2010 (2) TMI 963 - HC - Income Tax

Summary

Issues involved: Allowance of credit for TDS mistakenly deducted by Mahindra and Mahindra Limited, assessment year 2001-2002.

The High Court of Delhi, in the case related to the assessment year 2001-2002, addressed the issue of the allowance of credit for TDS mistakenly deducted by Mahindra and Mahindra Limited while making a payment to the assessee amounting to Rs 25,57,500/-. The Tribunal, after detailed examination, affirmed the views taken by the Commissioner of Income Tax (Appeals). The Tribunal observed that the TDS amount deducted was in excess of the assessable tax on the payment made, and thus, it had to be refunded as per the decision of the Hon'ble Supreme Court in the case of 'Sandvik India Ltd. v. CIT' 280 ITR 643(SC). The Tribunal directed the Assessing Officer to give credit for the whole TDS amount against the tax assessable in that year.

The department contended that the income corresponding to the TDS amount was not offered to tax. However, it was clarified that the amount received by the assessee company as tooling advance and paid as reimbursement to the vendors of Mahindra and Mahindra could not be considered as the assessee's income. The Tribunal upheld the decision of the Commissioner of Income Tax (Appeals) in directing the Assessing Officer to allow credit for the TDS amount. It was concluded that no substantial question of law arose for consideration, and thus, the appeal was dismissed.