2011 (11) TMI 865 - AT - Income Tax

Summary

Issues involved: Appeal by Revenue against deletion of addition u/s 198 of IT Act.

Summary:
1. Issue 1 - Deletion of addition u/s 198 of IT Act:
The case involved an appeal by the Revenue against the deletion of an addition of Rs. 14,89,650 made by the Assessing Officer (AO) u/s 198 of the IT Act. The assessee derived income from a transportation business through hired vehicles for Monnet Group goods, with two billing systems: "to be billed" and "to pay." The AO deemed the TDS amount of Rs. 14,89,650 as income of the assessee u/s 198. However, the CIT(A) allowed the appeal, stating that the addition was contrary to the provisions of the Act and hence deleted. The Revenue appealed against this decision.

2. Decision:
The Appellate Tribunal held that s. 198 is a machinery provision not related to computation or chargeability of income. Citing the case of Smt. Varsha G. Salunke, it was noted that without charging provisions to tax such deemed income, s. 198 cannot create a charge on certain receipts. The Tribunal also considered the AO's acceptance of the assessee's claim in earlier and later years, as well as refraining from making additions in reassessment proceedings. In light of these facts and the principle of consistency, the Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to delete the addition u/s 198 of the IT Act.

3. Conclusion:
The appeal filed by the Revenue against the deletion of the addition u/s 198 of the IT Act was dismissed by the Appellate Tribunal, maintaining the decision of the CIT(A) in favor of the assessee.