TMI Blog2007 (5) TMI 362X X X X Extracts X X X X X X X X Extracts X X X X ..... tax Department cannot refuse to give credit merely by contending that the income had not been disclosed in the return filed by the assessee for the assessment year. The assessee may as per relevant provisions of Income-tax Act, consider the income either as not taxable in his hands or as being relatable to a different assessment year and he may even claim set off of loss or other deductions against such income. The assessee may also be not chargeable to tax on the income becuase of the overriding provisions of Double Taxation Avoidance Agreement and/or because of the provision for exemption of such income, whether wholly or partly, under some provisions of the Income-tax Act. It would be, therefore, improper and even impermissible for the revenue to swallow the amount of TDS after having received and enjoyed the same. It cannot be ignored that every item of TDS carries with it an obligation of trust and accountability to return the amount and/or give credit for the amount so deducted depending upon the tax liability of the recipient to be determined in the course of his assessment. If a wrong assessment is made for whatever reasons, the Department has all the powers to rectify the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Act dated 15-5-2004 and before that no claim for credit for TDS has been made at any point of time. 3. That on the facts, circumstances and legal position of the case, the learned CIT (Appeals) has erred in law in not allowing credit for tax deducted at source amounting to Rs. 2,18,15,062 attributable to interest income offered and subjected to tax in the year under appeal. 4. Without prejudice to Ground No. 3 hereinabove, the learned CIT (Appeals) has erred in law in not considering and allowing credit for the entire amount of tax deducted at source amounting to Rs. 3,29,90,648 in assessment year 2003-04 when the deductee had provided for interest deducted TDS. 5. That the appellant craves to reserve to itself the right to add, alter, amend, substitute, withdraw and/or vary any ground(s) of appeal of or before the time of hearing." Grounds in ITA No. 2437/Delhi/05 : "1. That the impugned appellate order dated 17-3-2003 ( sic ) passed by the learned CIT (Appeals) is bad in law and wrong on facts. 2. That on the facts, circumstances and legal position of the case, the learned CIT (Appeals) has erred in law in holding that the appellant has claimed of T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration, the assessee has claimed credit for TDS with respect to the interest income disclosed by it, being amount receivable from Escorts Finance Investment Leasing (P.) Ltd. and Escorts Finance Investment (P.) Ltd. As there was no TDS certificate filed along with the return of income, while processing the returns, the Assessing Officer did not give any credit for the alleged amount of TDS. However, the assessee filed application under section 154 along with TDS certificate dated 29-3-2004, and requested for giving credit for the tax deducted at source with respect to the interest income offered by it in the assessment years 2001-02, 2002-03 and 2003-04. It was contended that the TDS certificate issued by both the deductors, clearly mentioned that the interest has been paid for the period 1-4-2002 to 31-3-2003. The Assessing Officer declined assessee s claim for giving credit of TDS by observing that section 199 stipulates for credit for tax deducted at source only on the production of certificate furnished under section 204 of the Act. Section 203 clearly states that the certificate issued by the tax deductor should contain particulars which are prescribed. The TDS certi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng (P.) Ltd. and Escorts Finance Investment (P.) Ltd. However, during the years under consideration, the assessee neither actually received any interest, nor any certificate was given for deduction of tax at source. It appears that there was some dispute between the assessee and its associates concerns to whom loans were given on interest. When the dispute was resolved, the tax was deducted at source for the period 1-4-2002 to 31-3-2003 at the rate of 21% on the amount credited to the assessee s account, the tax so deducted was also deposited in the Government treasury on 29-3-2004 through ITNS No. 209 in Indian Overseas Bank, Janpath, New Delhi and a certificate dated 29-3-2004 was also issued to the assessee. Since prior to the date of issue of this certificate, as the Assessing Officer has processed the returns for all the three years pending before him, there was no occasion for giving any credit for the tax claimed to be deducted. The application filed by the assessee under section 154 after receipt of TDS certificate dated 29-3-2004 was also declined by the Assessing Officer. As per provisions of section 199, the credit for TDS has to be given in the assessment year in whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 196C and 196D and paid to the account of Central Government is treated as a payment of tax on behalf of the person from whose income the deduction was made or the owner of the security or depositor or owner of the property or of unit-holder or of the shareholder, as the case may be, and credit given to such person for the amounts so deducted on the production of a certificate furnished under section 203 in the assessment made under this Act for the assessment year for which such income is assessable. Hardship is being faced by the assessee since in many cases certificates under section 203 are not furnished to them and as a result credit is not given for the tax so deducted. With a view to mitigate this hardship, it is proposed to insert a new sub-section (14) in section 155 to provide that where in the assessment for any previous year or in any intimation or deemed intimation under sub-section (1) of section 143 for any previous year, credit for tax deducted in accordance with the provisions of section 199 has not been given on the ground that the certificate furnished under section 203 was not filed with the return and subsequently such certificate is produced before the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccountability to return the amount and/or give credit for the amount so deducted depending upon the tax liability of the recipient to be determined in the course of his assessment. If a wrong assessment is made for whatever reasons, the Department has all the powers to rectify the same by resort to rectification of mistakes, revision and/or other proceedings, legally available under the Statute. Assessee s income for which tax is deducted at source should not be refused to be given credit. Being a case of direct tax, there is also no question of unjust enrichment being claimed so as to take the credit of tax without an obligation to return the same to the assessee. The payer does not pay the amount of TDS as his own liability and he only acts as the agent of the Government or as trustee to collect the TDS for the Government, free of cost. If no credit is to be given to the payer and/or to the payee, the Government would have no authority to treat the same as tax and article 265 does not empower the Government to make any levy or collection of tax not authorized by law. There may be cases in which the assessee is not in a position to have the records and make complete claim of credi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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