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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
AadoSa / O R D E R महावीर स िंह, न्याययक दस्य/ PER MAHAVIR SINGH, JM:
This appeal filed the Revenue is arising out of the order of Commissioner of Income Tax (Appeals)-21, Mumbai [in short CIT(A)], in Appeal No. CIT(A)-21/ITO-13(1)(1)/IT-104/2015-16 vide order dated 29.12.2016. The Assessment was framed by the Income Tax officer, Ward 13(1)(1), Mumbai (in short ‘ITO’/ AO’) for the A.Y. 2012-13 vide order dated 13.03.2015 under section 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’).
The only issue in this appeal of Revenue is against the order of CIT(A) deleting the disallowance of claim of TDS of Rs. 30 lacs. For this Revenue has raised the following grounds: -
1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance made by the AO of TDS claim of Rs. 30 lacs despite mission by him in the same order that TDS credit can normally be given only for the 'ear in which corresponding income is offered by an assessee"
2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) further erred in relying upon the ITAT, Hyderabad's Judgement in Zelam Projects P Ltd. 38 ITR 41, where part of the contract was execugted in the relevant year.(T)”
We have heard the rival contentions and gone through the facts and circumstances of the case. The facts are that the assesse company is engaged in the business of management, financials and accounting consultant. During the year under consideration the assesse claimed TDS of Rs. 30 lac which was deducted on account of advance made by Skystar Buildcon Pvt. Ltd. for an agreement of Rs. 15 crores. The assesse during the course of assessment proceedings explained that the TDS was deducted by Skystar Buildcon Pvt. Ltd. on advance given for the execution of contract of civil work with Skystar Buildcon Pvt. Ltd. but latter on the same was cancelled. The AO has not accepted the claim of assesse and disallowed the claim of TDS of Rs. 30 lac by observing that the assesse has not offered the income in the AY 2012-13. Aggrieved, assesse preferred the appeal before CIT(A).
The CIT(A) allowed the claim of TDS by observing that the assesse has refunded the entire amount of mobilization advance of Rs. 15 Crores to Skystar Buildcon Pvt. Ltd. and no income was offered in this year i.e. AY 2012-13. Once there is cancellation of contract, claim for TDS deduction is to be allowed, according to CIT(A). The CIT(A) noted this fact in Para 7 to 10 and deleted the addition as under: - “7. From the details filed it is noted that no significant income is offered by M/s Skystar Buildcon Pvt. Ltd., in AY 2012-13 and only inventory of ₹ 143 crores is shown. Assessment under section 143(3) was made dated 25.03.2015 by ITO 11(2)(1) and only rent income of ₹ 1,91,100/- is assessed as house property income. No depreciation or expense is claimed in respect of advance given to the appellant company. Assessment u/s 143(3) has been made in the case of the appellant company for subsequent year AY 2013-14 on 11.3.2015 with only a nominal disallowance u/s 14A. Revenue from operations of Rs 189 lakhs is shown on which net profit of Rs 14.24 lakhs is shown. Credit for TDS of Rs 18,91,430 is claimed which has been allowed. Ledger account in the books of M/s. Skystar Buildcon Pvt. Ltd., is filed showing that payments as mobilization advance have been made to M/s L & T Ltd. starting June 2013. This corroborates the explanation that contract was cancelled with appellant company and was given to M/s L & T Ltd.
Normally TDS credit can be given for the year in which corresponding income is offered by the assessee company. It is clear that Rs.15,00,00,000/- has not been offered as income for AY 2012-13. However, in this case the contract has been cancelled shortly even before any work could have been started by the appellant company. It has refunded the entire amount of mobilization advance of RsRs.15,00,00,000/- to M/s. Skystar Buildcon Pvt. Ltd. Even if it were to be considered that the cancellation took place in AY 2013-14, the fact remains that the income will never be offered as it will never arise. Claim for this TDS was not made in AY 2013-14 and now assessment under section 143(3) has also taken place. There is no evidence of any foul play or scheme of manipulation for tax benefit. The appellant is entitled to refund of TDS.
The appellant has relied upon certain case laws to buttress its case. In the case of Arvind Murjani Brands P. Ltd. 149 TTJ 221, the Mumbai ITAT held that "where assesse received certain amount after deduction of tax at source and such amount was not admittedly chargeable to tax in its hands, in such a case, credit for tax deducted at-- source was to be allowed to assesse in instant year. Similarly, in Zelan Projects P. Ltd. 38 ITR(T) 41 Hyderabad, it was held that "Where TDS was deducted from mobilization advance paid to assesse erection contractor, credit of same was to be allowed, even if no income was assessable to tax as contract was not fully executed in relevant year." In Sunita dcvi vs ACIT 63 taxmann.com 349, Delhi ITAT it was held that "In terms of sub- section (1) of section 199, credit of TDS cannot be restricted only to amount offered in return of income or in profit and loss account." Some other cases are referred to but citations or copy of the order is not filed.