INTERGLOBE TECHNOLOGY QUOTIENT PRIVATE LIMITED,NEW DELHI vs. ASSISTANT COMMISSIONER CIRCLE 10(1), NEW DELHI

1 ITA no. 95/Del/2024 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “C”: NEW DELHI

BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI ANUBHAV SHARMA, JUDICIAL MEMBER

ITA No. 95/DEL/2024 [Assessment Year: 2020-21

Interglobe Technology Quotient Vs ACIT, Circle-10(1), Private Limited, New Delhi. 3rd Floor, Dr. Gopal Das Bhawan, 28, Barakhamba Road, New Delhi-110001.

PAN- AABCI 3241 H

APPELLANT RESPONDENT

Assessee represented by Shri Rohit Jain, Adv.; & Ms. Somya Jain, CA

Department represented by Shri Sandeep Kr. Mishra, Sr.DR

Date of hearing 14.03.2024 Date of pronouncement 28.05.2024

O R D E R PER ANUBHAV SHARMA, JM:

The assessee has come in appeal against the order dated 30.11.2023 passed by the

National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred as “learned

2 ITA no. 95/Del/2024 First Appellate Authority” or in short “FAA”), in Appeal no. NFAC/2019-

20/10192967, arising out of order dated 22.09.2022 u/s 143(3) read with section

144B of the Income-tax Act, 1961 (hereinafter referred as the “Act”), passed by the

Assessing Officer, NFAC, Delhi (hereinafter referred as the “AO”), pertaining to

the assessment year 2020-21.

alia, engaged in the business of rendering data processing services and export

thereof. The appellant filed return of income, for present AY, under section 139(1)

of the Act on 12.02.2021 declaring income of Rs.24,43,74,310. Assessment was

completed by the assessing officer vide order dated 22.09.2022 passed under

section 143(3) r.w.s 144B, assessing income of the appellant at Rs.24,91,76,860,

after making two disallowances.

2.1 The first disallowance was with regard denial of deduction claimed under

section 80G of the Act

2.2 The second disallowance related to not allowing credit of TDS

3 ITA no. 95/Del/2024 3. The appeal filed by the appellant was partly allowed by the NFAC,

aggrieved, the appellant is in appeal before this Tribunal raising following grounds

of appeal:

“1. That on the facts and circumstances of the case and in law, the impugned order dated 30.11.2023 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeals Centre ['CIT(A)'] is erroneous and bad-in-law.

1.1. That the CTT(A) erred in passing the impugned order without granting personal hearing (either physically or virtually) to the appellant which is not only violative of settled principles of natural justice but also express provisions of section 250 of the Income Tax Act, 1961 (the Act') and the faceless appeal scheme.

1.2. That the CIT(A) erred on facts and in law in making adverse observations (not forming part of assessment order) and changing the complexion of the case without any prior notice/ opportunity, in gross violation of provisions of section 251(2) of the Act.

1.3. That the CIT(A) erred in not quashing the assessment order dated 22.09.2022 passed without providing opportunity of personal hearing, in violation of mandatory scheme of section 144B of the Act and in gross violation of principles of natural justice.

Re: Disallowance of deduction claimed under section 80G of the Act 2 That on the facts and circumstances of the case and in law. the CIT(A) erred in confirming the disallowance of deduction of Rs. 1,37,94,870 claimed under section 80G of the Act, being 50% of the eligible amount of donations made during the relevant previous year.

2.1. That the CIT(A) erred in denying deduction to the extent of Rs.59,93,920 (claimed qua donations aggregating to Rs. 1,19,87,840) merely because the donations were paid after 31 March, 2020, without appreciating that the time limit for making donations in assessment year 2020-21 stood extended

4 ITA no. 95/Del/2024 to 30th July, 2020 vide The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.

2.2. That the CIT(A) further erred in confirming the disallowance to the extent of Rs.78,00,950 (claimed qua donations aggregating to Rs.1,56,01,900) on the ground that the underlying expenditure was not in the nature of donation, rather the same represented mandatory contribution towards Corporate Social Responsibility (^ prime CS R^ prime prime ) as specified under the Companies Act, 2013. 2.3. That the CIT(A) erred in confirming disallowance of deduction for donation of Rs.23,100 without appreciating that the same was not claimed by the appellant in the return of income.

