TMI Blog2023 (10) TMI 1270X X X X Extracts X X X X X X X X Extracts X X X X ..... e policy of the Government however, if the actual business of purchase and sale of liquor is conducted by a Corporate entity formed by the individual license holders and corresponding income from the said business is also offered to tax by the said business entity and not by the individual license holders then the credit of advance tax collected from the transactions of purchase has to be allowed in the hands of the company which is the actual purchaser/buyer and also offering the income from the said business activity to tax. It is very pertinent and relevant for allowing the credit of TCS as who is actually subjected to the TCS on purchase of liquor from Excise Department and also accounting the transactions and consequential income offered to tax. Whether the individual in whose name license is issued has claimed any credit of the said amount of TCS or not ? - Credit of the tax deducted at source/tax collected at source be given to the de-facto prayer/recipient of the amount which is subjected to the collection/deduction of tax as in whose hands the corresponding income is going to be assessed. The only rider to this principle is that there should not be any double claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the case and in law the assessee submits that having regard to the nature of business and the explanation furnished before the lower authorities it be held that the assessee is lawfully eligible and entitled to claim the credit of TCS of Rs. 8226254 and the denial of such credit is injudicious and unlawful and hence the credit of TCS of Rs. 8226254 be kindly allowed. 4. That on the facts and in the circumstances of the case and in law, the levy of interest under section 234B and 234C is unlawful and without jurisdiction therefore, the same be kindly deleted. 2. The solitary grievance of the assessee for both the assessment year 2017-18 2018-19 is regarding non allowance of the credit of TCS collected by the Excise Department of State of M.P. in respect of the purchase of liquor due to nonappearance in the PAN account of the assessee company but reflected in the accounts of the individual license holders who are directors and associates of the assessee company. Ld. Sr. Counsel for the assessee submitted that the assessee company is engaged in the business retail sale of liquor. The directors/associates of assessee company are license holders and they have formed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment relied by him the Tribunal has considered Rule 37BA which is relevant for the credit of TDS whereas the Rule 37-I of the Income Tax Rules is relevant for credit for Tax Collected at Source(TCS) however the under line principles for both the provisions is same as credit of TDS or TCS to be allowed against the corresponding income offered to tax. Further the Ld. Sr. counsel submitted that the licensees/associates have not claimed credit of TCS in their individual case and have not obtained the refund of the same as it is evident from Form 26AS of the individual license holders. Therefore, the credit of the TCS ought to have been allowed to the assessee company who is actually doing the business of purchase and sale of liquor and accounted all the transactions as well as the income derived from the activities of purchase and sale of liquor. Ld. Sr. counsel has referred to the form 26AS of the individual license holders showing the amount of TCS in their accounts however, none of the individual license holders have claimed the credit of the TCS reflected in form 26AS and therefore, non-allowing the credit of the said TCS to the assessee would amount to under enrichment of revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis of the license granted in the name of the individual who have associated with the assessee company. This practice is otherwise prevailing and accepted by the concerned authorities of the State Government that after obtaining the license by the individuals they are usually forming association or partnership firm or a company to pool their resources as well as to avoid competition among themselves. Though the licenses are given by the Excise Department to the individuals as per the policy of the Government however, if the actual business of purchase and sale of liquor is conducted by a Corporate entity formed by the individual license holders and corresponding income from the said business is also offered to tax by the said business entity and not by the individual license holders then the credit of advance tax collected from the transactions of purchase has to be allowed in the hands of the company which is the actual purchaser/buyer and also offering the income from the said business activity to tax. It is very pertinent and relevant for allowing the credit of TCS as who is actually subjected to the TCS on purchase of liquor from Excise Department and also accounting the transa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whom payment has been made or credit has been given (hereinafter referred to as deductee) on the basis of information relating to deduction of tax furnished by the deductor to the income-tax authority or the person authorised by such authority. (2) (i) If the income on which tax has been deducted at source is assessable in the hands of a person other than the deductee, credit for tax deducted at source shall be given to the 'other 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 (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 perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nefit of the rule only in four specified situations. It has thus widened the scope of the rule 37BA thereby enabling the credit of taxes to the actual payee in whose hands the income is assessable and not restricting this benefit only to the specified four situations. 