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Facts
The case involves two appeals for AY 2021-22: one by InterGlobe Enterprises Private Limited against the short credit of TDS amounting to Rs. 67,90,143/-, and another by the Revenue challenging the CIT(A)'s deletion of an addition of Rs. 4,33,69,289/- made by the Assessing Officer. The assessee contended that both the income and corresponding TDS were offered in the year under consideration, and the disputed amount represented notional expenses already self-disallowed in their ITR-6.
Held
The Tribunal allowed the assessee's appeal, holding that credit for TDS must be given in the same year the corresponding income is offered for taxation, citing Section 199 read with Rule 37BA and previous judgments. The Revenue's appeal was dismissed, as the Tribunal upheld the CIT(A)'s finding that the AO's addition of Rs. 4,33,69,289/- constituted an unjustifiable double disallowance of notional expenses already accounted for by the assessee.
Key Issues
1. Whether TDS credit should be allowed in the year the corresponding income is offered for taxation as per Section 199 read with Rule 37BA. 2. Whether the Assessing Officer's addition of notional expenses constituted an impermissible double disallowance.
Sections Cited
Section 143(2), Section 144B, Section 143(3), Section 142(1), Section 199, Section 35DD, Rule 37BA
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Income Tax Appellate Tribunal, DELHI BENCH ‘C’: NEW DELHI
P a g e | 1 ITA No.3915/Del/2023 & ITA No.1/Del/2024 InterGlobe Enterprises Pvt. Ltd. Vs. ACIT, Circe 10(1)
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘C’: NEW DELHI BEFORE, SHRI G.S.PANNU, VICE PRESIDENT AND MS. MADHUMITA ROY, JUDICIAL MEMBER ITA No.3915/Del/2023 (ASSESSMENT YEAR 2021-22)
InterGlobe Enterprises Assistant Commissioner Private Limited of Income Tax, Circle 10 3rd Floor, Dr. Gopal Das Vs. (1), Room No.389-A, CR Bhawan, 28 Barakhamba Building , I.P Estate, Road, New Delhi - 110001 New Delhi - 110002 PAN- AAACG3351K (Appellant) (Respondent)
ITA No.1/Del/2024 (ASSESSMENT YEAR 2021-22)
Assistant Commissioner of M/s InterGlobe Income Tax, Circle 10 (1), Enterprises Private Room No.389-A, CR Vs. Limited, 3rd Floor, Dr. Building , I.P Estate, New Gopal Das Bhawan, 28 Delhi - 110001 Barakhamba Road, New Delhi - 110001 PAN- AAACG3351K (Appellant) (Respondent) Appellant By Sh. Rohit Jain & Ms. Somya Jain Respondent by Ms.Parul Singh Date of Hearing 03/07/2024 Date of Pronouncement 26/07/2024
P a g e | 2 ITA No.3915/Del/2023 & ITA No.1/Del/2024 InterGlobe Enterprises Pvt. Ltd. Vs. ACIT, Circe 10(1)
ORDER PER MADHUMITA ROY, JM:
Both the appeals filed by the respective parties are directed against the order dated 12.11.2023 passed by the National Faceless Appeals Centre (NFAC) arising out of the order dated 27.12.2022 issued order under Section 143(2) r.w.s 144B of the Act by the National e-assessment Centre Delhi for Assessment Year 2021-22. Since, both appeals relate to the same assessee, these are heard analogously and are being disposed of by a common order.
ITA No. 3915/Del/2023 (Assessee’s Appeal)
The assessee is a Core Investment Company (CIC) under the guidelines issued by the RBI, engaged in rendering “Functional Support Services” to various companies forming part of Interglobe group, letting out immovable properties, investments in debt oriented mutual funds, filed its return of income for this year under consideration on 11.03.2022 declaring total income at Rs.8,65,97,620/- which was selected for complete scrutiny under CASS and upon issuing statutory notices under Section 143(2) dated 28.06.2022, notice under Section 143(2)/142(1) dated 21.10.2022 followed by further notice dated 18.11.2022 and 01.12.2022 under Section 142(1) of the Act, the assessment was finally completed under Section 143(3) r.w.s 144B of the Act upon making adjustment of Rs.4,33,69,289/-. The credit of taxes deducted at source was allowed to the extent of Rs.1,12,26,103/- as against credit of Rs.1,80,16,246/- claimed by the appellant in the return of income, resulting in short credit of TDS to the extent of Rs.67,90,143/-.
