2024 (8) TMI 539 - AT - Income Tax

Denial of TCS credit - purchases were accepted by the AO however, in turn denied the TCS credit on the ground that the TCS was collected and was reflecting in the account of one Mr. Prashanth Shetty from Mangalore, as he was the original owner of the excise license - HELD THAT - It is not a disputed fact that, the business was carried on by the assessee based on an arrangement between the assessee and Mr. Prashanth Shetty. It is noted that Mr. Prashanth Shetty provided a declaration stating that, though the excise license is in his name, he has not declared the income as declared by the assessee and has also not claimed the credit of TCS a The assessee has been consistently carrying on business in this similar fashion as has been recorded by the erstwhile CIT(A) in the appellate orders passed for the preceding assessment years placed in the paper book referred to by the Ld.AR. Every year, this issue was considered and allowed in favour of assessee based on the declaration given by Mr. Prashanth Shetty. The declaration given by Mr. Prashanth Shetty reproduced hereinabove is verifiable by the authorities below. DR before us also could not establish any contrary to what has been stated in the declaration by Mr. Prashanth Shetty. We therefore do not find any reason to uphold the impugned order of Ld.CIT(A). We direct the Ld.AO to allow assessee s claim after due verification of what is stated in the declaration. Assessee appeal allowed.

Summary

Issues:
- Disallowance of TCS credit by Ld.CIT(A) based on ownership of excise license
- Claim for TCS credit by assessee despite license ownership by another person
- Interpretation of TCS provisions and applicability in the case

Analysis:
The present appeal dealt with the disallowance of TCS credit by the Ld.CIT(A) for the assessment year 2022-23 based on the ownership of the excise license. The assessee, engaged in trading IMFL, used a license issued to another person under a mutual understanding. The assessee declared income from the business but was denied TCS credit by the Ld.AO, who adjusted it against dues for a previous year. The Ld.CIT(A) upheld the disallowance citing that TCS credit can only be claimed by the person in whose account it reflects in Form 26AS, emphasizing the need for tax payment and information submission to the government.

The assessee contended that despite the TCS reflecting in the license holder's account, they declared the income and collected TCS, seeking credit based on the business income offered. The Ld.AR relied on precedents where TCS credit was allowed to the entity conducting the business, irrespective of license ownership. The Tribunal noted the consistent business arrangement between the assessee and the license holder, Mr. Prashanth Shetty. Mr. Shetty's declaration confirmed non-declaration of income and non-claiming of TCS, as per the assessee's submissions and past assessments.

The Tribunal found no reason to uphold the Ld.CIT(A)'s order, directing the Ld.AO to allow the assessee's claim after verifying Mr. Shetty's declaration. The decision was based on the verifiability of Mr. Shetty's declaration and the absence of contrary evidence presented by the Ld.DR. Ultimately, the Tribunal allowed the grounds raised by the assessee, resulting in the appeal being allowed in favor of the assessee.