WALVEKAR SONS,PUNE vs. INCOME-TAX OFFICER, WARD - 3(2), PUNE

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ITA 771/PUN/2018Status: DisposedITAT Pune13 December 2018AY 2013-145 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The tribunal held that the assessee cannot be denied credit for tax legitimately collected at source, even if the collector failed to deposit it. Section 205 of the IT Act bars recovery of tax from the assessee if it has already been deducted/collected at source.

What were the facts?

The assessee, a partnership firm, declared total income and sought credit for tax collected at source (TCS). The Assessing Officer and CIT(Appeals) denied credit for TCS amounting to Rs. 6,37,931/- because the collector had not deposited it with the government.

What were the issues?

Whether an assessee can be denied credit for tax collected at source if the collector fails to deposit the collected amount with the government.

Which sections of the Income-tax Act were involved?

Section 205

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE

Before: SHRI R.S. SYAL

For Appellant: Shri M.K. Kulkarni
For Respondent: Shri M.K. Verma
Hearing: 13.12.2018Pronounced: 13.12.2018

आदेश / ORDER

PER R.S. SYAL, VP :

This appeal by the assessee arises out of the order passed by the CIT (Appeals)-3, Pune on 07.02.2018 in relation to the assessment year 2013-14.

2.

This appeal was filed belatedly by 3 days. The assessee has filed an affidavit giving reasons for the delay. The reasons ascribed for the delay

2 ITA No. 771/PUN/2018 A.Y.2013-14

are satisfactory. I, therefore, condone the delay and admit the appeal for

hearing on merits.

3.

The assessee is aggrieved by not allowing credit for tax collected at

source against the tax due on total income.

4.

Briefly stated, the facts of the case are that the assessee is a

partnership firm engaged in the business of IMFL products, including

wines and beers for many liquor and beer manufacturing companies.

The assessee furnished return declaring total income at Rs.23,70,003/-.

The Assessing Officer completed the assessment by assessing the total

income at the same level, but did not allow the benefit of TCS against the

amount of tax due on total income. The assessee contended before the ld.

CIT(Appeals)-3 that benefit of TDS/TCS amounting to Rs.7,41,781/-

should be allowed against tax liability of Rs.7,32,330/- and the refund of

Rs.9,450/- be granted. The ld. CIT(Appeals) observed that one supplier,

namely, M/s. Cromex Liquors Pvt. Ltd., from whom the assessee had

purchased liquor during the year under consideration, collected tax at

source to the tune of Rs.6,37,931/-, but did not deposit the same in the

Government account. He, therefore, denied the benefit of such tax credit.

The assessee is aggrieved by the decision of CIT(A) on this score.

5.

I have heard both the parties and perused the relevant material

available on record. It is an undisputed position that M/s. Cromex

Liquors Pvt. Ltd. collected tax at source from the assessee amounting to

Rs.6,37,931/- but did not deposit the same in the Government

3 ITA No. 771/PUN/2018 A.Y.2013-14

exchequer. The moot issue is as to whether the benefit of tax collected at

source should be allowed to the assessee under such circumstances. In

my view, the lower authorities erred in denying the benefit of tax

collected at source from the assessee by M/s. Cromex Liquor Pvt. Ltd. to

the extent of Rs.6,37,931/-. The Assessing Officer, in the remand report,

has fairly admitted that tax of such a magnitude was in fact, collected

against the supplies made to the assessee. The benefit of tax credit was

denied only on the ground that M/s. Cromex Liquor Pvt. Ltd. did not

deposit the amount of tax collected at source in the Government account.

6.

I fail to comprehend as to how the assessee can be called upon to

pay the amount of such tax again, when it was lawfully collected at

source by someone on behalf of Government of India. If the collector has

not deposited the amount, after due deduction, it is such a tax collector

who should be held responsible for his default. Under no circumstance,

the Department can press the assessee to not take credit for the amount

of tax legitimately collected tax at source from it. Section 205 of the Act

clearly provides that “where tax is deductable at the source under the

foregoing provisions of this Chapter, the assessee shall not be called

upon to pay the tax himself to the extent to which tax has been deducted

from that income.” It is, therefore, abundantly clear that the Income-tax

Act itself carries a bar against recovery of any tax deducted/collected at

source from the assessee where it has been actually deducted/collected

at source. In view of the foregoing discussion, I am unable to sustain the

view canvassed by the authorities below in not allowing credit for tax

collected at source by M/s. Cromex Liquors Pvt. Ltd. from the assessee

4 ITA No. 771/PUN/2018 A.Y.2013-14

merely on the ground that such collected tax at source amount did not get deposited in the Government account. I, therefore, overturn the impugned order and direct the Assessing Officer to grant adjustment of such tax collected at source against the tax liability of the assessee.

In the result, appeal of the assessee is allowed. 7. Order pronounced on 13th day of December, 2018.

Sd/- R.S. SYAL उपा�य� /VICE-PRESIDENT

पुणे / Pune; �दनांक / Dated : 13th December, 2018. SB आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to :

अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT (Appeals)-3, Pune. 4. The Pr. CIT-2, Pune. 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “एक-सद�य” ब�च, पुणे / DR, ITAT, “SMC” Bench, Pune. गाड� फ़ाइल / Guard File. 6.

// True Copy // आदेशानुसार / BY ORDER,

�नजी स�चव / Private Secretary आयकर अपील�य अ�धकरण, पुणे / ITAT, Pune.

5 ITA No. 771/PUN/2018 A.Y.2013-14

Date 1 Draft dictated on 13.12.2018 Sr. PS/PS 2 Draft placed before author 13.12.2018 Sr. PS/PS 3 Draft proposed and placed JM/AM before the second Member 4 Draft discussed/approved by AM/JM second Member 5 Approved draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order

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