2017 (11) TMI 1561 - AT - Income Tax

TDS credit - A.O passed the order u/s 154 of the Act withdrawing the credit of TDS - scheme of amalgamation - Held that - No merit in the action of the AO for declining credit of TDS in the hands of the assessee company when undisputedly no credit of TDS has been claimed in the return of resulting company on demerger i.e., Reliance Fresh Limited and confirmation to this effect was also provided during the assessment proceedings that though trading income has been transferred to Reliance Fresh Ltd., the corresponding TDS has not been transferred and credit for such TDS is being claimed only by the assessee i.e., Reliance Hyper Realty Limited and not being claimed by the Reliance Fresh Ltd.. See Commissioner of Income Tax-15 Versus M/s Relcom 2015 (11) TMI 284 - DELHI HIGH COURT In view of the above, direct the AO to allow the credit of the TDS so deducted in the hands of the assessee company. - Decided in favour of assessee.

Summary

Issues:
Appeal against order of CIT(A) under section 154 of the IT Act for A.Y.2011-12 - TDS credit withdrawal - Income offered by different company - Justification of CIT(A)'s action - Eligibility of assessee to claim TDS credit without offering corresponding income.

Analysis:
The appeal was filed against the CIT(A)'s order confirming the withdrawal of TDS credit granted earlier to the assessee under section 154 of the IT Act. The AO withdrew the TDS credit of ?44,82,512 as the corresponding income, in consequence to demerger, was not offered by the assessee. The CIT(A) upheld the AO's action, noting that the income was shown in a different company than the one claiming TDS credit.

The assessee argued that the income for which TDS was deducted was initially offered by the assessee company but later transferred to a resulting company due to a High Court order. The assessee did not claim TDS relating to the income transferred to the resulting company. The assessee relied on a Delhi High Court decision to support their claim for TDS credit even when corresponding income was not offered for tax.

The Tribunal found that though the income was transferred to the resulting company, the TDS certificates were in the name of the assessee and appeared in the assessee's Form 26AS. The TDS was claimed by the assessee as the corresponding income was not transferred to the resulting company. The Tribunal referred to the provisions of Section 199 of the Act and other relevant case laws to support the assessee's claim for TDS credit.

The Tribunal held that the AO was not justified in denying the credit of TDS in the hands of the assessee company, especially when the corresponding income was not offered by the resulting company. The Tribunal directed the AO to allow the credit of the TDS deducted in the hands of the assessee company, thereby allowing the appeal and dismissing the revenue's contentions.

In conclusion, the Tribunal allowed the appeal of the assessee, emphasizing the eligibility of the assessee to claim TDS credit even without offering the corresponding income, based on the specific circumstances and legal provisions cited during the proceedings.