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TMI Blog2017 (6) TMI 545X X X X Extracts X X X X X X X X Extracts X X X X ..... Decided in favour of assessee. - ITA No. 6119/Mum/2016 - - - Dated:- 9-6-2017 - Sri Mahavir Singh, JM Assessee by : Shri Vijay Mehta, AR Revenue by : Shri Rakesh Ranjan, DR ORDER Per Mahavir Singh, JM This appeal by the assessee is arising out of the order of CIT(A)-3, Mumbai, in appeal No. CIT(A)-3/ITO 1(3)(1)/IT-63/2015-16 dated 29-08-2016. The rectification order passed by the ITO Ward-1(3)(1), Mumbai for the A.Y. 2010-11 vide order dated 19-05-2015 under section 154 of the Income Tax Act, 1961 (hereinafter the Act ). 2. The only issue in this appeal of assessee is against the order of CIT(A) confirming the action of the AO in rectifying the assessment order passed by the AO under section 154 of the Act and therefore not allowing credit for TDS. For this assessee has raised following two grounds: - 1. On the facts and circumstances of the case and in law, the assessment order passed by the AO under section 154 of the Income Tax Act, 1961 ( the Act ) is bad in law and therefore needs to be quashed. 2. On the facts and circumstances of the case and in law, the ld. CIT(A) had erred in not allowing the TDS credit of ₹ 3,16,001/- as claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontentions and gone through the facts and circumstances of the case. The learned counsel for the assessee first of all drew my attention to the computation of income filed by assessee along with return of income for the relevant AY 2010-11 and the computation of income contains income from house property which is as under: - 5. In the computation, the assessee claimed full credit of TDS of ₹ 5,86,412/- but the AO while acting under section 154 of the Act allowed credit of ₹ 2,70,411 on the rental income received actually. The learned counsel for the assessee stated that assessee has offered a total rental income of ₹ 63,56,768/- but claim deduction of unrealized rent for FY 2009-10 relevant to this AY 2010-11 at ₹ 37,25,658/-. The learned counsel for the assessee admitted that it has not received partial rent from one party M/s Sports and Leisure Apparel Ltd. ( the tenant ) to the extent of ₹ 33,30,657/- out of total rent of 48,00,000/-. It was claimed that the assessee has claimed deduction on account of unrealized rent amounting to ₹ 33,30,657/- under the provisions of section 23(1) of the Act read with Rule 4 of the Rules. The lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and circumstances of the case and find that the facts are not in dispute that the assessee has disclosed rental income but claimed deduction of unrealized rent under section 23(1) read with rule 4 of the Rules. I find that the Unrealized rent is deduction which is claimed u/s 23(1) of the Act, read with Rule 4 of the Rules, from the total rental income offered during the year. The unrealized rent is not an exempt income. As the total rental income (including unrealized rent) is duly offered to tax under the head 'Income from House Property', corresponding TDS credit needs to be allowed. There similar instances, where although the deduction is allowed with respect to total income offered during the year, still the claim of TDS with respect to such deduction claim is duly allowable under the Act i.e. TDS credit is allowed on deduction of Income under u/s 8OIA, 8OIB, 80IC of the act, etc and also TDS credit is allowed on bad debts claimed u/s 36(1)(vii) of the Act. Accordingly I am of the view that that the Unrealized rent is duly offered to tax by the assessee at first instance, and then the same is claimed as deduction from Rental Income u/s 23(1) of the Act r.w. Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the deductee files a declaration with the deductor and the deductor reports the tax deduction in the name of the of/jet person in the information relating to deduction of tax referred to in sub-rule (1). (ii) The declaration filed 19 the deductee under clause (i) shall contain the name, address, permanent account number of the person to whom credit is to be given, payment or credit in relation to which credit is to be given and reasons for giving credit to such person. (iii) The deductor shall issue the certificate for deduction of tax at count in the name of the person in whose name credit is shown in the information relating to deduction of tax referred to in sub-rule (I) and shall keep the declaration in his safe custody (3) (i) 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. (ii) Where tax has been deducted at source and paid to the Central Government and the income is assessable over a number of years. credit for tax deducted at fount shall be allowed across those years in the same proportion in which, the income is assessable to tax-. (4) Credit for tax d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e given for the assessment year for which, such income is assessable. Thus, if the said rule is read, it is clear that the assessee is entitled to get mdl of the tax deducted at source once such income is included in his income. The admitted facts of the case of the appellant is that the tax deducted at source has been offend as income by the appellant in his return of income and therefore, having regard to even the rules, the assessee is entitled to credit of the tax deducted at source. The assessee before the CTT(A) had provided an illustration whereby it was submitted that assuming an assessee follows cash system of accounting and raises an invoice of ₹ 100/- for the services rendered in Financial Year 2010-11 on this client and the said client deposits TDS of ₹ 10/- to the credit of the account of assessee and issued a certificate of TDS to the asses see and thus, it was submitted that an amount of ₹ 10/- was since deducted in respect of the assessee. the said sum is income of assessee which is assessable to lax. It was submitted that once an income is assessable to tax, the assessee is eligible for credit despite the fact that remaining amount would be taxabl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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