

letters and reminders to the said parties to rectify their e-TDS returns

(pages 15 to 20 PB). The assessee has not claimed TDS on credit of

the said amounts. The assessing officer has added the credit to the

total income to the extent of Rs.46,261/-. The Ld.AR submits that no

addition is required as the entries are erroneous, and no TDS credit has

been claimed by the assessee. There is no basis in fact or in law for

making this addition. The Ld.AR submits that the addition of

Rs.46,261/- may be deleted. 5. On the other hand the ld. DR, for the revenue submits that since the

assessee has claimed credit for the amount of Rs.5,47,755/- the lower

authorities were right in their action. However, he conceded that since

the assessee is trying to reconcile the difference with the revised e-TDS

return, necessary action deemed fit may be taken.

ITA No. 50/Mum/2018 Tata Services Ltd 6. We have considered the rival submissions and perused the material

available on record. Considering the submission of the ld AR for the

assessee as recorded in para -4 above, we restore this ground of appeal

to the file of assessing officer to verify the facts and grant relief to the

assessee in accordance with law. Thus, this ground of appeal is allowed

for statistical purpose. 7. Ground No. 1(b) relates to addition of Rs. 11,50,680/-. The Ld.AR

submits that in respect of several parties (details on page 28 of PB), the

assessee offered income in the preceding assessment year, i.e. AY

2013-14 and claimed TDS credit in that year. The statement placed on

page 28 of the compilation shows the date of the invoice raised to

demonstrate that all relevant invoices fall in A.Y 2013-2014, and that

is why the income was booked in that year. The Ld.AR further

submitted that the parties concerned have deducted and paid TDS in

the first quarter of the current assessment year, which is why the same

is reflecting in Form 26AS of the current year. No TDS credit has been

claimed in the current year, because it was claimed in the preceding

year, as corresponding income has also been accounted and offered in

Assessment Year 2013-2014. The Assessing Officer had added the said

TDS of Rs. 11,50,680/- to the total income of the current year. The

addition made in the current year is uncalled for, as it amounts to

ITA No. 50/Mum/2018 Tata Services Ltd double taxation, first taxed in Assessment Year 2013-14 when offered

by the assessee and second in current year. The Ld.AR submitted that

the addition may be fully deleted, as it is already taxed in Assessment

Year 2013-14.

CIT(A) has already directed the assessing officer to verify the facts

hence, this ground of appeal is uncalled for.

CIT(A) in para 7.3 of his order has clearly directed the assessing

officer to verify the facts and grant relief to the assessee. Considering

the submissions of ld DR for the revenue that ld CIT(A) has already

directed the assessing officer to verify the fact and grant relief to the

assessee, we direct the assessing officer to examine the facts as per the

submissions of the ld AR for the assessee as recorded by us in para 7

above and grant relief to the assessee. In the result this ground of

appeal is also allowed for statistical purpose.

ld.AR submits that the assessee submitted before the Assessing Officer vide letter dated 22 December 2016 (Page 29 of PB) that owing to late

entries by customers, some TDS credits could not be claimed while

filing the return of income, although the income had been fully booked

ITA No. 50/Mum/2018 Tata Services Ltd in the current year. The amount, so claimed, was Rs.8,83,050/- (later

increased to Rs.8,93.946/-), the details of which are available on page 31 of PB. These are the entries, the income of which is booked in the

current year, but TDS inadvertently not claimed in return of income. It was claimed vide letter dated 22nd December, 2016. In assessment

proceedings, it was pointed out to the Assessing Officer that only TDS

credit remained to be claimed by the assessee in the return of income,

whereas the gross income was already offered to tax. The Ld.AR

further submitted that the Assessing Officer has added the TDS amount

claimed of Rs.8,93,946/-. The appellant Submits that the addition is

uncalled for, as income is already offered and taxed in the current year.

The Ld.AR, therefore, submits that this amounts to double taxation,

and needs to be deleted. 11. The ld. DR, on the other hand supported the order of the lower

authorities. 12. We have considered the rival submissions and perused the material

placed on record. In our view considering the submission this ground

of appeal also require verification of the facts, thus this ground is also

restored to the file of assessing officer to verify the fact in accordance

with the submission of assessee which we have recorded in para 10

ITA No. 50/Mum/2018 Tata Services Ltd above and grant relief to the assessee in accidence with law. In the

result this ground of appeal is also allowed for statistical purpose. 13. Ground No.1 (d) relates to sustaining the additions of Rs.4,89,257/-.

The ld.AR for the assessee submits that in the return of income, the

assessee claimed TDS credit of Rs. 4,89,257/- (details available on Page 8 and 9 of PB), being items where income had been offered in the

current year, but credit for TDS appeared in Form 26AS in the

subsequent assessment year, because deductor have deducted and paid

TDS in the subsequent assessment year. The details were also furnished to the Assessing Officer vide letter dated 02ntl November

