SPRITE INVESTMENT P.LTD,MUMBAI vs. DCIT 13(2)(1), MUMBAI

आदेश / O R D E R

Per Sandeep Gosain, Judicial Member:

Ground No. 1 The learned CIT(Appeal) erred in not giving clear cut instructions to the A.O not to recover the tax payable from the appellant as TDS was deducted by the debtors. Ground No. 2 The learned CIT (Appeal) erred in directing the A.O to give credit for tax paid based on TDS return filed by these parties(debtors) & taxes paid by them in contrast to jurisdictional High Court decision in YaspalSahani vs. RekhaHajarnavis, ACIT 293 ITR 539 (Born).

Sprite Investment Pvt. Ltd. Aggrieved, by the order of the AO, assessee preferred appeal before Ld. CIT(A) and the Ld. CIT(A) after considering the arguments of both the parties, partly allowed the appeal of the assessee. Aggrieved, by the order of Ld. CIT(A), the assessee has filed the present appeal before us on the ground mentioned hereinabove. Ground No. 1 to 2. 3. Since, both the grounds raised by the assessee are interconnected and inter-related and relates to challenging the order of Ld. CIT(A) in not giving clear cut instructions to the AO for not recovering the tax paid by the assessee as TDS which was deducted by the deductor. Therefore, we thought it fit to dispose of the same thorough this common order.

4. We have heard Counsels of both the parties and we have also perused the materials placed on record as well as the orders passed by the Revenue authorities. Before, we decide the merits of the case, it is necessary to evaluate the orders passed by the Ld. CIT(A). The Ld. CIT(A) has dealt with the above grounds raised Sprite Investment Pvt. Ltd. by the assessee in Para No. 6 to 8 of its order. The operative portion is contained in Para No. 8 and the same is reproduced below: -

8. It is seen that in YashpalSahani vs. RekhaHajarnavis , ACIT 293 ITR 539 (Born) , the facts were that the tax has been deducted at source from the salary of the employee, the bar u/s.205 comes into operation and it is immaterial as to whether the TDS has been paid to the Central Government or not, because elaborate provisions are made under the Act for recovery of TDS from the person who has deducted such tax. In that case, the petitioner has furnished monthly slips and bank statements to show that from his salary tax was deducted at source by the employer. In the present case however, it cannot verified whether TDS was made by this party or not. There is no TDS certificate issued to the appellant and no such certificate in Form 16 is produced. Further, there may be a bar on recovery of tax from the tax payers, but the same does not imply that refund can be issued without credit of tax appearing on the Department account. Elaborate instruction have been issued by the Board has to be procedure for giving credit for payment of tax. In particular after computerization of the TDS return the credit for TDS is available to assessee only were such credit is shown in the TDS return filed by the tax deductor. In the present Sprite Investment Pvt. Ltd. case it is not clear whether TDS return were filed by these parties, and whether they have deducted tax at source and not paid the same to the Government Account is not established from the submission of the Appellant. It could quite he that, these parties had contractual dispute with the appellant and the appellant is using the department to make recovery. There is no record furnished of action taken by the apel1ant against these parties for TDS credit not appearing in its 26AS statement. It is noticed from the Form 26AS updated till 12 Aug 2015,filed by the AR that TDS is reflected as made by Madura Biotech Pvt. Ltd., and City Point Trading Company Pvt. Ltd. What is the discrepancy and its reason is however not clear. However, the Assessing Officer is directed to verify the factual position and give credit for tax paid based on the TDS return filed by these parties and the taxes paid by them. He may coordinate with TDS section for ascertaining the factual position in this regard. This ground is technically partly allowed.

No. 3 is in respect of charging interest u/s.234Band 234C. Charging of interest is consequence of the computation of taxpayable and tax paid by the assessee. It will necessarily follow that tax payable determined by the Assessing Officer will lead to interest chargeable u/s.234B and 234C. The levy of Sprite Investment Pvt. Ltd. interest is mandatory therefore this grounds of appeal is dismissed.

5. After having gone through the facts of the present case as well as orders passed by the Revenue authorities and the submission made by both the parties, we find that the Ld. CIT(A) has rightly given specific directions to the AO to verify the tax credit appearing in the name of the assessee and to give credit for the tax paid based on the TDS return filed by the parties and taxes paid by them. Since, find no fault in the order passed by Ld. CIT(A), therefore, the same stands uphold and affirmed. However, since the assessee has relied upon the judgment in the case of YaspalSahani vs. RekhaHajarnavis, ACIT 293 ITR 539 (Born)., wherein it has been held that in case the TDS has been deducted by the deductor and not paid, in that eventuality the same cannot be recovered from the payee. Respectfully following the aforementioned judgment, we further direct the AO that in case on the verification of factual position if it is found that the TDS has been deducted by the deductor & then in that eventuality the same cannot be recovered from the assessee. With this modification, we Sprite Investment Pvt. Ltd. disposed of these grounds raised by the assessee. Hence, these grounds raised by the assessee stands allowed.