8. As per above rules and interpretation of the Act, we are of the view that if the assessee is a partnership firm to carry on the business in liquor and TCS is claimed in the name of partner of the firm, the TCS collected by the party in the name of different persons, which reads as under :- S.No. Name of Partners Amount of TCS 1 Avinash Chalana Co. 5,52,525/- 2 Avinash Chalana Co. 89,163/- 3 Million Traders 82,054/- 4 Maxima Traders 1,17,035/- 5 Gundadeen Patel 9,11,330/- 6 Shiv Charan Singh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of Hon'ble A.P. High Court, in the case of CIT vs. Bhooratnam Company, (2013) 357 ITR 396 (AP). 5.2 The tribunal has considered the basis of allowing the credit of the tax deducted at source in the hands of the person of whose corresponding income is assessed or assessable. Similarly, in the case of ACIT vs. Avinash Chalana Co. Bhopal the Coordinate Bench of this Tribunal has reiterated this view. The Jaipur Bench of the Tribunal, in case of M/s. Jai Ambey wines, Ajmer vs. ACIT (supra) has considered an identical issue in para 2.6 to 2.9 as under: 2.6 We have heard the rival contentions and perused the material available on record. In order to appreciate the arguments, it would be relevant to refer to the provisions of Section 190, Section 199, Section 206C and the Rule 37BA(2)(i) of Income tax Rules. Section 190 reads as under: (1) Notwithstanding that the regular assessment in respect of any income is to be made in a later assessment year, the tax on such income shall be payable by deduction or collection at source or by advance payment or by payment under sub-section (1A) of section 192, as the case may be, in accordance with the provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diately preceding the date on which the Taxation Laws (Amendment) Act, 2003 comes into force, of debiting of the amount payable by the buyer to the account of the buyer or of receipt of such amount from the said buyer in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, collect from the buyer of any goods of the nature specified in column (2) of the Table as it stood immediately before the 1st day of June, 2003, a sum equal to the percentage, specified in the corresponding entry in column (3) of the said Table, of such amount as income-tax in accordance with the provisions of this section as they stood immediately before the 1st day of June, 2003. (1A) Notwithstanding anything contained in sub-section (1), no collection of tax shall be made in the case of a buyer, who is resident in India, if such buyer furnishes to the person responsible for collecting tax, a declaration in writing in duplicate in the prescribed form and verified in the prescribed manner to the effect that the goods referred to in column (2) of the aforesaid Table are to be utilised for the purposes of manufacturing, processing or producing articles or things or for the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tle the assessee to claim credit of TCS in whose hands the income is finally assessed to tax. The reason for the same is that the nature of TCS is nothing but tax which has been statutorily recognised in the Income tax Act, and the Rules are enabling and procedural in nature and absence thereof cannot result in denial of credit of TCS. This issue also find supports from the decision of the ITA No. 676/JP/2015 M/s Jai Ambey Wines Coordinate Bench in case of ACIT, Circle-2, Udaipur vs. Shri Krishnalal Meel party (supra). 2.8 In the instant case, the ld. AR has submitted that the income has been brought to tax in the hands of the assessee firm and accordingly the credit for TCS should be granted to the assessee firm. In this regard, we find that there is no findings of fact by the AO in this regard and in A.Y. 2012-13 the ld. CIT(A) has stated that the claim of the appellant that all the income of partners of the firm has been include in the income of the appellant is also not fully verifiable from the documents filed by the appellant. 2.9 In light of above discussions, we set-aside the matter in both the years to the file of the AO with the directions to verify whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant to refer to the provisions of Section 190, Section 199, Section 206C and the Rule 37BA(2)(i) of Income tax Rules. Section 190 reads as under: (1) Notwithstanding that the regular assessment in respect of any income is to be made in a later assessment year, the tax on such income shall be payable by deduction or collection at source or by advance payment or by payment under sub-section (1A) of section 192, as the case may be, in accordance with the provisions of this Chapter. (2) Nothing in this section shall prejudice the charge of tax on such income under the provisions of sub-section (1) of section 4. Section 199 reads as under: (1) Any deduction made in accordance with the foregoing provisions of this Chapter and paid to the Central Government shall be treated as a payment of tax on behalf of the person from whose income the deduction was made, or of the owner of the security, or of the depositor or of the owner of property or of the unit-holder, or of the shareholder, as the case may be. 