P a g e | 3 ITA No.3915/Del/2023 & ITA No.1/Del/2024 InterGlobe Enterprises Pvt. Ltd. Vs. ACIT, Circe 10(1)
In appeal preferred by the ld. Assessee the Ld. CIT(A) granted part relief upon deletion of addition on account of disallowances of expenses of Rs.4.33 crores. However, short credit of TDS to the extent of Rs.67,90,143/- was not allowed by the ld. First Appellate Authority. Hence, the instant appeal before us.
The case of the assessee is this that both the income and TDS deducted thereon has dully been offered to tax during the year under consideration and no credit for such TDS has been claimed in the subsequent Assessment Year. Further that since income corresponding to the credit was offered to tax in the year under consideration i.e Assessment Year 2021-22, the credit of tax deducted thereon was also to be granted in the same year. In this regard, the assessee’s counsel referred Sec. 199 of the Act read with Rule 37BA of the Rules.
At the time of hearing of the instant appeal, it was further submitted by the ld. A.R that by and under the order dated 07.06.2022 the Coordinate Bench in ITA No. 6580/Del/2019 in assessee’s own case for Assessment Year 2016-17 has been pleased to hold that the credit of TDS should be allowed for the same year in which the income has been claimed to have accrued/arising and included for determination of taxable income. A copy whereof has also been submitted before us. In addition to that it was submitted before us that even in appellant group company i.e Interglobe Technology Pvt. Ltd. Vs. ACIT reported in taxmann.com 542, the issue has been reiterated and decided that in terms of Sec. 199 of the Act r.w. Rule 37BA, the credit of TDS is to be allowed in the year in which income has offered for taxation. A copy of the same has also been submitted before us by the ld. A.R. As the issue is squarely covered in assessee’s own case and also in the case of the
P a g e | 4 ITA No.3915/Del/2023 & ITA No.1/Del/2024 InterGlobe Enterprises Pvt. Ltd. Vs. ACIT, Circe 10(1)
group company, he has prayed for the same relief before us. In fact such submissions made by the ld. Counsel appearing for the assessee has not been able to be controverted by the Ld. D.R.
We have heard the rival submissions made by the respective parties and perused the relevant materials available of record. It appears that in assessee’s own case the Coordinate Bench has been pleased to grant relief in favor of the assessee for Assessment Year 2016-17 by and under its order dated 07.06.2022. The relevant portion is reproduced as under:
“5. We have carefully considered the rival submissions. It is the case of the assessee that when the issue of availability of TDS credit in the appropriate Assessment Year is examined in the light of Section 199(3) r.w. Rule 37BA(3) of the Income Tax Rules, it would be clear that credit for tax deducted at source and paid to the Central Government, shall be given for the Assessment Year for which such income is assessable. The assessee contends that the TDS credit is available in the financial year where the corresponding income has been referred by the assessee. A reference was made to the decision of the Co-ordinate Bench in the case of Greatship India Ltd. vs. DCIT in ITA No.5562/Mum/2018 order dated 8th June, 2020 to contend that the TDS credit cannot be postponed to a different Assessment Year on the basis of deduction carried out by the deductor when the accrued income from such transaction has been reported in the earlier Assessment Year.” 7. Apart from that the issue is found to have been covered in appellant’s group company, in ITA No. 95/Del/2024 for Assessment Year 2020-21. The relevant observation made by the Coordinate Bench is as follows:
“9.1 Even otherwise, in the computation of income annexed to the assessment order, the assessing officer however did not allow the credit of Rs.3,87,50,028 claimed by the applicant without granting any opportunity and without assigning any reason for the same. Similarly the CIT(A) dismissed the claim of the applicant for alleged want of reconciliation of TDS and the corresponding income shown, without providing the applicant with an opportunity to furnish the details. In the light of provisions of section 199 of the Act read with Rule 37BA of the rules, We are of considered view that since the income corresponding to the credit was offered to tax in the year under consideration i.e., Assessment Year 2020-21, the credit of taxes deducted thereon was also to be granted in the same year.
