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2016 (4) TMI 1099 - ITAT JAIPUR

2016 (4) TMI 1099 - ITAT JAIPUR - TMI - Credit of TDS - CIT (A) not allowing credit of TDS deducted by our Bank on interest and deposited to the Income Tax Department and holding that the interest belongs to Police department and the provisions of section 199 are applicable - Held that:- In the present case the amount was deposited as FDRs by the assessee on behalf of State of Rajasthan with the Bank of Rajasthan and on the FDRs deposit the interest has been accrued . The TDS was deducted by t .....

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han . Similarly it is also undisputed that the refund of TDS has not been claimed by the the State of Rajasthan and is only claimed by the Assessee being the nodal agency of the State of Rajasthan for this project . In our view, no prejudice will be caused to any person if the TDS is refunded to the assessee being the nodal agency with the undertaking to return the amount to the State of Rajasthan. The TDS deducted by the Income Tax Department is directed to be paid to the assessee and we accord .....

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under :- ITA No. 247/JP/2014 (A.Y. 2009-10) : In the facts and circumstances of the case the ld. CIT (A) has erred in not allowing credit of TDS of ₹ 4502798/-, deducted by our Bank on interest and deposited to the Income Tax Department and holding that the interest belongs to Police department and the provisions of section 199 are applicable. ITA No. 248/JP/2014 (A.Y. 2010-11) : In the facts and circumstances of the case the ld. CIT (A) has erred in not allowing credit of TDS of ₹ 1 .....

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shares, 20000 shares are held by Rajasthan Housing Board. The Rajasthan Housing Board is a statutory body created through Rajasthan State Act No. 4 of 1970. Thus the assessee is a company of the Statutory Body of Rajasthan Housing Board (State of Rajasthan for the purposes of the Act). The object of the assessee is to construct houses for poor in accordance with the programme of Government of Rajasthan. The State Government has taken a decision to construction 10,000 houses for police personnel .....

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r book). The Housing Project was to be completed in an association with the three Government departments, namely, PWD, Rajasthan State Road Development and Construction Corporation Ltd and the assessee. The assessee was acting as a nodal agency in the State Government for obtaining the loan from HUDCO and distributing the same to three Government Departments, namely PWD, RSRDCC and Avas Vikas Ltd. (who was assigned the work of construction of houses for police department). 2.1. The admitted fact .....

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asthan and has deposited the amount with the bank for and on behalf of State of Rajasthan. It was also the case of the assessee that the interest income accrued on the FDRs was not taxable. The assessee has submitted that the assessee is entitled to the refund of entire amount of ₹ 45,02,798/- in the assessment year 2009-10. However, the ld. AO has denied the refund of TDS on the following grounds :- 4. The assessee has claimed credit of TDS of ₹ 1,26,78,670/- on examination it has c .....

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. This fact was also mentioned in Note No. 15 to Audited Financial Account, thus no interest income has been offered for tax by assessee in respect of credit of TDS of ₹ 445,02,798/-. Section 199 of the Act provides that any deduction made under chapter XVII-B and paid to Central Government shall be treated as a payment of tax on behalf of the person from whose income the deduction was made or the owner of the security. Rule 37BA of I.T. Rules 1962 read with section 199 provides that if th .....

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Officer did not allow credit of TDS deducted on interest income not shown by the appellant by following the provisions of section 199 read with relevant rules that credit is to be given to the person in whose hand such income is taxable. Assessing Officer mentioned that in the note to financial statement, it is clearly mentioned that income to the extent of ₹ 2,18,65,365 is not included in the hands of the appellant since it was receiving it in fiduciary capacity. Assessing officer did not .....

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partment state of Rajasthan. The decisions relied upon by the appellant are only on this issue that income received in fiduciary capacity will not be taxable in the hands of person receiving it. Since there is no dispute on the taxability of interest income received in fiduciary capacity, these decisions are not relevant to the issue involved here hence not discussed here. The only issue involved in these grounds of appeal is about credit of TDS deducted on this income. Since interest income on .....

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ment which is part of State government. State government is not a taxable entity and therefore there is no question of offering interest income for tax. However, as far as credit of TDS deducted is concerned, appellant cannot claim the same in view of the provisions disclosed earlier. Accordingly, the AO s decision in not allowing credit of TDS to the appellant is confirmed. 4. Now the assessee is before us. 4.1. The ld. A/R for the assessee has submitted that non refund of TDS amount of ₹ .....

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on of houses was awarded to PWD, Rajasthan State Road Development and Construction Cooperation Limited and Avas Vikas Limited. 5. Till the construction was started, for intervening periods the firms receipts by Avas Vikas Limited from HUDCO were deposited in Bank of Rajasthan (Now ICICI Bank) by Avas Vikas Limited. 6. At all the stages the Government of Rajasthan was having over riding title over the funds lying with Avas Vikas Limited/Bank of Rajasthan. The Avas Vikas Limited was acting in fidu .....

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interest income which belongs to the Govt. of Rajasthan. 10. The amount of TDS also belongs to Govt. of Rajasthan and the refund of this amount shall be credited to the account of Govt. of Rajasthan. 11. Thus neither the interest income was taxable in hands of the assessee i.e. Avas Vikas Ltd. nor it is taxable in any other hand as the same has exempt u/s 196 being the income of Govt. of Rajasthan. So the TDS has to be refunded back to the assessee so the same is credited in account of Govt. of .....

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ecord. In our view the issue involved in the present appeal had already been adjudicated in the matter of CIT vs. Relcom (2015) 62 Taxmann.com 190 (Delhi) wherein it was held as under :- 6. Having heard the submissions made on behalf of the revenue and after a perusal the orders passed by the CIT(A) and the ITAT, we are of opinion that the said orders do not call for any interference and were warranted and justified in the facts and circumstances of the case. Before we proceed to elaborate on ou .....

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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. (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 subsecti .....

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M/s. REPL. Therefore, the revenue, having assessed M/s REPL's income in respect to such TDS claim cannot now deny the assessee's claim on the mere technical ground that the income in respect of the said TDS claim was not that of the assessee, given that M/s Relcom (the assessee) and M/s REPL are sister concerns and M/s REPL has not raised any objection with regard to the assessee's TDS claim of ₹ 1,20,73,097/-. 8. This Court's reasoning is supported by a ruling of the Divi .....

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rms of the agreement dated 12-03-2003 among the parties to the joint venture and held that credit for TDS certificates cannot be denied to the assessee while assessing the contract receipts mentioned in the said certificates as income of the assessee. The income shown in the TDS certificates has either to be taxed in the hands of the joint venture or in the hands of the individual co-joint venturer. As the joint venture has not filed return of income and claimed credit for TDS certificates and t .....

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visions of Rule 37BA of the Income Tax Rules, 1962, which envisions grant of TDS credit to entities other than the deductee (herein, M/s REPL). We must clarify that we are not oblivious of the fact that Rule 37BA is not directly applicable in the facts of this case. The reliance placed on Rule 37BA is merely to demonstrate that in not all circumstances is TDS credit given to the deductee. In the present case the amount was deposited as FDR s by the assessee on behalf of State of Rajasthan with t .....

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