2019 (5) TMI 1999 - AT - Income Tax

Non grant of TDS credit on mobilization advance - It is the case of authorities below that assessee has not billed any revenue, so assessee credit in P L account of income has been rejected - HELD THAT - Once it is the case of the Revenue that assessee has not commenced any business during the assessment year, it has not made any bill for the work done and revenue recognition is rejected and authorities below emphasized that only a sum being the mobilization advance reflected in the balance sheet in liability is an acceptable figure, then how can it be said that the TDS deducted by the payer i.e. is correct is beyond comprehension. These facts clearly indicate that on the facts and circumstances of the case, the payer had wrongly deducted TDS on this sum paid as mobilization advance. As held by the ITAT in M/s. Patel Engineering 2015 (11) TMI 1665 - ITAT MUMBAI wherein it was expounded that the mobilization advance was not an income and that credit for any TDS on the same should be given in the year of TDS itself. We note that the authorities below have denied the assessee's request on various technicalities that the assessee should have made an application etc. for wrong deduction of TDS in this regard. In our considered opinion such mechanical approach of the Revenue is not justified. We draw support from case of CIT Vs. Shelly products and others 2003 (5) TMI 4 - SUPREME COURT wherein it was held that assessee was entitled to refund excess tax paid out of abundant caution or owing to error or non-taxability. The common law maxim of aprobate and reprobate mandates that such a contradictory approach and shifting stands are not permissible. This view was reiterated by SUZUKI PARASRAMPURIA SUITINGS PVT. LTD. 2018 (10) TMI 484 - SUPREME COURT Assessee deserves to succeed on this issue and accordingly we direct the Assessing Officer to give the credit for the TDS.

Summary

Issues Involved:
1. Unbilled revenue.
2. Setting up/Commencement of business.
3. Pro rata expenses of Mr. I. Bannerjee.
4. Expenditure towards technical consultancy charges.
5. Non-grant of TDS credit on mobilization advance.
6. Head of Income for Interest income.
7. Interest under sections 234B, 234C, and 234D.

Detailed Analysis:

Unbilled Revenue:
The appellant contended that the Commissioner (Appeals) erred in holding that the appellant received only the mobilization advance and no work was undertaken during the relevant assessment year, thus ignoring the unbilled revenue recognized in the books of accounts. However, the appellant did not press this ground during the hearing, and it was dismissed as not pressed.

Setting up/Commencement of Business:
The appellant challenged the Commissioner (Appeals) for holding that the business was set up on 12th March 2010 and for directing the AO to allow only pro rata expenses for Mr. I. Bannerjee. Additionally, the appellant contested the disallowance of Rs. 1,16,72,900 towards technical consultancy charges under section 37(1). These grounds were also not pressed by the appellant and thus were dismissed.

Non-grant of TDS Credit on Mobilization Advance:
This was the primary issue contested by the appellant. The AO had observed that the appellant claimed TDS of Rs. 2,13,56,569 deducted by KMRCL on mobilization advance of Rs. 93,79,58,000, but no regular billing was done, and only unbilled revenue was credited to the P&L account. The AO withdrew the TDS credit, stating it was in violation of section 199 and Rule 37BA. The Commissioner (Appeals) upheld this decision, noting that the mobilization advance was shown as 'Other Liabilities' and not as income.

The appellant argued that the mobilization advance was a short-term loan, not income, and requested TDS credit in subsequent years proportionate to the mobilization advance recovered. The Tribunal referred to the ITAT decision in ACIT vs. M/s. Patel Engineering Ltd., which held that mobilization advance is not income and TDS credit should be given in the year of deduction. The Tribunal found the authorities' orders contradictory and directed the AO to grant the TDS credit, citing the ITAT decision and the Hon'ble Apex Court's ruling in CIT vs. Shelly Products.

Head of Income for Interest Income:
The appellant contested the AO's assessment of interest received on mobilization advance as "Income from Other Sources" instead of "Business Income." This ground was not pressed during the hearing and was dismissed.

Interest under Sections 234B, 234C, and 234D:
The appellant objected to the interest levied under sections 234B, 234C, and 234D. However, these grounds were not pressed during the hearing and were dismissed.

Conclusion:
The appeal was partly allowed, with the Tribunal directing the AO to grant the TDS credit for the mobilization advance, following the precedent set by the ITAT in the case of Patel Engineering Ltd. and the Hon'ble Apex Court's decision. The other grounds were dismissed as not pressed.