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TMI Blog2011 (6) TMI 814X X X X Extracts X X X X X X X X Extracts X X X X ..... with the CO are heard together and are being disposed of by this common order for the sake of convenience. 2. The first ground raised in Revenue appeal No. 1116/Hyd/2010 is as under: "The CIT(A) ought to have upheld the disallowance of proportionate interest on the investments made in the concerns for the reason that the assessee failed to substantiate its claim that the investment was made for advancement of business purpose." The effective ground raised in the CO is as under: "The learned Commissioner of Income-tax (Appeals) ought to have deleted the disallowance of interest on the investments made by the appellant company in the following: (a) Satyapriya Holdings Pvt. Ltd. - Rs. 16,00,000/- (b) Seven Hills Health Care Ltd. - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven to those three sister-concerns, which proved the absence of any nexus between the funds borrowed on interest and interest free advances given to those three parties. Disallowance out of interest expenditure could not be sustained in relation to interest-free advances given in earlier years in cases where, no such disallowance out of interest expenditure was made in those earlier years." In the light of the above decisions of the Tribunal, we think it is appropriate at this juncture to restore this issue to the file of the A.O. to verify whether there is any nexus between the borrowed funds and investments made and thereafter decide the issue in accordance with law after giving reasonable opportunity of being heard." 4. In view o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rresponding income was not offered for taxation. We have carefully gone through the provisions of section 199 of the Act which read as follows: "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 (IA) 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. (3) The Bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be given in the assessment year in which TDS is assessable. As against the words "credits shall be given ... for such assessment year for which such income is assessable", the section provided "the credit shall be given ... for the immediately following year under this Act". Thus, the Legislature having modified the language of section 199 with effect from June 1, 1987, in my considered view, there is no escape from the view that the credit for TDS is to be given in the year in which the income in respect of which tax has been deducted at source is assessable to tax. It is not disputed that the assessee has not offered the income credited by the three parties in respect of which tax has been deducted at source on the ground that incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 199 of the Act. It has nothing to do with the system of accounting followed by the assessee. Further there is no dispute that the Revenue should have a consistent approach but the above principle of law has no application where interpretation of the statutory provisions is involved. If in a particular year a statutory provision was wrongly interpreted and applied, the Revenue can correct the error as income is required to be computed by correctly applying and enforcing law. Error cannot be perpetuated. Therefore, on correct interpretation of section 199 and for the reasons given above, I am of the view that the Assessing Officer was right in allowing credit for tax deducted at source on pro-rata basis. The credit for the balance amount men ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal in Pradeep Kumar Dhir (supra) would have a binding nature rather than this Tribunal's decision in Progressive Construction Ltd. (supra). Even otherwise, as found by the Tribunal in Progressive Construction Ltd. (supra) the majority opinion expressed by the Chandigarh Bench would prevail. 10. The learned counsel for the assessee made an attempt to distinguish the decision of the Chandigarh Bench of this Tribunal on the ground that the assessee before the Chandigarh Bench was following cash system of accounting. However, in the case before us the assessee was following mercantile system of accounting. This issue was also considered by the Third Member in Chandigarh Bench of this Tribunal and found that method of accountin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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