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Sandersans & Morgans Versus Assistant Commissioner of Income Tax., Circle-54, Kolkata

2015 (9) TMI 1436 - ITAT KOLKATA

Rectification of mistake - not giving credit for TDS - Held that:- The income attributable to the TDS under dispute before us has been duly offered to tax by the assessee and hence in the interest of justice , the assessee should be given due credit for TDS thereon more so when the certificate for the same has been filed by the assesee before the Learned AO on 30.5.2008.

Thus we direct the Learned AO to grant credit for TDS amounting to ₹ 1,01,090/- to the assessee. - Decided in .....

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the Learned Assessing officer framed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ). 2. Shri.J.P.Khaitan, Senior Advocate, the Learned AR argued on behalf of the assessee and Shri.D.Banerjee, JCIT, the Learned DR argued on behalf of the revenue. 3. The assessee is a partnership firm engaged in the profession of Advocates and Solicitors. For the Asst Year 2004-05, the assessee firm filed its return of income showing total income of ₹ 42,73,610/- cla .....

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rned AO granted TDS of ₹ 9,60,694/- against the certificates produced in the assessment and thereby not giving credit for TDS to the tune of ₹ 5,38,193 ( 1498887-960694) in the assessment. Later the assessee firm filed a rectification petition u/s 154 of the Act on 28.5.2008 before the Learned AO enclosing the TDS certificate for ₹ 1,01,090/- seeking credit for TDS to the tune of ₹ 1,01,090/- based on the physical TDS certificates produced. The Learned AO rejected the sam .....

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d at source. The AO noticed that the appellant has not made the claim for the tax deducted at source in the return of income filed. Hence the AO rejected the appellant s petition. Since the appellant has not filed the TDS certificates and claimed credit in the return of income filed, there is no mistake apparent from record amenable for rectification u/s 154. The AO is correct as per law in rejecting the appellant s petition. The AO s action is upheld. 3.1. The Learned AR argued that .....

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ay of an independent letter dt 28.5.2008 filed on 30.5.2008 which is enclosed in page 42 of the paper book filed by the Learned AR. He argued the provisions of section 199(3) of the Act read together with Rule 37BA of Income Tax Rules and stated that the same are only procedural in nature and would accordingly apply to pending cases also. He argued that based on the above provisions it is for the Learned AO to have verified the fact of deduction of tax at source and remittance of TDS made thereo .....

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wer authorities. 3.2. We have heard the rival submissions and perused the materials available on record. We find that the provisions of section 199(3) of the Act read with Rule 37BA of Income Tax Rules would squarely apply in the facts of the instant case. For the sake of convenience, the provisions of section 199(3) are reproduced below:- Section 199(3) - The Board may, for the purposes of giving credit in respect of tax deducted or tax paid in terms of the provisions of .....

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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 the verification in accordance with the risk management strategy formulated by the Board from time to time. We also find that the aforesaid rule t .....

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e ends are to be attained. The latter regulates the conduct and relations of courts and litigants in respect of the litigation itself; the former determines their conduct and relations in respect of the matters litigated. What facts constitute a wrong is determined by the substantive law ; what facts constitute proof of a wrong is a question of procedure. So far as the administration of justice is concerned with the application of remedies to violated rights, we may say tha .....

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liabilities, it is the function of the procedural law to deal with the application of substantive law to particular cases and it goes without saying that the law of evidence is a part of the law of procedure. Procedural law, generally speaking, is applicable to pending cases. No suitor can be said to have a vested right in procedure. Bennion s Statutory Interpretation (first edition, page 446, paragraph 191) lays down as follows: Because a change made by the legi .....

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se his own order where the appellate order income-tax assessment is made more than four years after the date of the original assessment. No tax which is not leviable by the authority of law should be collected or realized by the State and, if realized by the State, should be refunded by the State. The scheme of fiscal statutes should be looked at from that point of view and, in case of injustice, the court should ensure that such injustice is rectified as far as practicable unless the same is co .....

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implement and carry into effect the major legislative intent. In such a situation, when manifest injustice is being done to the taxpayer and where the legislative intent of taxing agricultural income on the basis of the computation made under the Income-tax Act is being defeated, it would be proper to read that the Commissioner has inherent power to direct the Agricultural Income-tax Officer to take into consideration the order passed by the Appellate Assistant Commissioner of Income-tax, for c .....

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of Escorts Ltd vs DCIT reported in (2007) 15 SOT 368 (Delhi ITAT) is well placed , wherein it was held that : 6. The scheme for giving credit for TDS was sought to be modified through clauses 56 and 59 of the Finance Bill, 2002 and the same have also been explained in the Memorandum explaining the provisions of the Finance Bill to state that: "Under the existing provisions of section 199 of the Income-tax Act, any deduction made in accordance with the provisions of se .....

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tificate furnished under section 203 in the assessment made under this Act for the assessment year for which such income is assessable. Hardship is being faced by the assessee since in many cases certificates under section 203 are not furnished to them and as a result credit is not given for the tax so deducted. With a view to mitigate this hardship, it is proposed to insert a new sub-section (14) in section 155 to provide that where in the assessment for any previous year .....

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roduction of such certificate. Nothing contained in the proposed sub-section shall apply unless the income from which tax has been deducted has been disclosed in the return of income filed by the assessee for that assessment year. The proposed amendment shall enable the Assessing Officer to rectify the order of assessment or any intimation or deemed intimation under sub-section (1) of section 143. As a consequence, it is also proposed to amend sub-section (9) of sect.ion 1 .....

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our considered view, 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 Department cannot refuse to give credit merely by contending that the income had not been disclosed in the return filed by th .....

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or partly, under some provisions of the Income-tax Act. It would be, therefore, improper and even impermissible 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. If a wrong assessment is mad .....

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