2013 (1) TMI 645 - AT - Income Tax

Addition on account of income as per TDS certificate - Difference in books of accounts and TDS - TDS certificate issued by Mysore Breweries Limited, the total reimbursement made to the assessee Due to clerical mistake debit note in excess of amount resultant shown higher reimbursement to assessee - Held that - Following the decision in case of SUDHIR SEKHRI (2010 (4) TMI 50 - DELHI HIGH COURT) that addition wholly unwarranted. The assessee had explained that a credit note of Rs. 80,88,000/- issued by it in favour of Mysore Breweries Limited was not accounted for by them and, therefore, by this amount they had shown higher reimbursement to assessee In favour of assessee Tax Credit - Where the income component was neither being admitted, nor was being offered to tax TDS certificate issued by deductor - Held that - Following the decision in case of Lear Automotive India Ltd. (2010 (2) TMI 963 - DELHI HIGH COURT) that credit is to be allowed to the deductee in respect of TDS made on higher amount of reimbursement than was actually offered to tax. Once the TDS certificate has been issued by deductor he cannot claim refund of the amount deducted because the tax deducted primarily constitutes income of deductee and he can only claim the refund of the amount In favour of assessee Contravention of Rule 46A of the Income Tax Rules, 1962 - AO had required the assessee to submit the invoices/vouchers - the relevant documents were not available since the same got mutilated/ destroyed while shifting of office Held that - In regard to personnel expenses are concerned, no interference is called for with the said findings because the impugned amount was part of the overall salary payments debited to P&L A/c. And provision for audit fees is concerned, assessee had submitted a bill vide ADB-101/04 dated 12/06/2003 issued by Price Waterhouse mentioning that the same is claimed towards statutory audit fee. To examine genuineness of evidence - Remand back to AO

Issues Involved:
1. Deletion of addition on account of difference in receipts as per TDS certificate and those credited to Profit & Loss Account.
2. Credit of TDS on the amount of Rs. 80,88,000/- addition of which has been deleted.
3. Deletion of addition on account of provision of expenses, and contravention of Rule 46A of the Income Tax Rules, 1962.

Detailed Analysis:

1. Deletion of Addition on Account of Difference in Receipts as per TDS Certificate and Those Credited to Profit & Loss Account:

The primary issue was the discrepancy of Rs. 80,88,000/- between the income reported in the audited financial statements and the amount as per the TDS certificate. The assessee explained that the discrepancy arose due to a clerical mistake by its subsidiary, Mysore Breweries Limited, which issued a TDS certificate showing an inflated figure. The assessee had raised debit notes amounting to Rs. 3,35,85,000/-, but a credit note of Rs. 80,88,000/- was not accounted for by Mysore Breweries Limited. The AO did not accept the explanation, citing that tax at source had been deducted on the total income of Rs. 3,35,85,000/- and thus made an addition of Rs. 80,88,000/-.

The CIT(A) deleted the addition, noting that the discrepancy was a bona fide mistake without tax implications, as there was no evidence of higher expenditure allowed in Mysore Breweries Limited's hands or lower receipts shown by the assessee. The Tribunal upheld the CIT(A)'s decision, referring to the Hon'ble Delhi High Court's decision in the case of Sudhir Sekhri vs. ACIT, which supported the assessee's position that the addition was unwarranted due to the clerical error. Therefore, the ground was dismissed.

2. Credit of TDS on the Amount of Rs. 80,88,000/- Addition of Which Has Been Deleted:

The issue was whether the TDS amount attributable to Rs. 80,88,000/- should be allowed as a credit to the assessee when the income component was neither admitted nor offered to tax. The CIT(A) referred to CBDT Circulars No. 285 and No. 2/2011, which outlined the procedure for claiming refunds of excess TDS. The CIT(A) concluded that since the TDS certificate had been issued and the assessee claimed a refund, the excess TDS could not be claimed by the deductor.

The CIT(A) directed the AO to grant the credit of excess TDS of Rs. 84,924/- but without interest under section 244A due to the mistake being attributable mostly to the assessee. The Tribunal upheld the CIT(A)'s decision, relying on the Hon'ble Delhi High Court's decision in the case of Lear Automotive India Ltd., which supported the deductee's right to claim a refund of excess tax deducted. Therefore, this ground was dismissed.

3. Deletion of Addition on Account of Provision of Expenses, and Contravention of Rule 46A of the Income Tax Rules, 1962:

The AO disallowed Rs. 47,80,510/- due to the assessee's inability to produce invoices/vouchers, as they were destroyed during an office move. The CIT(A) accepted collateral and circumstantial evidence for personnel expenses and audit fees. The personnel expenses of Rs. 3,53,252/- were part of the overall salary payments, and the audit fee provision of Rs. 2,10,138/- was supported by a bill from Price Waterhouse.

The Department contended that the CIT(A) accepted new evidence in contravention of Rule 46A. The Tribunal upheld the CIT(A)'s findings for personnel expenses, noting that they were part of the overall salary payments and not new evidence. However, for the audit fee provision, the Tribunal remanded the matter to the AO to examine the bill's genuineness. Therefore, this ground was partly allowed for statistical purposes.

Conclusion:

The departmental appeal was partly allowed for statistical purposes, with the Tribunal upholding the CIT(A)'s decisions on the first two issues and remanding the third issue for further examination.

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