Re: Not allowing credit of TDS 3. That on the facts and circumstances of the case and in law, the CIT(A) assessing officer erred in granting credit of taxes deducted at source to the extent of Rs.23.01,710 as against credit of Rs.4,10,51,738 claimed by the appellant thereby granting short credit to the extent of Rs.3,87,50,028.

3.1. That the CIT(A) erred in not appreciating that the income corresponding to the aforesaid TDS credit of Rs.3,87,50,028 was offered to tax in the year under consideration and hence the credit was allowable in terms of section 199 of the Act read with Rule 37BA of the Income Tax Rules, 1962 dehors the fact that the same was reflected in the Form 26AS for subsequent year.

Re: Interest under section 234A/B/C 4. That the CIT(A) erred on facts and in law in not deleting interest under sections 234A, 234B and 234C of the Act levied/ computed by the assessing officer.”

nothing was submitted with regard to ground no. 1. As with regard to ground No. 2

to 2.3, the relevant facts are that during the year under consideration, the appellant

5 ITA no. 95/Del/2024 claimed deduction under section 80G of the Act in respect of the following

donations made by it till 30th July, 2020:

S. Date of Party Amount Deduction Whether No. Donation donated allowable part of u/s 80G CSR (50%) expense 1. 15.04.2019 Interglobe 55,00,000 27,50,000 Yes Foundation 2. 27.08.2019 55,00,000 27,50,000 Yes PAN-ACCI2495N 3. 18.03.2020 20,00,000 1,00,000 Yes 4. 17.06.2020 1,10,00,000 55,00,000 No 5. 20.12.2019 Uththaan 13,12,500 6,65,250 Yes 6. 14.05.2020 PAN-AAJU0183G 12,89,400 6,44,700 Yes 7. 07.05.2020 End Poverty 9,87,840 4,93,290 No PAN-AATE3346B TOTAL 2,75,89,740 1,37,94,870

4.1 Admittedly the donations made as part of CSR expenditure were suo-motu

disallowed by the appellant under section 37(1) of the Act. However, the assessing

officer disallowed the entire deduction claimed by the appellant on the ground that

donations forming part of CSR expenditure is not allowable as deduction under

section 80G of the Act. The CIT(A) though rightly observed that donations to the

extent of Rs.1,19,87,840, being total of S.No. 4 & 7, in above column, were not

paid as part of CSR expense, however, the CIT(A) confirmed the disallowance on

the ground that the same were made beyond 31.03.2020. Similarly, donation of

Rs.12,89,400 made to Uththaan, referred above at S.No.6, after 31.3.2020 was

6 ITA no. 95/Del/2024 disallowed by the CIT(A) on the ground that payment was made beyond the end of

financial year (without prejudice to eligibility of CSR expenditure.

4.2 Here itself we will like to observe that CIT(A) seems to have lost sight of the

fact that provisions of the Taxation and Other Laws (Relaxation and Amendment

of Certain Provisions) Act, 2020 ("TOLA'), were applicable in regard to the

donations made beyond 31.03.2020. This aspect could not be disputed by Ld. DR.

As per the provisions of TOLA, inter-alia, the due date for making donations,

deduction for which could be claimed under section 80G of the Act, in the income

tax return for assessment year 2020-21 was extended till 30th July, 2020.

ground that donations forming part of CSR expenditure is not allowable as

deduction under section 80G of the Act. Same forms the basic controversy now.

The assessing officer and CTT(A) disallowed the deduction claimed by the

appellant by holding that the donations have been made to meet the statutory

requirement of the provisions of Companies Act 2013 and were accordingly not

'voluntary donation to be allowable under section 80G of the Act.

expenditure incurred as part of CSR Activities in accordance with provisions of

section 37(1) of the Act. However, for the purpose of claiming deduction under

section 80G of the Act, the donations made as part of CSR expenditure were

7 ITA no. 95/Del/2024 considered. It was submitted that law in this regard is now quite settled. Ld.

Counsel submitted that disallowance of deduction claimed under section 80G of

the Act will result in double disallowance, which is not provided for by the

Legislature. He has placed reliance on Bangalore Bench of the Tribunal judgment in the case of Allegis services (India) Pvt Ltd vs ACIT Bangalore: ITA No.1693/Bang/2019. Relevant extracts of the decision, as relied by him, are

reproduced hereunder:

"14. In our view, expenditure incurred under section 30 to 36 are claimed while computing income under the head 'Income from Business or Profession", whereas monies spend under section 80G are claimed while computing "Total Taxable Income" in the hands of appellant. The point of claim under these provisions are different

