TMI Blog2011 (6) TMI 814X X X X Extracts X X X X X X X X Extracts X X X X ..... Disallowance of Credit for TDS claimed - TDS certificates were issued in the name of JV. As TDS certificates were not standing in the name of the assessee company, CIT(A) upeld the disallowance of credit for TDS claimed - HELD THAT:- Identical issue was addressed by Tribunal in INCOME TAX OFFICER OTHERS VERSUS LIMAK-SOMA JV., M/S. CSCHK-SOMA (JV) M/S. SOMA-PATEL ASI (JV) [ 2010 (9) TMI 695 - ITAT, HYDERABAD] where it was held that unless the assessee offers the income for taxation, the TDS cannot be given credit. Respectfully following the order of the Tribunal, we set aside the issue to the file of the Assessing Officer to examine whether the assessee offered the income for taxation, and if the assessee offered the inacome for taxation for the assessment year under consideration, credit to the TDS is to be given accordingly to the assessee. - I.T.A. No. 1116/Hyd/2010 , I.T.A. No. 1117/Hyd/2010 & C.O. No. 87/Hyd/2010 - - - Dated:- 15-6-2011 - SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER For the Petitioner : Shri Hari Lal Naik Smt. Nivedita Biswas For the Respondent : Shri M.V.R. Prasad ORDER PER CHANDRA POOJ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning Mills vs. Asst. Commissioner of Income-tax [(2004) 89 ITD 65] held as under: ... the facts of the case clearly established the fact that the assessee s own capital and current year s profits were substantially more than the advances given 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 of the above, we direct the Assessing Officer to examine whether the assessee had borrowed certain funds on which liability to pay tax is being incurred and on other hand, certain amounts had be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for which such credit may be given. 6. From the Third Member decision of the Chandigarh Bench of this Tribunal it appears that section 199 was amended by Finance Act, 1987. Till June 1, 1987 the language employed by the Parliament in section 199 was different insofar as it provided giving credit to the assessee in respect of TDS for the assessments immediately following the assessment year. However, by Finance Act, 1987 the language of section 199 was substantially modified to give credit to the TDS in respect of the income which is assessable. While taking note of the amendment made by Finance Act, 1987, the learned Judicial Member has observed as follows: It may be pertinent to mention that section 199 quoted above is the section as amended from time to time and as applicable for the assessment year 2002-03. Till June 1, 1987, the language of section 199 was different in so far as it provided for giving credit to the assessee in respect of TDS in the assessment for the immediately following assessment year. By the Finance Act, 1987, the language of section 199 was modified to the extent that the credit for the tax deducted at source was provided to be given in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proach 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 mentioned in the certificate is to be allowed in the year in which such income is disclosed or is otherwise found to be assessable by the Revenue. 8. In view of the majority opinion of this Tribunal it is very clear that unless the assessee offers the income for taxation, the TDS cannot be given credit. A similar view was taken by majority opinion by the Mumbai Bench of this Tribunal in Smt. Varsha G. Salunke vs. DCIT (2006) 98 ITD 141 (TM). 9. We have also carefully gone through the decision of this Tribunal in Progressive Construction Ltd. This Tribunal after considering the language of section 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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