P a g e | 5 ITA No.3915/Del/2023 & ITA No.1/Del/2024 InterGlobe Enterprises Pvt. Ltd. Vs. ACIT, Circe 10(1)
9.2 Further more Ld. DR could not dispute the fact that the aforesaid issue now stands covered in favour of the applicant vide order dated 07.06.2022 passed by Tribunal in the case of applicant's group company, viz. InterGlobe Enterprises Ltd vs. ACIT: ITA 6580/Del/2019 for Assessment Year 2016-17 wherein the Coordinate Bench has categorically held that the credit of TDS should be allowed in the same year in which the income has been claimed to have accrued / arisen and included for determination of taxable income. Relevant extract of the order of the Tribunal is reproduced as under:
"5. We have carefully considered the rival submissions. It is the case of the assessee that when the issue of availability of TDS credit in the appropriate Assessment Year is examined in the light of Section 199(3) r.w. Rule 37BA(3) of the Income Tax Rules, it would be clear that credit for tax deducted at source and paid to the Central Government, shall be given for the Assessment Year for which such income is assessable. The assessee contends that the TDS credit is available in the financial year where the corresponding income has been referred by the assessee. A reference was made to the decision of the Co-ordinate Bench in the case of Greatship India Ltd. vs. DCIT in ITA No.5562/Mum/2018 order dated 8th June, 2020 to contend that the TDS credit cannot be postponed to a different Assessment Year on the basis of deduction carried out by the deductor when the accrued income from such transaction has been reported in the earlier Assessment Year.
A combined reading of Section 199(3) r.w. Rule 37BA(3) makes the position of law clear that credit for TDS is available in the year in which the income is reported and as a corollary, should not be deferred to some other Assessment Year. In the instant case, the Revenue has allowed the credit in the subsequent Assessment Year when the TDS is shown to have been credited in the form 26AS. However, as stated on behalf of the assessee, the corresponding income will not be found to be recorded and therefore such direction would belie the letter and spirit of Section 199(3) and Rule 37BA(3) thereto. Thus, on first principles, we are inclined to agree with the stand taken on behalf of the assessee for eligibility TDS credit in the Assessment Year 2016-17 itself when income has been claimed to have accrued/arisen and included for determination to chargeable income.” (emphasis supplied).
9.3 Thus the income was offered to tax in the year under consideration i.e., Assessment Year 2020-21, so the appellant had rightly claimed credit of TDS of Rs.3,87,50,028 in the year under consideration and the action of the assessing officer/CIT(A) in not allowing the credit deserves to be reversed. The ground is sustained.”
P a g e | 6 ITA No.3915/Del/2023 & ITA No.1/Del/2024 InterGlobe Enterprises Pvt. Ltd. Vs. ACIT, Circe 10(1)
Having regard to the entire aspect of the matter since we find that the income as was offered to tax in the year under consideration i.e Assessment Year 2021-22, the appellant had claimed credit of TDS of Rs. 67,90,143/- in the year under consideration. Identical claim has already been decided by the Coordinate Bench in favour of the assessee in view of the provision of Sec. 199 of the Act r.w.rule 37BA of the Rules as mentioned therein. We, therefore, do not find any reason to deviate from such stand taken by the Coordinate Bench and respectfully relying upon the same, we delete the impugned addition.
The assesee’s appeal, is therefore, allowed.
ITA No.1/Del/2024 (Revenue’s Appeal)
The order passed by the CIT(A) in deleting addition of Rs.4,33,69,289/- on account of national expenses claimed under the head ‘any other amount allowable as deduction’ is under challenge before us.