8 ITA no. 95/Del/2024 18. In our view, appellant cannot be denied the benefit of claim under chapter VIA, which is considered for computing "Total Taxable Income". If appellant is denied this benefit, merely because such payment forms part of CSR, would lead to double disallowance, which is not the intention of legislature. Accordingly, ground raised by appellant stands allowed. "(emphasis supplied)

6.1 Ld. Counsel has relied judgment in Goldman Sachs Services Pvt Ltd vs JCIT: ITA No.2355/Bang/2019, of the Bangalore Bench of the Tribunal to

submit that that deduction under section 80G cannot be denied in respect of CSR

expenditure incurred under section 135(5) of the Companies Act, 2013. He

submitted that the Tribunal while allowing the deduction under section 80G, has

also considered clauses (iiihk) & (iiihl) of section 80G(2) to hold that contribution

made under section 135(5) of the Companies Act, 2013 other than to "Swachh

Bharat Kosh" and "Clean Ganga Fund" shall be eligible for deduction under

section 80G of the Act. The relevant extracts of the decision, as relied by him, are

as under:

"16…………. We find that the CSR expenses are required to be incurred by companies as per Section 135 of the Companies Act and the deduction u/s. 37(1) of the Act, is not available from Assessment Year 2015-16 as per the Explanation 2 to Section 37(1) of the Act inserted by the Finance Act No.2. 2014. Whereas, the appellant company has made a claim for deduction of CSR expenses w/s. 80G of the Income Tax Act, 1961. But the assessing officer has rejected the assesses claim without verifying the nature of contributions and observed that it is not a donation, and was not spent voluntarily for the eligibility of claim u/s.80G of the Act but due to legal obligation prescribed w/s. 135 r.w. Schedule VII of Companies Act, 2013. We find that the A.O has allowed eduction n/s.80G of the Act in respect of

9 ITA no. 95/Del/2024 contribution made to PM Relief Fund which is not disputed. We are of the opinion that the A.O. has not made his observations clear that no CSR expenses are eligible for deduction m/s. 80G of the Act. We consider it appropriate to refer to the Clauses (link) & (d) of sub section 2 of Section 80G of the Act which are read as under:

"(link) the Swachh Bharat Kosh, set up by the Central Government, other than the sum spent by the appellant in pursuance of Corporate Social Responsibility under sub-section (3) of Section 135 of the Companies Act, 2013 (18 of 2013): or

(iihl) the Clean Ganga Fund, set up by the Central Government, where such appellant is a resident and such sum is other than the sum spent by the appellant in pursuance of Corporate Social Responsibility under sub- section (5) of Section 135 of the Companies Act, 2013) (18 of 2013)"

Where these two exceptions are provided in Section 80G of the Act, it can be inferred that the other contributions made us. 135(5) of the Companies Act are also eligible for deduction u/s 80G of Income Tax Act subject to appellant satisfying the requisite conditions prescribed for deduction u/s 80G of the Act. In the present case the A.O. has not dealt on these aspects, prima facie, considered the contributions as not voluntary but a legal obligation and has accepted the genuineness of the contributions. We are of the opinion that the matter has to be considered for examination and verification of facts subject to the appellant satisfying the requirements of claim u/s 80G of the Act. Accordingly, we restore the entire disputed issues to the file of A.O. for fresh examination and verification as discussed above and the appellant should be provided adequate opportunity of hearing and shall co-operate in submitting the information and we allow the ground of appeal of the appellant for statistical purposes." (emphasis supplied)

6.2 Ld. Counsel has then relied a co-ordinate Delhi bench of Tribunal decision in the case of Honda Motorcycle and Scooter India Pvt Ltd vs ACIT: ITA No.1523/Del/2022 vide order dated 22.08.2023, where relying on the decision of

Bangalore bench of the Tribunal in the case Goldman Sachs (supra), the Co-

10 ITA no. 95/Del/2024 ordinate bench has held that there is no restriction in the Act that expenditure when

disallowed for CSR cannot be considered under section 80G of the Act. The said

donation also formed part of CSR expenditure of the assessee, though the assessee

disallowed the said expenditure under section 37(1) of the Act. The Tribunal,

however, remitted the issue to the file of the assessing officer with the directions to

allow deduction under section 80G of the Act subject to verification that the

payments qualified as donation under that section. The relevant extracts of the

decision, as relied by him, are as under;

