DCIT, CENTRAL CIRCLE - 7(1), MUMBAI , MUMBAI vs. RARE ENTERPRISES, MUMBAI

ITA 1442/MUM/2024Status: HeardITAT Mumbai27 September 2024AY 2018-1910 pages
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What did the Tribunal hold?

The Tribunal held that while the interest income itself might not be taxable due to non-receipt and the debtor's financial condition, the TDS deducted on this amount cannot be ignored. The assessee cannot claim TDS credit without offering the corresponding income, nor can they use the TDS to offset other income if they choose the cash system for this component.

What were the facts?

The Revenue appealed against the deletion of Rs. 3.6 Crores added as interest income. The assessee claimed it did not receive this interest from a debtor company (Dharti) which had become an NPA. However, the debtor had deducted TDS on this interest.

What were the issues?

Whether interest income not actually received due to the debtor's financial distress is taxable, and how to treat TDS deducted on such income when the assessee claims non-receipt.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 198

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, D BENCH MUMBAI

Before: SHRI SATBEER SINGH GODARA & SHRI GIRISH AGRAWAL

Hearing: 11.07.2024Pronounced: 27.09.2024

PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:

This appeal filed by the Revenue is against the order of Ld. CIT(A)- 49, Mumbai, vide order no. ITBA/APL/S/250/2023-24/1059630932(1), dated 11.01.2024, against the assessment order passed by the Deputy/Assistant Commissioner of Income Tax, Central Circle-7(1), Mumbai, u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 16.04.2021 for Assessment Year 2018-19. 2 Rare Enterprises, AY 2018-19 The grounds of appeal taken by the Revenue are as under:

1.

"On the facts and in circumstances of the case and in Law, the Ld. CIT(A) erred in concluding that the assessee did not receive the i

The order continues below.

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