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... collecting tax under this section shall deliver or cause to be delivered to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner one copy of the declaration referred to in sub-section (1A) on or before the seventh day of the month next following the month in which the declaration is furnished to him. (2) The power to recover tax by collection under sub-section (1) or subsection (1C) or subsection (1D)] shall be without prejudice to any other mode of recovery. Rule 37BA(2)(i) of Income tax Rules as amended, by the Income Tax (Eight amendment) Rules 2011 reads as under: Where under any provisions of the Act, the whole or any part of income on which tax has been deducted at source is assessable in the hands of a person other than the deductee, credit for the whole or any part of tax deducted at source, as the case may, shall be given to the other person and not to the deductee. Provided that the deductee files a declaration with the deductor and deductor reports the tax deduction in the name of the other person in the information relating to deduction referred to in sub-rule (1). 2.7 The essence of the above state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion and verification, the AO find that the corresponding income has been brought to tax in the hands of the assessee firm, the AO is directed to allow credit for TCS in the hands of the assessee firm. 8. Learned DR, however, placed reliance on the decision of SMC Bench, Bengaluru, rendered in the case of Shri. Jayaprakasha Rai Vs. DCIT ITA No.681/Bang/2021, order dated 13.06.2022. I have perused the aforesaid decision and I find that the said decision was a case of transfer of licence from one person to another where pending the formality of transfer of licence, the credit was claimed by transferee of the licence in respect of TCS made in the hands of the predecessor in interest of transferor of the licence. In the aforesaid decision, the Tribunal made a reference to the provision of section 206C(4) and Rule 37-I of the Rules and came to the conclusion that credit should be given to TCS on the basis of the ultimate outcome before the Central Excise authorities regarding transfer of excise licence. The Tribunal also held in the aforesaid case that the AO can take necessary safeguards to ensure that the interest of the Revenue is not affected or prejudiced in any manner. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 our reasons for the same, a perusal of Section 199 of the Act is necessary. Section 199 reads as follows: 199. Credit for tax deducted. (1) Any deduction made in accordance with the foregoing provisions of this Chapter and paid to the Central Government shall be treated as a payment of tax on behalf of the person from whose income the deduction was made, or of the owner of the security, or of the depositor or of the owner of property or of the unit-holder, or of the shareholder, as the case 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the TDS cannot be taken by anybody. This is not the spirit and intention of law. (emphasis supplied) 9. At this stage, it is also relevant to note the provisions 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. 10. This Court relies upon the well-settled dictum that procedure is the handmaid of justice, and it cannot be used to hamper the cause 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. 5.5 The Hon ble High Court has observed that the procedure is the handmaid of justice, and it cannot be used to hamper the cause of justice while upholding the order of the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es the title Requirement to furnish Permanent Account Number. Various sub-sections contained therein provide for supplying PAN by the deductee failing which tax will be collected at a higher rate. In case of invalid or not matching PAN also, similar circumstances would follow. 8. It can thus be seen that the Act contains detailed provision for collecting tax at source, depositing such tax with the government revenue and issuance of certificates to the deductee of such tax so deducted. The anxiety of the department, therefore, to ensure the credit of tax deducted at source is given to the rightful person in consonance with the certificate of TDS can easily be appreciated when large number of such transactions in any accounting year are likely to take place. The most dependable identification of the deductee would be his PAN which would be a unique identification number so far as an individual or an entity is concerned. The anxiety of the department therefore to ensure proper matching of the PAN in the TDS certificate as compared to the PAN of the assessee who claims the benefit of such tax deducted at source, therefore, cannot be lightly brushed aside. The short question is, In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the other person in the information relating to deduction of tax referred to in sub-rule (1). (1) The declaration filed by the deductee under clause (i) shall contain the name, address, permanent account number of the person to whom credit is to be given, payment or credit in relation to which credit is to be given and reasons for giving credit to such person. (iii) The deductor shall issue the certificate for deduction of tax at source in the name of the person in whose name credit is shown in the information relating to deduction of tax referred to in sub-rule (1) and shall keep the declaration in his safe custody. 10. It can thus be seen that under sub-rule 2 of Rule 37BA where whole or part of the income on which tax has been deducted at source is assessable in the hands of a person other than the deductee, credit could be given to such other person and not to the deductee provided the three conditions contained therein are satisfied. These conditions in brief are that the deductee files a declaration with the deductor in this respect, such declaration would contain the details of the person entitled to the credit and the reasons for giving such credit and last ..... X X X X Extracts X X X X X X X X Extracts X X X X
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