"18. We have heard both the parties and perused the records. We find that ITAT, Bangalore Bench in the case of Goldman Sachs Services (P.) Lad. (supra) has held that the other contributions made under section 135 (5) of the Companies Act are also eligible for deduction's 80G of the Act ITA No. 1523/Del./2022 subject to satisfying the requisite conditions prescribed for deduction w/s 80G of the Act. For this purpose, the issue is remanded to the file of AO to examine the same whether the payments satisfy the claim of donation's 80G of the Act. We find that the case law is fully applicable to the facts of the case. There is no restriction in the Act that expenditure when disallowed for CSR cannot be considered w/s 80G of the Act, Hence, we remit the issue to the file of AO to verify whether these payments were qualified as donations u/s 80G of the Act or not, if they qualify as donation u/s 80G of the Act then the requisite amount deserves to be allowed." (emphasis supplied)

6.3 Ld. Counsel also relied judgment in case of Teradata India Pvt Ltd vs. DCIT: ITA 1248/Del/2022, the co-ordinate Delhi Bench of the Tribunal, where in

the bench allowed the deduction claimed under section 80G of the Act in respect of

11 ITA no. 95/Del/2024 donations made to eligible institutions as part of CSR Expenditure, holding as

under;

"16. It is not in dispute that contributions made by the assessee are made to eligible institutions which are enjoying exemption u/s 80G of the Act. The fact that those contributions were made only to eligible institutions are not in dispute before us. We find that all the institutions listed in the tabulation are enjoying exemption u/s 80G of the Act and accordingly, assessee would be entitled for deduction u/s 80G of the Act thereon, irrespective of the fact that it is made as part of CSR obligations. The assessee in the instant case had duly complied the provisions of Companies Act, 2013 read with CSR rules thereon and as per the provisions of the Income Tax Act had also voluntarily disallowed the CSR expenditure while computing the taxable income. Since, the donee institutions are eligible institutions enjoying exemption u/s 80G of the Act, the assessee has claimed deduction u/s 80G of the Act which is also provided in the statute itself to the assessee. Hence, denial of deduction u/s 80G of the Act to the assessee would result in gross injustice. We direct the ld AO to grant deduction u/s 80G of the Act to the assessee. Accordingly, the ground No. 6 to 6.6 raised by the assessee are allowed." (emphasis supplied)

6.4 He has also made reference to Hyderabad Bench of the Tribunal decision in

the case of Optum Global Solutions (India) (P) Ltd vs DCIT: [2023] 203 ITD 14 (Hyd Trib.) that where assessee satisfied conditions of section 80G, the

assessee shall be eligible to claim deduction under the said section in respect of

such donations, even if the same formed part of spends towards CSR. The relevant

extracts of the decision, as relied by him, are as under:

"13. After computing the business income, while computing the total income of the assessee, the assessee is invoking the benefit under chapter-VIA by claiming deduction of the sums under section 80G of the Act. According to

12 ITA no. 95/Del/2024 the Revenue, when once such sum went to satisfy the requirement of section 135 of the Companies Act, the benefit gets exhausted and such an amount is no more available for the purpose of claiming deduction under section 80G of the Act.

6.5 Reliance was also placed on the decision of Mumbai Bench of the Tribunal in the case of Synergia Lifesciences Pvt Ltd vs DCIT: ITA No. 938/Mum/2023

13 ITA no. 95/Del/2024 (Mum Trib), which has relied on the decision of Bangalore bench of the Tribunal in the case of Allegis (supra) and held that "the claim for deduction under section 80G of the Act in respect of CSR expenses cannot be denied". The Tribunal, however, remitted the issue to the file of the assessing officer with the directions to allow deduction under section 80G of the Act is the conditions specified therein are satisfied. He also cited the following decisions for the same proposition of law. - FNF India Private Limited vs ACIT: 133 taxmann.com 251 (Bang Trib.) - Infinera India (P.) Ltd vs. JCIT: 194 ITD 463 (Bang Trib.) - First American (India) Private Limited: ITA No. 1762/Bang/2019 (Bang. Trib) - Sling Media (P) Ltd vs. DCIT: 194 ITD 1 (Bang Trib.) - JMS Mining (P.) Ltd vs PCIT: 130 taxmann.com 118 (Kol Trib.) - DCIT vs. Peerless General Finance & Investment Co Ltd: 112 taxmann.com 410 (Kol Trib.) - Diamond Beverages Private Limited vs PCIT: ITA No.208/Kol/2022 (Kol Trib.) - Power Mech Projects Ltd vs DCIT: ITA No.155/Hyd/2023 (Hyd Trib.) - Supreme Buildestates Pvt Ltd vs DCIT: ITA No.495/Jpr/2023 (Jpr Trib.) - Naik Seafoods Pvt Ltd vs. PCIT: ITA 490/Mum/2021 (Mum Trib.) - Societe Generale Securities India Pvt Ltd vs. PCIT: ITA 1921/Mum/2023 (Mum Trib.) 7. Learned DR has failed to bring forth any decision to the contrary. Thus, we accept the plea of learned counsel on the basis of case law cited, denial of CSR expenditure u/s 37(1) of the Act is not embargo to claim deduction u/s 80G of the Act.

