2016 (11) TMI 655 - AT - Income Tax

Non credit of tax deducted at source - TDS u/s 195 - Held that - We have observed that the assessee has offered for taxation commission income of ₹ 1,42,98,518/- for the assessment year 2012-13 on which tax is stated to have been deducted at source of ₹ 44,15,455/- which is claimed by the assessee in the return of income filed with Revenue. The said commission income was credited to the account of the assessee by deductor Aegis Logistics Limited as at 31-03-2011 and tax was stated to have been deducted at source by the deductor u/s. 195 of the Act amounting to ₹ 44,15,455/- which was reported to the Revenue to be pertaining to the assessment year 2011-12 while the said commission was stated to be subject to approval of shareholders which approval was accorded by the shareholders of Aegis Logistics Limited only in previous year 2011-12 and hence the assessee accounted for the income as well tax deducted at source thereon only in the assessment year 2012-13 which claim of credit of tax deducted at source was denied to the assessee in the assessment year 2012-13 on the ground that tax deducted at source pertained to the assessment year 2011-12 while credit of tax deducted at source of ₹ 37,08,000/- was granted to the assessee which the assessee stated to have claimed in the assessment year 2013-14. The assessee had placed reliance on Section 199 of the Act of 1961 read with Rule 37BA of Income Tax Rules, 1962. The contentions of the assessee needs verification and we are setting aside and restoring this matter/issue to the file of learned AO/ACIT(CPC) who shall verify all the contentions of the assessee as well as return of income filed for the assessment years 2011-12 to 2013-14 to arrive at correct declaration of income and credit of tax deducted at source thereon in accordance with provisions of the Act including relied upon provisions of Section 199 of the Act read with Rule 37BA of the Income Tax Rules, 1962, specifically Rule 37BA(3) of Income Tax Rules, 1962 . - Decided in favour of assessee for statistical purposes.

Summary

Issues:
Non-credit of tax deducted at source under Chapter XVII-B with respect to income offered for taxation in accordance with Section 199 of the Income Tax Act, 1961 read with Rule 37BA of Income Tax Rules, 1962.

Analysis:
The appeal was filed against the appellate order passed by the Commissioner of Income Tax (Appeals) for the assessment year 2012-13. The issue revolved around the non-credit of tax deducted at source with respect to the income offered for taxation by the assessee. The assessee earned commission income from Aegis Logistics Limited, and tax was deducted at source under Section 195 of the Act. The revenue did not give TDS credit to the assessee based on the timing of when the commission income was credited and approved by the deductor's shareholders. The assessee claimed credit for the tax deducted at source in accordance with Section 199 of the Act and Rule 37BA of Income Tax Rules, 1962.

The first appeal with the CIT(A) was rejected, stating that the income should have been reported for the assessment year 2011-12 instead of 2012-13. The CIT(A) directed the correct assessment of the assessee's income for the appropriate year. The assessee then filed a second appeal with the Tribunal, reiterating the arguments made earlier. The Tribunal observed discrepancies in the reporting of commission income and tax deducted at source, leading to the setting aside and restoration of the matter to the Assessing Officer (AO) for verification.

The Tribunal directed the AO to verify all contentions of the assessee, examine the returns filed for the relevant assessment years, and ensure correct declaration of income and credit of tax deducted at source. The AO was instructed to prevent double credit of prepaid taxes and rectify any errors to ensure accurate tax assessment. The issue of denial of TDS credit was also to be addressed by the AO. The Tribunal emphasized providing the assessee with a fair opportunity to present evidence and explanations, following principles of natural justice.

In conclusion, the appeal was allowed for statistical purposes, and the matter was remanded to the AO for thorough verification and rectification in accordance with the provisions of the Income Tax Act, 1961 and Income Tax Rules, 1962.