2017 (6) TMI 1041 - AT - Income Tax

Disallowance of assessee s claim for credit of TDS - Held that - It is no doubt true that the condition stipulated in Rule, i.e. 37BA(2) for claiming credit for TDS in the hands of the person other than the deductee is to avoid allowing double credit for TDS amount as rightly contended by the ld. D.R. However, as submitted by the assessee in this regard, the concerned proprietor Shri Soumendu Porel has not claimed credit for TDS amount in question nor the same has been allowed to him even by the Department. He has submitted that this mater can be verified by the Assessing Officer to ensure that there is no double crtedit allowed for the TDS amount in question and if it is found on such verification that no credit is allowed for the TDS in the hands of the proprietor/individual, the claim of the assessee for credit of such TDS may be allowed. I find merit in this contention of the assessee and since the ld. D.R. has also not raised any objection in this regard, set aside the impugned order of the ld. CIT(Appeals) and restore the matter to the file of the Assessing Officer for deciding the same afresh after necessary verification. Appeal of the assessee allowed for statistical purposes.

Summary

Issues:
Disallowance of assessee's claim for credit of TDS amounting to ?6,48,946.

Analysis:
The appeal concerns the disallowance of the assessee's claim for credit of TDS amounting to ?6,48,946. The assessee, a Company engaged in contractual works, took over a business from a proprietary concern. The Assessing Officer refused credit for TDS as the certificate was issued in the name of the proprietary concern, not the assessee. The CIT(Appeals) upheld this disallowance, stating that the TDS certificates were not in the name of the assessee, and permission from Municipal Authorities was necessary. The assessee contended that credit should be given as the receipts were accounted for, citing a High Court decision. The Department argued that Rule 37BA(2) required the deductee to claim credit. The Tribunal noted that the proprietor did not claim credit, and if verified, the assessee could be allowed the credit. The Tribunal set aside the CIT(Appeals) order for fresh assessment.

The crux of the issue revolves around the entitlement of the assessee to claim credit for TDS despite the certificate being in the name of the proprietary concern. The Tribunal acknowledged the rule preventing double credit but emphasized that since the proprietor did not claim credit, the assessee's claim could be considered. The Tribunal directed the Assessing Officer to verify and allow the credit if no double credit was granted to the proprietor. This decision indicates a nuanced approach balancing legal provisions with the practical application of tax credit rules.

The dispute also highlights the importance of proper documentation and compliance with tax regulations. The Tribunal's decision underscores the need for meticulous record-keeping and adherence to procedural requirements. By emphasizing the verification process and directing a fresh assessment, the Tribunal ensures a fair and thorough review of the claim for TDS credit. This case serves as a reminder for taxpayers to diligently follow tax procedures and maintain accurate records to support their claims effectively.

In conclusion, the Tribunal's decision provides clarity on the issue of TDS credit entitlement, balancing legal provisions with practical considerations. The directive for verification and fresh assessment underscores the significance of compliance and documentation in tax matters. This judgment offers valuable insights for both taxpayers and tax authorities in navigating TDS credit claims and ensuring procedural adherence for fair assessments.