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2023 (2) TMI 456 - AT - Income TaxCredit for Tax Collected at Source (TCS) - credit for TCS made in the hands of the partner - Assessee is a partnership firm - claim for credit of TCS was not granted because the TCS certificate was in the name of the partner Mr.Raju S.Shetty - liquor licence stands in the name of Shri. Raju S. Shetty, one of the partners of the firm and firm utilized the said licence in the business of selling liquor - purchase of liquor for sale was made from the Karnataka State Beverages Corporation Ltd., (KSBCL) - HELD THAT - Identical issue with regard to claim of TCS in the hands of the partnership firm when the licence stands in the name of the partners came up for consideration. The Hon ble ITAT, Jaipur Bench in Jai Ambey Wines 2017 (1) TMI 986 - ITAT JAIPUR after referring to the statutory provisions viz., sections 190, 199, 206C of the Act and Rule 37BA(2)(i) of the Income Tax Rules, 1962 (hereinafter called the Rules ), held that the assessee firm should be given benefit of credit for TCS made in the hands of the partner. If the ultimate conclusion on an application u/s 154 of the Act can only be one particular conclusion, then even if in reaching that conclusion, analysis has to be done then it can be said that the issue is debatable which cannot be done in proceedings u/s 154 of the Act. Conclusion in the present case can only be one viz., that one person alone is entitled to claim credit for TCS and it is only the assessee who has claimed credit for TCS and not the licencee. In such circumstances, the application u/s 154 of the Act ought to have been entertained by the Revenue. DR also made submission that the decision of the ITAT, Jaipur Bench, was in relation to provisions of Rule 37BA of the Rules which is applicable to TDS and not to TCS and it is only Rule 37-I of the Rules which is applicable when credit for TCS is claimed. The very basis of the decision of in the case of Jai Ambey Wines 2017 (1) TMI 986 - ITAT JAIPUR is based on the facts that what is applicable for TDS should also be applicable for TCS and merely because there is no Rule identical to Rule 37BA(2)(i) of the Rules with reference to TCS provisions, it cannot be the basis for the Revenue to deny the legitimate claim for credit of TCS made by an assessee. The assessee should be given the benefit of credit for TCS. The AO is directed to give credit for TCS. Appeals of the assessee are accordingly allowed.
Issues Involved:
1. Whether the Revenue authorities were justified in not giving credit for Tax Collected at Source (TCS) as claimed by the assessee. Detailed Analysis: Common Issue: The central issue in these appeals is whether the Revenue authorities were justified in not granting credit for Tax Collected at Source (TCS) to the assessee, a partnership firm engaged in the business of liquor bar and restaurant. The liquor license was in the name of one of the partners, Shri. Raju S. Shetty, and the TCS certificate was also issued in his name. Assessee's Claim: The assessee filed returns for the relevant Assessment Years (2016-17 to 2019-20) and claimed credit for TCS made by Karnataka State Beverages Corporation Ltd. (KSBCL). Since the TCS certificate was in the name of the partner, the credit was not granted in the initial intimation under section 143(1) of the Income Tax Act, 1961. The assessee subsequently filed applications under section 154 of the Act, along with an indemnity bond from Shri. Raju S. Shetty, stating that the TCS should be credited to the firm as the income from the sale of liquor was accounted for by the firm. Revenue's Rejection: The Assessing Officer (AO) rejected the rectification request, stating that the TCS certificate was not in the name of the assessee firm. The First Appellate Authority (FAA) upheld this view, stating that only mistakes apparent from the record could be rectified under section 154 of the Act. The FAA also referred to sections 206C(4) and (5) of the Act, concluding that credits could only be given to the person named in the TCS certificate. Tribunal's Findings: 1. Reference to ITAT Jaipur Bench Decision: The Tribunal referred to the ITAT Jaipur Bench's decision in the case of Jai Ambey Wines Vs. ACIT, which dealt with a similar issue. The Jaipur Bench had held that the credit for TCS should be given to the entity where the income is finally assessed, even if the TCS certificate is in another name. The Tribunal noted that the provisions of sections 190, 199, and 206C of the Act, along with Rule 37BA(2)(i) of the Income Tax Rules, support this view. 2. Nature of TCS: The Tribunal emphasized that TCS is akin to TDS and should be credited to the entity where the income is assessed. The absence of specific rules for TCS similar to Rule 37BA for TDS does not negate the assessee's right to claim credit for TCS. 3. Verification and Indemnity Bond: The Tribunal noted that Shri. Raju S. Shetty had provided an indemnity bond confirming that he had not claimed the TCS in his return of income. Therefore, there was no risk of a double claim. 4. Debatable Issue: The Tribunal acknowledged that if the ultimate conclusion on an application under section 154 is clear, even if it involves some analysis, it should not be considered a debatable issue. The Tribunal concluded that only one person is entitled to claim credit for TCS, and in this case, it should be the assessee firm. 5. Rule 37-I vs. Rule 37BA: The Tribunal dismissed the Revenue's argument that Rule 37-I, applicable to TCS, should be the basis for denying credit. The Tribunal held that the principles applicable to TDS should also apply to TCS. Conclusion: The Tribunal directed the AO to grant credit for TCS to the assessee firm, as the income was assessed in the firm's hands, and no double claim was made. The appeals were allowed in favor of the assessee. Final Judgment: The appeals of the assessee are allowed, and the AO is directed to give credit for TCS. The judgment was pronounced in the open court.
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