TMI Blog2022 (11) TMI 371X X X X Extracts X X X X X X X X Extracts X X X X ..... account during the relevant assessment year, and thereafter, allow the claim of credit of tax deducted at source by NHAI - With the aforesaid directions and in view of our findings Ground No. 1 to 4 are disposed off. - ITA No. 895/MUM/2022 - - - Dated:- 18-10-2022 - Shri M. Balaganesh, Accountant Member And Shri Rahul Chaudhary, Judicial Member For the Appellant : Shri M.M. Golvala, Shri Amey Wagle For the Respondent : Shri Tejinder Pal Singh ORDER PER RAHUL CHAUDHARY, JUDICIAL MEMBER: 1. By way of the present appeal the Appellant has challenged the order, dated 16.03.2022, passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as the CIT(A) ] for the Assessment Year 2017-18, whereby the Ld. CIT(A) had dismissed the appeal filed by the Appellant against the Assessment Order, dated 26.12.2019 passed under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ). 2. The Appellant has raised the following grounds of appeal: 1. The learned CIT(A) erred in approving the order of AO refusing to claim full credit for TDS of Rs. 66,49,131/-. 2. The learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ighway Authorities. The entire receipts and payments is forming the part of the ledger and nothing is reflected in the P L account. Since the appellant has not credited any amount to the P L account, the appellant is not entitled for credit of TDS. Hence, the AO is justified in denying the credit. (Emphasis Supplied) 5. Being aggrieved, the Appellant is now in appeal before us challenging the order passed by the CIT(A) on the ground reproduced in paragraph 2 above. Ground No. 1 to 4 6. Ground No. 1 to 4 pertain to denial of credit of tax deducted at source of INR 66,49,131/- and are, therefore, taken together hereinafter. 7. The Ld. Authorised Representative for the Appellant submitted that the Appellant had entered into a contract with NHAI for construction of a national highway on Hospet-Chitradurga section in Karnataka State. As per the aforesaid agreement, the Appellant was entrusted with the responsibility of shifting utilities being trees, electric cables, electrical fittings etc., situated on the said highway, from the current location to a temporary location, so that there are no interruptions in the construction work and the supply of utilities/services. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout dealing with the submission of the Appellant. 8. Per contra, the Ld. Departmental Representative submitted that, admittedly, the Appellant has not credited the contract receipts from NHAI to the Profit Loss Account. He submitted that since the Appellant has not offered the income to tax, the Assessing Officer and the CIT(A) were justified in not granting credit of tax deducted at source by NHAI. He placed reliance on the order passed by authorities below to support his contention. As regards, credit of tax deducted at source by SBI, he submitted that the matter be remanded to the Assessing Officer for verification. 9. We have heard the rival contention and perused the material on record including the judicial precedents cited during the course of hearing. As per Form 26AS placed on record NHAI and SBI have deducted tax of INR 66,26,115/- and INR 23,016/-, respectively. 9.1. On perusal of computation of income and Note 21- Other Income forming part of Notes to the Financial Statements for the previous year ended 31.03.2017 relevant to the Assessment Year 2017-2018, it is clear that the Appellant has offered to tax interest income of INR 2,30,136/- and therefore, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not disclosed the same in the return of income. The Tribunal allowed the assessee to claim credit of tax deducted at source in the aforesaid facts and circumstance. To the same effect is the decision of the Tribunal in the case of Supreme Renewable Energy Ltd. (supra). However, in the appeal before us, it is not the case of the Appellant that the contract receipts were not liable to tax in the hands of the Appellant. 9.5. In the case of Relcom (supra), the Ho ble Delhi High Court permitted the assessee to claim credit for tax deducted at source even though income was not assessable in the hands of the assessee since the vendor had inadvertently issued certificate of tax deducted at source in the name of the assessee in respect of income of its sister concern taking note of the fact that the aforesaid sister concern of the assessee had not raised any objection and had also not claimed credit of tax deducted at source. It would be pertinent to note that while granting the relief the Hon ble Delhi High Court observed that the Rule 37A was not directly applicable to the facts of the case and reliance was placed on the same to demonstrate that not in all circumstances credit of tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person in cases where- (a) the income of the deductee is included in the total income of another person under the provisions of section 60, section 61, section 64, section 93 or section 94; (b) the income of a deductee being an association of persons or a trust is assessable in the hands of members of the association of persons, or in the hands of trustees, as the case may be; (c) the income from an asset held in the name of a deductee, being a partner of a firm or a karta of a Hindu undivided family, is assessable as the income of the firm, or Hindu undivided family, as the case may be; (d) the income from a property, deposit, security, unit or share held in the name of a deductee is owned jointly by the deductee and other persons and the income is assessable in their hands in the same proportion as their ownership of the asset: Provided that the deductee files a declaration with the deductor and the deductor reports the tax deduction in the name of the other person in the information relating to deduction of tax referred to in sub-rule (1). (ii) The declaration filed by the deductee under clause (i) shall contain the name, address, permanent account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the assessee, and the joint venture has not filed a return of income, then credit of the TDS cannot be taken by anybody. This is not the spirit and intention of law. 21. Therefore, in our view, the Assessing Officer erred in denying the benefit of the TDS mentioned in the TDS certificates filed by the assessees on the ground that the TDS certificate is issued in the name of the joint venture or a Director and not the assessee. (Emphasis Supplied) 9.7. The above decision was considered by the Hon ble Delhi High Court In the case of Relcom (supra). In that case the Hon ble Court permitted the Appellant to claim credit of tax deducted at source holding as under: 7. The revenue relies on the phrase shall be treated as a payment of tax on behalf of the person from whose income the deduction was made to contend that the assessee's TDS claim cannot be based on the receipts of M/s REPL. However, the assessee fairly admitted throughout the proceedings for its TDS claim of Rs. 1,20,73,097/- that the benefit of such claim has not been availed by M/s. REPL. Therefore, the revenue, having assessed M/s REPL's income in respect to such TDS claim cannot now deny the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use of justice Sardar Amarjit Singh Kalra v. Pramod Gupta, [2003] 3 SCC 272. Therefore, the revenue's contention that the assessee, instead of claiming the entire TDS amount, ought to have sought a correction of the vendor's mistake, would unnecessarily prolong the entire process of seeking refund based on TDS credit. (Emphasis Supplied) 9.8. In the case before us, the objection of the Revenue is that the Appellant is claiming credit for tax deducted at source corresponding receipts of which have not been credited to the profit and loss account and therefore, not offered to tax. While the stand of the Appellant is that there was back to back arrangement with the Sub-Contractor and therefore, the entire receipts were passed on to the Sub-Contractor leaving Nil income to be disclosed in the return of income. We are of the view that while the Appellant cannot be denied the credit for credit for tax deducted at source in the facts and circumstances of the present case, the Revenue cannot be denied opportunity to examine the receipts and corresponding payments. The Appellant has placed on record, separate ledger account maintained showing receipts from NHAI and correspond ..... X X X X Extracts X X X X X X X X Extracts X X X X
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