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Income Tax Appellate Tribunal, Hyderabad ‘ B‘ Bench, Hyderabad
Before: Shri Manjunatha, G. & Shri K. Narasimha Chary
Per Manjunatha, G. A.M These two appeals filed by the assessee are directed against, separate but identical orders dated 11/01/2024 of the learned CIT (A)/Addl/JCIT (A)-1 Coimbatore, and pertains to A.Ys 2021-22 & 2022-23 respectively. Since facts are identical and issues are common, for the sake of convenience, these two appeals filed by the assessee were heard together and are being disposed off, by this consolidated order.
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ITA Nos 205 and 206 of 2024 Matrix Security and Surveillance P Ltd
The brief facts of the case are that the assessee has filed his return of income for the A.Y 2021-22 on 28.10.2022 and for the A.Y 2022-23 on 5.3.2022. The appellant company follows the percentage completion method and recognizes revenue in the books of account in accordance with applicable accounting standard/ICDS. The assessee entered into long term contract with NCC-Matrix Consortium and the works started in the financial year relevant to A.Y 2018-19 and continued upto A.Y 2023-24. Accordingly, the assessee recognizes the income in terms of percentage completion method of contract and claimed TDS to the extent the income was recognized in the books of account for the relevant A.Y. The excess TDS credit available as per Form 26AS has been carried forward to subsequent A.Ys. The return of income filed by the assessee for both the A.Ys was processed u/s 143(1) and intimations were issued. The Assessing Officer/CPC while processing the return of income u/s 143(1) has not considered the TDS credit of Rs.54,42,398/- for A.Y 2021-22 and Rs.35,24,781/- for the A.Y 2022-23 on the ground that the above TDS was not available in Form 26AS. The assessee filed appeal against the assessment order passed u/s 143(1). Before the learned CIT (A), the assessee argued that it is following percentage completion method for recognizing revenue and as per the method of accounting followed by the assessee, there is a mismatch between the amount credited or paid by the contractor and the income recognized by the assessee in its books of account. Further, the assessee had also claimed TDS in proportion to
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ITA Nos 205 and 206 of 2024 Matrix Security and Surveillance P Ltd
income offered for the relevant A.Y and excess TDS credit, if any, has been carried forward to subsequent A.Ys. The learned CIT (A) after considering the relevant submission of the assessee and also taken note of Form 26AS for both the A.Ys observed that in absence of relevant details with particulars of deduction for which A.Y said TDS pertains and also relevant credits in Form 26AS, the Assessing Officer/CPC cannot allow credit for TDS as claimed by the assessee in ITR filed for the relevant A.Y and therefore, rejected the claim of the assessee and upheld the assessment order passed by the Assessing Officer u/s 143(1) of the I.T. Act, 1961.
Aggrieved by such order of the learned CIT (A,) the assessee is in appeal before the Tribunal.
The learned Counsel for the assessee submitted that the reasons for mismatch of TDS between Form 26AS of the relevant A.Y and return of income is mainly due to the method of accounting followed by the assessee, as per which the appellant is following percentage completion method for recognizing the revenue which des not match exactly with the payment made or credited by the contractors. The learned Counsel for the assessee submitted that the appellant has carried out long-term contract awarded by the NCC-Matrix Consortium which runs from A.Y 2018-19 to A.Y 2023-24. The appellant has recognized the income as per percentage completion method, whereas the contractor has
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ITA Nos 205 and 206 of 2024 Matrix Security and Surveillance P Ltd
deducted the TDS on payment made/credited to appellant account. The assessee has explained the reasons for difference in TDS as per Form 26AS and ITR filed by the assessee. But, the learned CIT (A) rejected the explanation offered by the assessee and upheld the computation of income and tax. Therefore, submitted that the matter may be set aside to the file of the Assessing Officer to verify the facts and allow the TDS credit as per law.
The learned DR, on the other hand, supporting the orders of the learned CIT (A) submitted that the assessee failed to file relevant details and also the reconciliation explaining difference between the TDS as per form 26AS and ITR filed for the relevant A.Y. Since the appellant has not filed the relevant details, the learned CIT (A) has rightly upheld the order passed by the Assessing Officer. Therefore, he submitted that the appellate order should be upheld.
We have heard both the parties, perused the material available on record and gone through the orders of the authorities below. The appellant is following percentage completion method for recognition of revenue in the books of account in accordance with applicable accounting standard/ICDS. The accounting method followed by the appellant mandates that, if the contracts/ agreement is entered into for various years, then the income has to be offered to tax on percentage completion method irrespective
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ITA Nos 205 and 206 of 2024 Matrix Security and Surveillance P Ltd
of the invoice raised/amount accrued upon in the contract. The assessee executed the contract awarded by NCC Matrix Consortium which started from financial year 2017-18 and continued upto financial year 2022-23. The appellant claims that in case of percentage completion method revenue recognition, it may not match with contract receipts and relevant TDS credited as per Form 26AS. We find merit in the submission of the assessee for the simple reason that when the appellant is following percentage completion method for recognition of the Revenue, it may not match with the income from operations or receipts from its business and corresponding TDS credit as per Form 26AS. This is for the simple reason that, the contractor deducted TDS on the amount credited or paid to the account of the contractee, whereas the contractee recognizes revenue in terms of the percentage of completion of works. If the claim of the assessee is correct that it is following percentage completion method, then the income offered by the assessee on the basis of percentage completion method should be adopted and accepted. Further, as per section 199(2) of the I.T. Act, 1961 r.w. rule 37BA(93)(i) credit for tax deducted at source and paid to the central govt. shall be given for the A.Y for which such income is assessable. From the above, it is undisputedly clear that the credit for TDS should be allowed for the A.Y in which such income is assessed or assessable to tax irrespective of TDS credit available in Form No.26AS. In the present case, the appellant claimed that it has recognized revenue in terms of percentage
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ITA Nos 205 and 206 of 2024 Matrix Security and Surveillance P Ltd
completion method and also claimed TDS credited in proportion to income recognized for the relevant A.Ys. The appellant also claims that the excess TDS credit, if any, has been carried forward to subsequent A.Ys. Therefore, we are of the considered opinion that when the appellant is claiming credit for TDS in proportion to the income offered for the relevant A.Y, the Assessing Officer ought to have allowed credit for TDS as claimed by the assessee, provided relevant details has been furnished to prove the claim of the assessee. Since, the appellant claims that it has filed all the relevant details to prove credit for TDS as per ITR filed for the relevant A.Ys, in our considered view, the matter needs further examination from the Assessing Officer. Thus, we set aside the order of the learned CIT (A) for both the A.Ys and restored the issue back to the file of the Assessing Officer and also direct the Assessing Officer to verify the claim of the assessee in light of our discussion given herein above and also evidences, if any, filed by the assessee to justify its claim for credit for TDS.
In the result, appeals filed by the assessee for both the A.Ys are allowed for statistical purposes.
Order pronounced in the Open Court on 12th July, 2024. Sd/- Sd/- (K. NARASIMHA CHARY) (MANJUNATHA, G.) JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad, dated 12th July, 2024 Vinodan/sps
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Copy to: S.No Addresses 1 Matrix Security & Surveillance P Ltd 1-65/K/7 Floor II, Sri Lakshmi Space, Kavuri Hills, Hyderabad 500082 2 ACIT Circle 5(1) Hyderabad 3 Pr. CIT - Hyderabad 4 DR, ITAT Hyderabad Benches 5 Guard File By Order
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