TMI Blog2017 (8) TMI 1287X X X X Extracts X X X X X X X X Extracts X X X X ..... or lessee nor the assessee is given contract to use the mines for business. However, it is not clear whether the individuals who had paid the excess royalty also claimed credit of tax collected at source. The case of the assessee is that it deposited amount at the instance of the Mining Department, Government of Rajasthan and the said department issued the certificate in favour of the assessee. Thus the issue is restored to the file of AO to verify, whether any other individual claimed credit of tax on the payment of excess royalty, if not then the claim of the assessee may be allowed, in the interest of justice, as the Revenue is not legally entitled to withhold such tax, which is deposited by a wrong person. However, the Revenue would be at liberty to claim tax liability if any arising out of such transaction from the appropriate person. Appeal of the assessee is allowed for statistical purposes. - ITA No. 744/JP/2011 - - - Dated:- 16-6-2017 - Shri Bhagchand, AM And Shri Kul Bharat, JM Assessee by : Shri S.L. Poddar.(Advocate) Revenue by : Shri R.A. Verma (Addl.CIT) ORDER Per Shri Kul Bharat, JM This Appeal by the Assessee is directed against the order o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. He submitted that on the instruction of the Rajasthan Government, he deposited the tax collected from the lessee of the Mines for excess royalty. He contended that the Ld. CIT(A) failed to appreciate the facts, that dispute is with regard to the fact when the State Government has recovered TCS from the assessee on collection of additional on excess royalty and has granted TCS survey in the name of the assessee. Even then the Department has not given credit of the same in the hands of the assessee. He contended that there is no dispute with regard to the fact that TCS has been deposited by the assessee without any collection or recovery from the lessees of Mines. He contended that Ld. CIT(A) reiterated the claim merely on the ground that such credit is to be given in the hands of the lessees of the Mines. He submitted under these facts in the interest of substantive justice, the AO may be directed to grant credit of TCS deposited by the assessee. 5. Per contra, the Ld. Departmental Representatives supported the order of the AO and submitted that what the Ld. Counsel is praying which is contrary to the provisions of law. 6. We have heard the rival contentions, peru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpose of collection of excess royalty . Normally the Government of Rajasthan, though its Department of Mines and Geology, awards fixed royalty contract to the lessee for mining which is referred to as dead rent . In addition another contract for collection of excess royalty is awarded to certain other contractors, who collect it through the mechanism of toll from individual lessees at the time of passage of the mined material through the royalty toll gate. The State Department directly collects fixed royalty as well as the tax there on under section 206C(IC) from the lessee. In the present case, the appellant (royalty toll contractor) has claimed that it had paid the tax on excess and deposited the same with the Mining Department. On careful consideration, I am not inclined to accept the arguments of the appellant. In this connection, the terms of the agreement between the appellant and mining department state government, dated 30.01.2006 were gone through. In terms of this agreement, the contractor had collected excess royalty at the toll near the mining area of Tehsil Bassi and issued printed receipts of amount of excess royalty collected for every dispatch of the said mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for TCS which never belonged to them. Further, in case, if there was liability to collect tax under 206C in respect of additional royalty then it would be in addition to the tax collectible from the lessee of the mine. I find it quite baffling to note that credit for tax collected at source, which belongs to the lessee of mine in light of section 206C(IC) of the income tax Act, is claimed by the appellant (toll contractor) who is not a lessee of the mine. 3.1 The appellant was aware of this problem and vide its letter dated 08.02.2011 addressed to ITO, Ward-4 (2), Jaipur, it had stated that it was facing practical problem since it could not deny to deposit or deduct TCS to mining department, as it was feared that the mining department might cancel the said contract and penalize it which might have resulted in heavy financial losses as well as loss of goodwill which might impact its business in future. Further, it had requested the mining department not to deduct TCS from its present contract price and refund the earlier deducted TCS but the mining department did not accept the said request and issued a letter dated 06.09.2010 wherein it was mentioned that they had deducted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the TDS shall be available for the year for which the corresponding income is assessable. It, i.e. the law as provided by the statute, to our mind, could not get clearer than this. As sought to be emphasized by us, the provisions of section 199 of the Act, even otherwise, represents a common sense, purposive view of the matter; TDS being only manner of recovery of tax, so that it would, subject to the provisions to the contrary, be allowable only against the corresponding income, as otherwise tax on one income may get set off against TDS on another, and which would be defective of its concept as well as contradictory to the TDS provisions. The denial of credit for TDS in only on account for the income not received by the assessee and, as such, not recognized and returned by it, so that there is no scope of the impugned TDS being inclusive of such a proportionate amount, and toward which we also do not find any claim by the assessee before any forum, including us, and the assertion made - without even attempting to substantiate the same - was only in response to a query by the Bench. Further, even assuming hypothetically of the impugned TDS amount having seen returned as income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount is debited to the account of the buyer or licensee or lessee or payment is received from the buyer or licensee or lessee as the case may be. I do not agree with the arguments of the appellant that Rule 37-I brought into the statute with effect from 01.04.2009 is applicable to the earlier years i.e. AY 2007-08. Further Rule 37-I (2) (i) lays down that where TCS has been collected at source, credit for such tax shall be given for the assessment year for which income is assessable to tax. Therefore, it also does not the help the case of the assessee. 7. Now, in this background it is to be determined whether the assessee is entitled for the credit of TCS, collected on behalf of the mining department. The Ld. Single Member in S.M.C. has taken a view that the assessee is entitled for credit of TCS. This ruling of the Ld. Single Member is admittedly not binding precedent. There is no ambiguity so far as the provision of law is concerned under section 206C(1C) of the Act mandate every person, who grants a lease or licence or enters into a contract or otherwise transfers any right or interest either in whole or in part in any mine or quarry, to another person, other than a pub ..... X X X X Extracts X X X X X X X X Extracts X X X X
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