2016, when a reconciliation of TDS claimed as per the return of

income, with TDS available in 26AS was furnished (Page 6 to 9 of

PB). The ld. AR for the assessee further submits that without any

verification and justification, the Assessing Officer has added the said

amount of Rs.4,89,257/- to the taxable income on this account. The

addition is completely uncalled for, because the gross income is

already booked in the current year. The claim for TDS was made in the

current year and disclosed in the reconciliation statement, because it

appeared in the Form 26AS of next year (AY 2015-16). The claim for

TDS credit was made because under Section 199 of the Income-tax

Act, credit is allowable in the year in which the income is taxed. In any

ITA No. 50/Mum/2018 Tata Services Ltd event, the addition to the income is completely uncalled for because

the income is already offered to tax in the current year, which is once

again a clear case of double taxation. 14. The ld. DR, on the other hand, submits that as the facts can be verified

by the assessing officer and this ground may also be restore to the file

of assessing officer. 15. We have considered the rival submissions and perused the material

placed on record. Considering the submissions of the ld AR for the

assessee that the was TDS was made in the current year and disclosed

in the reconciliation statement, because it appeared in the Form 26AS

of next year (AY 2015-16). The claim for TDS credit was made

because under Section 199 of the Income-tax Act, credit is allowable in

the year in which the income is taxed. The addition to the income is

double taxation. Hence, this ground of appeal is also restored to the file

of assessing officer for verification of the facts and to grant relief to the

assessee in accordance with law. In the result this ground of appeal is

also allowed for statistical purpose.

Rs. 31,27,929/-. The ld. AR of the assessee submitted that after making

the erroneous addition of Rs.31,27,929/- in the normal computation of

income, (referred and challenged in Ground No.1 above) the assessing

ITA No. 50/Mum/2018 Tata Services Ltd officer has made an addition of the very same amount while computing

Book Profits u/s 115JB. The computation of book profit is available on

Page 4 of the assessment order. Although the assessing officer has not

explained it in detail, the working of which is, as under:

Particulars Amount Rs. Amount Rs. Book Profit as per accounts and declared in (15,87,6327-) Return of Income (Page 3 of compilation) Add: Disallowance under Section 14A 14,96,6337- :Add: Additions made on account of TDS in 31,27,9297- para 6 of Assessment Order. 46,24,562 Assessed Book Profit 30,36,930

deleted in first appeal. However, as regards the second addition of

Rs.31,27,929/-, it would be observed that after making the additions

made on account of TDS in the normal computation in para 6 of the

assessment order, the assessing officer repeated the addition in

calculation of book profit under Section 115JB. The said addition is

completely contrary to law. The provisions of Section 115JB mandate

that the computation to be made as per profits and loss declared by the

assessee in its books of account. Certain additions / deductions are to

be made, as provided in the Explanation below Section 115JB. The

ITA No. 50/Mum/2018 Tata Services Ltd addition of Rs. 31,27,929/- made in the instant case is not provided for

in any of the subsections which require addition /deletion to book

profit u/s.l15JB. In support of his submission the ld AR for the

assessee relied upon the decision of the In the case of Ajanta Pharma

vs. CIT 327 ITR 305(SC) where it was held by the Supreme Court that

Section 115JB constitutes a complete code by itself, and the decision

of Hon’ble Supreme Court in Apollo Tyres vs. CIT 255 ITR 273(SC)

and HCL Comnet vs. CIT 305 ITR 409(SC), wherein it was held that

while determining book profits under the MAT provisions, the

Assessing Officer has to accept the authenticity of accounts which are

prepared by the Company. The Assessing Officer is not empowered to

embark upon a fresh enquiry in respect of the entries made in the books

of account. The ratio of the above mentioned decision is that the

Assessing Officer cannot make an addition while computing book

profits, merely because he made addition under the normal provisions

of the Act. The addition is contrary to the above decisions of the Apex

court and needs to be deleted.

lower authorities.

placed on record. Considering the facts that we have already restored

ITA No. 50/Mum/2018 Tata Services Ltd the disallowances to the file of assessing officer, hence, this ground of

appeal is also restored to the file of assessing officer to decide this

issue afresh after considering the submission of the ld AR for the

assessee and the case law relied by him. In the result this ground of

appeal is also allowed for statistical purpose.

submitted that in the return of income, the assessee claimed setoff of

MAT credit to the tune of Rs. 5,67,471/- against the tax payable

determined in the normal computation of income. The detail of

working is filed as per Page 35 of the Paper Book. The Assessing

Officer did not allow the set-off of MAT Credit, although the same is

mandated by Section 115JAA.The Ld.AR further submits that the

assessing officer be directed to set-off MAT Credit under Section

115JAA against the tax determined in the computation of total income

under the normal provisions of the Act.

given to the Assessing Officer. Considering the fact that assessee is

entitled for MAT Credit of Rs. 5,67,471/- against the tax payable in

normal computation of income, which has not been allowed by the

Assessing Officer. Therefore, considering the submission of ld. AR of

the assessee, the Assessing Officer is directed to allow the set off of

ITA No. 50/Mum/2018 Tata Services Ltd MAT Credit in accordance with provision of section 115JAA. In the

result, this ground of appeal is also allowed for statistical purpose.

noted that these grounds of appeal are consequential to Ground No.

1(a) to 1(d), which we have restored to the file of Assessing Officer for

verification of fact and to allow the appropriate relief in accordance

with law. Therefore, these grounds of appeal are also restored to the

file of Assessing Officer to allow the credit of TDS after considering

the relief on ground no. 1(a) to 1(d). In the result, these grounds of

appeal are allowed for statistical purpose.

Order pronounced in the open court on 19-09-2019.

Sd/- Sd/- (G.S. Pannu) (Pawan Singh) VICE PRESIDENT JUDICIALMEMBER

Mumbai, Dt : 19 September, 2019 Pk/- Copy to : 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR /True copy/ By order

Asstt. Registrar, ITAT, Mumbai 14