The brief fact leading to the issue is this that the assessee by under notice under Section 142(1) of the Act dated 18.11.2022 directed to furnish the details of ‘any other amount allowable as deduction’ of Rs.17,39,21,001/-. The assessee in reply stated that the impugned amount represents a cluster of various items which includes various debits and credit appearing in the profit and loss account of the appellant on account of adoption of Indian Accounting Standard (IND- AS). All these items were merged and reported as ”any other amount allowable as deduction” in ITR-6 of the appellant company as there was
P a g e | 7 ITA No.3915/Del/2023 & ITA No.1/Del/2024 InterGlobe Enterprises Pvt. Ltd. Vs. ACIT, Circe 10(1)
no specific claim for ITR-6 to report each items separately. The break-up of the said amount of Rs.17,39,21,001/- is as follows:
Sr. No. Particular Amount (in Rs.) Tax Treatment (A) Income/credits appearing in P & L 14,91,22,518 These items don’t reflection Account on account of notional entries come of real nature. due to mandatory adoption of Indian Accordingly, these items have been reduced in order Accounting Standard [‘Ind-AS’] to compute Taxable Income (B) Other items credited to profit and loss 50,04,773 In view of the respective account but not forming part of taxable nature of these items and income as per provisions of the Act provisions of the Act, these items have been reduced while computing taxable income (C) Deduction under Section 35DD of the 6,31,62,999 This is the fifth year of the Act claim of the said deduction which has been duly allowed by your ld. Predecessors in all earlier years Gross amount claimable as deduction 21,72,90,290 [(A) +(B) + (C)] (D) Less: - Expenses/debits appearing in P 4,33,69,289 These expenses are not real & L account on account of notional expenses. Therefore, these entries due to mandatory adoption of notional expenses have Ind-AS been suo-moto disallowed to compute the Taxable income Amount claimed as deduction 17,39,21,001 [(A) + (B) +(C)+(D)]
In fact it appears that the appellant did not claim deduction in respect of expenses to the tune of Rs.4,33,69,289/- in the income of tax return for the year under consideration. However, the deduction of Rs.17,39,21,001/- claimed by the appellant was net off and did not include expenses of Rs.4,33,69,289/- but the same was disallowed and added to the total income of the assessee.
In appeal the assessee further submitted that the said amount has already been disallowed further disallowance made by the assessing officer resulted in double disallowance of Rs.4,33,69,289/-. The ld. CIT(A) with the following observations deleted said addition:
P a g e | 8 ITA No.3915/Del/2023 & ITA No.1/Del/2024 InterGlobe Enterprises Pvt. Ltd. Vs. ACIT, Circe 10(1)
“6.1 The submission of the appellant is duly considered I find that the notional expenses of Rs 4,33,69,289/- have been considered in the net notional amount of Rs 17,39,21,001/- claimed as deduction under the head "any other amount allowable as deduction in schedule BP-A-33 of ITR-6. Thus, the notional expenses of Rs 4,33,69,289/ have already been disallowed by the assessee Further, this notional expenses of Rs. 4,33,69,289/- have been considered only once in the computation of income of the appellant Thus, adding this amount again will amount to double disallowance of this expenses of Rs. 4,33,69,289/- In view of this, the Ld. AO is directed to delete the said disallowance of Rs. 4,33,69,289/- Ground of the appellant is allowed.” 13. As the assessee has already disallowed the notional expenses of Rs.4,33,69,289/-, further addition of the same made by the Ld. AO rightly been considered as double disallowance by the ld.CIT(A) and therefore, deletion of the same is found to be just and proper so as not to warrant interference.
The revenue appeal is, therefore, found to be devoid of any merit and thus dismissed.
In the result, the appeal of the assessee is allowed and the
appeal of the revenue is dismissed.
Order pronounced in the open court on 26 July, 2024
Sd/- Sd/-
(G.S.PANNU) (MS. MADHUMITA ROY) VICE PRESIDENT JUDICIAL MEMBER Dated: 26/07/2024 Rohit/p.s
P a g e | 9 ITA No.3915/Del/2023 & ITA No.1/Del/2024 InterGlobe Enterprises Pvt. Ltd. Vs. ACIT, Circe 10(1)