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2018 (1) TMI 1070 - AT - Income TaxTDS treated as deemed income u/s 198 - adding the TDS as income of the assessee - Held that - CIT(A) in the impugned order has brushed aside and not examined or considered the assessee s contentions that since his case falls clearly under the provisions of sec. 199(3) r.w. Rule 37BA(3)(ii), carry forward of earlier years TDS commencing from Financial Year 2008-09 should be allowed for reducing year wise utilization, by giving credit thereof across the various years in which such income was assessable to tax. This fact on record, that the ld CIT(A) had failed to address the aforesaid claim of the assessee, was not controverted before us by Revenue. Thus set aside the finding of the authorities below on this issue and remand the same for examination, verification and consideration to the file of the ld CIT(A) - Decided in favour of assessee for statistical purposes.
Issues Involved:
1. Whether the TDS of ?5,04,063 is deemed income under section 198 of the Income Tax Act, 1961. 2. Whether the TDS credit should be allowed across the years in which the income is assessable to tax as per section 199(3) r.w. Rule 37BA(3)(ii) of the IT Rules, 1962. Detailed Analysis: 1. Deemed Income under Section 198: The primary issue is whether the actions of the authorities below were correct in holding that the TDS of ?5,04,063 is deemed income under section 198 of the Income Tax Act, 1961, and adding the TDS as income of the assessee. The assessee, following the cash system of accounting, declared income based on receipts and claimed TDS proportionately to the income received. The Assessing Officer (AO) added the unutilized TDS of ?5,04,063 as undisclosed TDS and invoked the provisions of section 198, treating it as income for the year. The Commissioner of Income-tax (Appeals) [CIT(A)] upheld this addition, stating that as per section 198, all tax deducted is income of the person, and the AO was right in adding the undisclosed TDS to the income. 2. TDS Credit Across Years (Section 199(3) r.w. Rule 37BA(3)(ii)): The assessee contended that the case falls under section 199(3) r.w. Rule 37BA(3)(ii), which allows TDS credit across the years in which the income is assessable. The CIT(A) did not consider the assessee's claim that the carry forward of TDS from earlier years should be allowed for reducing year-wise utilization. The Tribunal noted that section 199(3) provides for the CBDT to make rules for giving credit for TDS, and Rule 37BA(3)(ii) specifies that TDS credit should be allowed across the years in which the income is assessable. The Tribunal found that the CIT(A) failed to address the assessee's claim under these provisions. Tribunal's Findings and Directions: The Tribunal observed that the CIT(A) did not examine or consider the assessee's contentions regarding the application of section 199(3) r.w. Rule 37BA(3)(ii). The Tribunal held that the assessee's claim that the case is covered by these provisions requires examination and consideration. Therefore, the Tribunal set aside the findings of the authorities below on this issue and remanded the matter to the CIT(A) for examination, verification, and consideration, directing that adequate opportunity be given to the assessee and the AO to file details and submissions. Conclusion: The appeal for the assessment year 2012-13 was allowed for statistical purposes, with the Tribunal remanding the issue to the CIT(A) for further examination and adjudication. The order was pronounced in the open court on January 19, 2018.
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