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2014 (7) TMI 301 - AT - Income TaxIncome to be offered for tax liquor licence in the name of individual (assessee) - AP Beverages Corporation Ltd., while collecting payments on purchase of liquor has deducted tax at source by mentioning PAN of the assessee. Held that - The AO has completely mixed up facts as he has treated the amount of ₹ 88,25,300/- as rental income received from AP Beverages Corporation Ltd., which is not at all correct - though the license was issued in the name of individual because of restriction in the policy decision of the Prohibition and Excise Department, but, the liquor business was carried on by the company M/s Country Club (India) Pvt. Ltd. - The entire purchase from AP Beverages Corporation Ltd. and sales effected of liquor have been reflected in the books of account of the company and profit generated there from has been offered to tax in the return of income filed by the company - Relying upon CIT Vs. Bhooratnam & Co, 2013 (1) TMI 478 - ANDHRA PRADESH HIGH COURT thus, there was no reason to interfere with the order of CIT(A) in deleting the addition as the particular income, which has been added at the hands of the assessee has already been offered to tax by the company in the return of income filed for the in the AY Decided against Revenue.
Issues:
1. Addition of income not offered by the assessee in the return of income. 2. Discrepancy in treatment of income received from AP Beverages Corporation Ltd. 3. Claim of TDS credit by the company, not the individual assessee. 4. Double taxation concern due to the same income being offered by the company. Issue 1: The primary issue in this case was the addition of income by the Assessing Officer (AO) that the assessee had not offered in the return of income. The AO added the amount to the income of the assessee based on the discrepancy noted in the assessment record of the company, where the income was not reflected. The assessee contended that the company had accounted for the income from the sale of liquor, including TCS collected, and had already offered it for taxation. The AO's addition was challenged by the assessee before the CIT(A). Issue 2: The discrepancy arose from the treatment of income received from AP Beverages Corporation Ltd. The company, of which the assessee was the Managing Director, had applied for a liquor license, which was issued in the name of the individual due to departmental policy. The TCS collected was attributed to the individual, but the entire purchase and sale of liquor were accounted for by the company. The CIT(A) examined the documentary evidence and concluded that the income had already been reflected in the company's books and offered for taxation, thus deleting the addition made by the AO. Issue 3: A significant aspect of the case was the claim of TDS credit by the company, M/s Country Club (India) Ltd., and not by the individual assessee. The CIT(A) noted that the company had claimed the TCS collected by AP Beverages Corporation Ltd. and had already offered the income for taxation. The CIT(A) relied on a judgment of the Honorable AP High Court regarding the entitlement to credit for TDS certificates issued in the name of joint ventures or directors, emphasizing that denying such credit would lead to double taxation concerns. Issue 4: The concern of potential double taxation was pivotal in the decision-making process. The CIT(A) referenced a judgment by the Honorable AP High Court in a similar case, emphasizing that income shown in TDS certificates must either be taxed in the hands of the joint venture or the individual co-joint venturer. The CIT(A) concluded that since the income had already been offered to tax by the company, taxing the same income in the hands of the individual would amount to double taxation. The decision to delete the addition was based on the principle of avoiding double taxation and ensuring that credit for TDS was appropriately accounted for. This detailed analysis of the judgment highlights the core issues, arguments presented, and the ultimate decision reached by the CIT(A) in favor of the assessee, emphasizing the principles of taxation and the prevention of double taxation.
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