7.1 Further, we like to observe that as a matter of fact as per Section 135 of the Companies Act, 2013 ('CA 2013), the qualifying Companies as mentioned therein

14 ITA no. 95/Del/2024 are required to spend certain percentage of profits of last three years on activities

pertaining to Corporate Social Responsibility (CSR). The expenditure on CSR,

could be by way of expenditure on projects directly undertaken by said companies,

such as setting up and running schools, social business projects, etc. Such

expenditure would include expenditure otherwise falling for consideration under

section 37(1) of the Act. On the other hand, companies, instead of undertaking or

participating directly in a project, may choose to give donations to institutions that

are engaged in undertaking such projects, which is also a recognized way of

compliance of CSR obligation.

7.2 The assessing officer and CIT(A) have relied upon General Circular 14/2021

dated 25.08.2021 issued by MCA and "Explanatory Notes to the provisions of the

Finance (No.2) Act, 2014" to hold that donations made as part of CSR expenditure

are not allowable as deduction. The foundation of their reasoning being that the

donation is voluntary in nature, while CSR expenditures are under statutory

obligations.

7.3 As we take notice of the fact that Parliament legislated that CSR expenses

would not be eligible for deduction as business expenditure under section 37 of the

Act by inserting Explanation 2 to section 37(1) vide the Finance (No.2) Act, 2014

(applicable from the assessment year 2015-16), which provided that any

15 ITA no. 95/Del/2024 expenditure incurred by an assessee on the activities relating to CSR referred to in

section 135 of the CA 2013, shall not be deemed to be an expenditure incurred by

an assessee for the purpose of business or profession and shall not be allowed as

deduction under section 37(1) of the IT Act. The intent of Parliament in bringing

the aforesaid provision is given in the Explanatory Memorandum to the Finance

(No.2) Bill, 2014 and is reproduced as under ;

“CSR expenditure, being an application of income, is not incurred wholly and exclusively for the purposes of carrying on business, As the application of income is not allowed as deduction for the purposes of computing taxable income of a company, amount spent on CSR cannot be allowed as deduction for .computing the taxable income of the company, Moreover, the objective of CSR is to share burden of the Government in providing social services by companies having net worth/turnover/profit above a threshold. If such expenses are allowed as tax deduction, this would result in subsidizing of around one-third of such expenses by the Government by way of tax expenditure." (emphasis supplied)

7.4 The aforesaid explanatory memorandum categorically expresses the

legislative intent and the rationale of disallowance of CSR expenditure referred to

in section 135 of the Companies Act, that such expenditure is application of

income and not incurred for the purposes of business. We are of considered view

that this in itself justifies the grant of deduction u/s 80G. As CSR expenditure is

application of income of the assessee under the Income Tax Act, that means it

continues to form part of the Total income of the assessee. Section 80G(1) of the

Act provides that in computing the total income of an assessee, there shall be

16 ITA no. 95/Del/2024 deducted, in accordance with the provisions of this section, such sum paid by the

assessee in the previous year as a donation. Further, section 80G(2) lists down the

sums on which deduction shall be allowed to the assessee. Section 80G falls in

Chapter VIA, which comes into play only after the gross total income has been

computed by applying the computation provisions under various heads of income,

including the Explanation 2 to section 37(1) of the Act. Thus, there is no

correlation between suo-moto disallowance in section 37(1) and claim of deduction

under section 80G of the Act.

