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2020 (10) TMI 452 - AT - Income TaxNon Credit of TDS - Actual beneficiary of TDS - Credit of the TDS has been allowed by the Department in the hands of recipients of the commission or not - HELD THAT - Assessee explained that RTL has directly paid commission to the retailers and therefore the above commission was never the income of the assessee. Ld A.R. of the assessee that recipients have not claimed TDS in their respective returns. In the case of Sunita Devi 2015 (9) TMI 64 - ITAT DELHI on similar issue has directed the AO to verify whether any credit of the TDS has been allowed by the Department in the hands of recipients of the commission or not and if the same is not allowed then the credit of this amount should be given in the hands of the assessee Restore the issue back to the file of the Assessing Officer with the direction to verify whether the recipients (retailers) have claimed TDS in their respective returns or not and if the AO finds that they have not claimed TDS then the claim of the assessee should be allowed. With these directions the issue is restored to the file of the AO for fresh verification - Decided in favour of assessee for statistical purposes
Issues Involved:
1. Principles of natural justice and fairness in the dismissal of the appeal. 2. Non-credit of TDS amounting to Rs. 12,88,214. 3. Misinterpretation of Rule 37BA of the Income Tax Rules, 1962. 4. Verification of TDS claims by recipients (retailers). Detailed Analysis: 1. Principles of Natural Justice and Fairness: The assessee argued that the dismissal of the appeal by the CIT(A) was against the principles of natural justice, arbitrary, and erroneous. The assessee claimed that the decision was contrary to facts and legally untenable. 2. Non-Credit of TDS Amounting to Rs. 12,88,214: The core issue revolved around the non-credit of TDS amounting to Rs. 12,88,214. The Assessing Officer (AO) allowed credit for TDS of only Rs. 4,04,840 out of the total TDS of Rs. 16,93,054 reflected in Form 26AS. The AO's decision was based on the fact that the assessee had credited only Rs. 40,48,009 to the profit and loss account, while the remaining commission of Rs. 1,28,82,141 was paid directly to retailers by Reliance Telecom Ltd (RTL). The AO relied on Rule 37BA(2) of the Income Tax Rules, 1962, to disallow the balance TDS amount. 3. Misinterpretation of Rule 37BA of the Income Tax Rules, 1962: The assessee contended that the lower authorities misinterpreted Rule 37BA. The assessee argued that the denial of TDS credit was unjustified, arbitrary, and not in accordance with the law. The assessee cited the ITAT Delhi decision in the case of Sunita Devi vs. ACIT, which directed the AO to verify whether any credit of TDS had been allowed to the recipients (retailers). If not, the credit should be given to the assessee. 4. Verification of TDS Claims by Recipients (Retailers): The assessee suggested that if there were doubts about double TDS claims, the issue should be referred back to the AO for verification. The Department's representative agreed that if necessary, the issue could be restored to the AO for verification. The ITAT Delhi case of Sunita Devi was cited, where the AO was directed to verify if TDS credit was allowed to the recipients, and if not, to allow it to the assessee. Conclusion: The Tribunal, after considering the rival submissions and materials on record, found merit in the assessee's contentions. It was noted that RTL directly paid commissions to retailers, and the recipients had not claimed TDS in their returns. Following the ITAT Delhi decision in Sunita Devi's case, the Tribunal directed the AO to verify whether the recipients claimed TDS in their returns. If not, the AO was instructed to allow the TDS credit to the assessee. The Tribunal set aside the orders of the lower authorities and restored the issue to the AO for fresh verification and adjudication as per law. Result: The appeal of the assessee was allowed for statistical purposes, with the direction to the AO to verify the TDS claims by the recipients and allow the credit to the assessee if the recipients had not claimed it. The order was pronounced on 08/10/2020.
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