TMI Blog2016 (2) TMI 420X X X X Extracts X X X X X X X X Extracts X X X X ..... eposited to the account of the Central Government is though income of the assessee but is not eligible for credit of tax in the year when such TDS was offered as income. This view is otherwise also not in accordance with the provisions contained in section 198 and 199 of the Act. The proposition as laid out by the CIT(A) and learned DR before us therefore cannot be countenanced. Thus the claim of the assessee is allowed in as much as it is held that the assessee would be entitled to credit of the entire TDS offered as income by the assessee in his return of income. - Decided in favour of assessee. Restriction of credit of TDS - Held that:- Having regard to the submission of assessee TDS certificates were furnished by the assessee and such credit was also reflected in 26AS statement prepared by the revenue except to the sum of ₹ 4,10,870/- for which, confirmations have been furnished by the assessee, we feel it appropriate that the issue be restored to the file of the Assessing Officer with a direction that the credit be allowed to the assessee of the entire TDS in respect of which, TDS certificate has been furnished by the assessee in accordance with section 198 read with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s) in her zeal to dispose off the appeal arbitrarily even ignored that the assessee had filed applications under section 154 of the Act on 17.7.2012 and 4.2.2013 which has not been disposed off by the learned Assessing Officer and that on similar basis her predecessor had directed the learned Assessing Officer for the Assessment Year 2009-10 and 2010-11 to allow the claim of credit of tax deducted at source as per deduction certificates filed by the assessee and otherwise mandated by law. 3.2 That the learned Commissioner of Income Tax (Appeals) has absolutely given no basis or brought any material on record and ignored the ratio of the judgment of the Delhi High Court in the case of All India Federation of Tax Practitioners vs. UOI reported in 352 ITR 273 which directed the revenue to allow the credit of tax deducted at source, which in the instant case aggregated to ₹ 80,16,290/-. 3.3 That the learned Commissioner of Income Tax (Appeals) has erred in failing to appreciate even the written submissions of the assessee dated 30.08.2013 and 21.10.2013. 4 That furthermore the interpretation placed by the learned Commissioner of Income Tax (Appeals) of section 199 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,677/-. Against the aforesaid order assessee appealed before CIT(A) who vide the impugned order dated 17.10.2013 dismissed the appeal of the assessee and as such the instant appeal. 4. The basic issue raised in this appeal arising from Ground Nos.4 to 4.2 of Grounds of Appeal challenges the conclusion of the CIT(A) viz-a-viz section 199 read with Rule 37BA(3) of the Income Tax Rules 1962 ( Rules ). 5. The CIT(A) has observed that as per the provisions of section 199 read with 37BA(3), TDS credit is to be given in the manner as under: 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; and 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 source shall be allowed across those years in the same proportion in which the income is assessable to tax. It has been further observed that the above rule has been inserted w.e.f. 1.4.2009 and is therefore applicable from assessment year 2009-10. Reference has been made to cases of Lloyd Insulation (India) Ltd. ITA No. 2400 CO 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red the original submission and perused the material on record. It is noticed that in the instant case assessee as adopted cash method of accounting. He furnished his return of income claiming credit of TDS of ₹ 79,91,290/- which was further revised to ₹ 80,16,290/-. The AO restricted the credit of ₹ 71,20,267/- in the intimation u/s 143(1) of the Act. The CIT(A) has upheld the restriction inter-alia on the ground that credit of TDS is to be allowed in terms of Rule 37BA(2) of the Rules and as such the credit would be allowable on pro rata basis in the year in which the certificate is issued and also in future where balance of such income is found to be assessable as per the mandate of section 199 of the Act. She has held that any amount which has not been assessed in any year but referred in the TDS certificate cannot be claimed under section 199 of the Act. 9. Sub-section (1) of section 199 of the Act provides that 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 deduction was made. In view thereof, since the tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to be given and reasons for giving credit to such person. (iii) The deductor shall issue the certificate for deduction of tax at source 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 (1) 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 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 authorized by such authority; and (ii) the information in the return of income in respect of the claim for the credit, Subject to verification in accordance with the risk management strategy formula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax in that year but is assessable in a number of years. However, such rule has no applicability, where assessee follows cash system of accounting. This can be supported from the illustration that suppose as assessee who is following cash system of accounting raises an invoice of ₹ 100/- in respect of which deductor deducts TDS of ₹ 10/- and deposits to the account of the Central Government. Accordingly, the assessee would offer an income of ₹ 10/- and claim TDS of ₹ 10/-. However in the opinion of the revenue, the assessee would not be entitled to credit of the entire TDS of ₹ 10/- but would be entitled to proportionate credit only. Now let us assume that ₹ 90/- is never paid to the assessee by the deductor. In such circumstances, ₹ 9/- which was deducted as TDS by the deductor would never be available for credit to the assessee though the said sums stand duly deposited to the account of the Central Government. Rule. 37BA(3) of the Act cannot be interpreted so as to say that TDS deducted at source and deposited to the account of the Central Government is though income of the assessee but is not eligible for credit of tax in the year when s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessable: (3) The Board may, for the purposes of giving credit in respect of tax deducted or tax paid in terms of the provisions of this Chapter, make such rules 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 subsection (2) and also the assessment year for which such credit may be given. Section 199. (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 deduction was made, or of the owner of the security, or of the depositor or of the owner of property or of the unit-holder, or of the shareholder, as the case may be. (2) Any sum referred to in sub-section (1A) of section 192 and paid to the Central Government shall be treated as the tax paid on behalf of the person in respect of whose income such payment of tax has been made. 11. Infact the above view has also been followed by Ahmedabad Bench in the case of Sadhbav Engineering Ltd. (supra) wherein it was held as under: 26. We find that the Visakhapatnam Bench in the case of Peddu Srinivasa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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