7.5 As with regard to the reasoning that CSR expenditure are not voluntary but

mandatory in nature due to penal consequences, we are of considered view that

voluntary nature of donation is by nature of fact that it is not on the basis of any

reciprocal promise of donee. The CSR expenditures are also without any reciprocal

commitment from beneficiary being philanthropic in nature. The Act permits

deduction of donations as per Section 80G of the Act, even though, assessee is not

gaining any benefit out of any reciprocity from donee. Similar is the case of CSR

expenditure. Thus the reasoning of learned Tax Authority, the CSR expenditure is

mandatory, does not justify disallowance of these expenditures u/s 80G, if other

conditions of section 80G are fulfilled. There is no allegation of Revenue that other

conditions of Section 80G are not fulfilled. We, thus sustain the ground.

17 ITA no. 95/Del/2024 8. Ground of Appeal No. 3 to 3.1:- Ld. Counsel has submitted that the

appellant, as a consistent practice, follows an "accrual system of accounting"

wherein the revenue is recognized once the service has been rendered and the bill

is raised upon the service recipient. The service recipient is obligated to deduct

applicable tax (TDS) under the relevant provisions of the Act while making the

payment. However, in appellant's case, there is a gap in the recognition of revenue

by the appellant and deduction of taxes by the receipt inasmuch as, for services

provided by the appellant around year end, the revenue is recognized by the

appellant in March, however, the TDS is deducted by the recipient in the next

financial year when the payment is made. As a consequence, though the revenue is

offered to tax in the preceding financial year, the credit of tax deducted thereon

gets reflected in the next financial year. In such a situation, in terms of section 199

of the Act read with Rule 37BA(3)(ii) of the Income Tax Rules, 1962 ('the Rules'),

the applicant claims credit of the taxes in the year in which the income is offered to

tax. In this background, it is submitted that during the year under consideration, the

appellant rendered certain data processing and IT enabled services to M/s.

Travelport International Operations Limited ('TravelPort'). Revenue from the

services rendered to the said party to the extent of Rs.38,75,00,274 was offered to

tax in the year under consideration (refer pages 44, 132 and 163 of PB). However,

the tax on the said amount was deducted and deposited by TravelPort in the next

18 ITA no. 95/Del/2024 financial year i.e., 2020-21, relevant to assessment year 2021-22 (refer page 154 of

PB). Accordingly, TDS credit of Rs.3,87,50,028 was reflecting in the Form 26AS

of the applicant for assessment year 2021-22. As per the accrual method of

accounting followed by the appellant read with provisions of section 199 of the Act

and Rule 37BA of the Rules, since the income from TravelPort to the extent of

Rs.38.75 crores was offered to tax in the year under consideration, the credit of the

taxes deducted thereon, reflecting in the Form 26AS for the next year, were

claimed in the year under consideration (refer pages 3 and 165 of PB). Further

pertinently, since the credit of taxes to the extent of Rs.3,87,50,028 was claimed

during the year under consideration, the applicant did not claim the said credit in

the return of income for assessment year 2021-22 (refer pages 167 and 175 of PB).

Attention in this regard was invited to the following documents for establishing

that income from TravelPort was offered to tax during the year:

(a) Copy of invoice dated 30.04.2020 raised on TravelPort for services rendered in the month of February 2020-refer page 127 of PB:

(b) Copy of the ledger of 'TravelPort' and 'Data Processing Services' duly evidencing that the income of Rs.38.75 crore was offered to tax in the year under consideration and not in subsequent year-refer pages 128-136 of PB:

(c) Copy of financial statements for the year ended 31 March 2020-refer pages 4- 61 @ 44 of PB;

19 ITA no. 95/Del/2024

(d) Copy of Form 26AS for AY 2020-21 and 2021-22-refer pages 137-148 and 149- 162 @ 154 of PB:

(e) Copy of relevant extract of ITR for AY 2020-21 and 2021-22 duly evidencing that credit of TDS of Rs.3,87,50,028 was claimed in the year under consideration and not the subsequent year refer pages 2-3, 166-167 of PB.

there remains no doubt that both the income and TDS deducted thereon has duly

been offered tax during the year under consideration and no credit for such TDS

has been claimed in the subsequent assessment year.

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

20 ITA no. 95/Del/2024 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.

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 Co-

ordinate 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.

21 ITA no. 95/Del/2024 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.

Order pronounced in open court on 28.05.2024.

Sd/- Sd/- (M. BALAGANESH) (ANUBHAV SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated:_28.05.2024. *MP* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI