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2015 (9) TMI 435 - ITAT MUMBAI

2015 (9) TMI 435 - ITAT MUMBAI - TMI - Credit for tax deducted - CIT(A) allowed claim - Held that:- CIT(A) has given a clear finding that there was no revenue impact, since the payments made by the assessee has been fully reimbursed during the year under consideration, meaning thereby, if the profit and loss account is recast by including the payments and reimbursements as its expenditure and income respectively, then the provisions of sec. 199 of the Act read will Rule 37BA would stand complied .....

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Mum/2014 - Dated:- 4-8-2015 - SHRI B.R.BASKARAN, J. For The Appellant : Shri K P R R Murty For The Respondent : Shri Anuj Kisnadwala ORDER PER BENCH: The Revenue has filed this appeal challenging the order dated 14.7.2014 passed by the ld.CIT(A)-3, Mumbai and it relates to the assessment year 2011-12. 2. The solitary issue urged in this appeal is whether the ld.CIT(A) was justified in directing the AO to allow the credit of TDS of ₹ 13,76,800/- to the assessee company. 3. The facts relatin .....

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At the time of reimbursement, the holding company has deducted Tax at source from the amount so reimbursed @ 2%. 4. Since the assessee company claimed that it has made payment pay channel charges for CAS areas only as representative of its holding company, it accounted for the payment as well as the reimbursements as a Balance Sheet item (Debtors account), i.e., it did not route the payments and reimbursements through the profit and loss account. However, the assessee company claimed credit of T .....

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nd perused the record. I notice that the ld. CIT(A) has given a clear finding that whatever amount was paid by the assessee on behalf of its holding company has been reimbursed by the holding company during the current year itself and hence there was no revenue impact, even if the payments and receipts were not routed through the profit and loss account. Further, the ld.CIT(A) has also placed reliance on the decision rendered by the Delhi Bench of the Tribunal in the case of Escorts Ltd (15 SOT .....

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ed the reimbursed expenses amount to the P&L account and therefore, in terms of the provisions of section 199, r.w.r. 37BA, the appellant cannot claim credit for the TDS deducted on such receipts. The provisions of section 199 r.w.r. 37BA read as under: Section 199: Credit for tax deducted. (1) Any deduction made in accordance with the foregoing provisions of this Chapter and paid to the Central Government shall be treated as a payment of tax on behalf of the person from whose income the ded .....

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his Chapter, make such rules53 as may be necessary, including the rules for the purposes of giving credit to a person other than those referred to in sub-section (1) and sub-section (2) and also the assessment year for which such credit may be given Rule 37BA Credit for tax deducted at source for the purposes of section 199. (1) Credit for tax deducted at source and paid to the Central Government in accordance with the provisions of Chapter XVII, shall be given to the person to whom payment has .....

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shall be given to the other person and not to the deductee : Provided that the deductee files a declaration with the deductor and the deductor reports the tax deduction in the name of the other person in the information relating to deduction of tax referred to in sub-rule (1). (ii) The declaration filed by 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 giv .....

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source and paid to the Central Government and the income is assessable over a number of years, credit for tax deducted at source shall be allowed across those years in the same proportion in which the income is assessable to tax. (4) Credit for tax deducted at source and paid to the account of the Central Government shall be granted on the basis of- (i) the information relating to deduction of tax furnished by the deductor to the income-tax authority or the person authorised by such authority; .....

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nt treasury, the assessee becomes entitled for the credit of such TDS while computing the tax liability for the relevant period (para 5). Credit for TDS must in every case be given to the assessee from whose income tax was deducted at source and paid to the credit of the Central Government. If the recipient of the income considers that he is not liable to tax in respect of the income, wholly or partly, therefore, does not disclose the amount of such income in his return, the Income-tax Departmen .....

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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. ………………….. Being a case of direct tax, there is also no question of unjust enrichment being cl .....

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by law. (paras 7 to 9) . 2.7 Thus, it is quite clear that credit will have to be given to the person to whom the payment has been made once the tax has been deposited in the government treasury, regardless of whether the income is taxable or exempt. 2.8 The AO is also incorrect in holding that the assessee has not offered for taxation the impugned receipts from M/s. Digicable. The fact of the matter is that vide an agreement between the appellant and M/s. Digicable, dated 01.04.2009, M/s. Digica .....

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years, the account stands squared up. As a result, the balance to be carried to the P&L account on account of broadcaster payout for CAS area would be nil. This is not the same as saying that the amounts reimbursed have not been offered for taxation. If, as per the terms of agreement, M/s. Dgicable was not obliged to reimburse the broadcaster CAS expenses, these expenses would have been reduced from the profits of the appellant. In other words, the CAS reimbursement has gone to reduce the to .....

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in the case of Arvind Murjani Brands (P) Ltd Vs. ITO (2012)(137 ITD 173), wherein the Tribunal held as under:- The position is, therefore, crystal clear that the amount of tax deducted at source has to be necessarily allowed credit somewhere. It cannot be a case that the amount of such tax deducted and paid to the exchequer is not to be refunded, if the tax due on the amount of income received is either lower than the amount of tax deducted or there does not exist any liability to tax in respect .....

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f the person from whose income the deduction was made, that is the payee….. The AO has unequivocally held that the amount is not chargeable to tax in the hands of the assessee. The finding of the AO is not that such receipt is liable to tax in the hands of the assessee in a later or an earlier year. Rather it is that the amount received by the assessee is not at all chargeable to tax either in the current year or in an earlier or a later year. If the AO had held that the amount received b .....

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