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2017 (1) TMI 986 - AT - Income TaxCredit of TCS denied - TCS certificates are in different names and carry different PANs - Held that - If we look at the provisions of section 206C read with section 190 of the Act, the nature of tax collection at source (TCS) is exactly identical to TDS and it is in the nature of tax on income which has been collected at source in respect of specified business and the nature of goods as specified in section 206C of the Act. In light of above, the credit for TCS should be given to the assessee which is finally and lawfully assessed to tax in respect of the corresponding income on which TCS has been collected. The fact that there are no specific rules which have been provided in the Income tax Rules in respect of credit of TCS in such situations on the lines of Rule 37BA, in our view, doesn t disentitle the assessee to claim credit of TCS in whose hands the income is finally assessed to tax. The reason for the same is that the nature of TCS is nothing but tax which has been statutorily recognised in the Income tax Act, and the Rules are enabling and procedural in nature and absence thereof cannot result in denial of credit of TCS. In the instant case, AR has submitted that the income has been brought to tax in the hands of the assessee firm and accordingly the credit for TCS should be granted to the assessee firm. In this regard, we find that there is no findings of fact by the AO in this regard and in A.Y. 2012-13 the ld. CIT(A) has stated that the claim of the appellant that all the income of partners of the firm has been include in the income of the appellant is also not fully verifiable from the documents filed by the appellant. In light of above discussions, we set-aside the matter in both the years to the file of the AO with the directions to verify whether the corresponding income in respect of which TCS has been claimed by the assessee firm has been brought to tax in the hands of the asessee firm or not. Where after due examination and verification, the AO find that the corresponding income has been brought to tax in the hands of the assessee firm, the AO is directed to allow credit for TCS in the hands of the assessee firm.
Issues Involved:
1. Rejection of application filed u/s 155(14)/154. 2. Non-granting of TDS/TCS credit. 3. Applicability of section 199/rule 37BA for credit of TDS/TCS. Issue-wise Detailed Analysis: 1. Rejection of Application Filed u/s 155(14)/154: The assessee filed an application u/s 155(14)/154, which was rejected by the CIT(A). The AO had rejected the claim for tax collected at source (TCS) amounting to ?4,92,071 for AY 2010-11 because the TCS certificates were in different names and carried different PANs. The CIT(A) upheld this decision, stating that the credit for TCS should be given to the persons in whose names the TCS certificates were issued, as per section 206C(4). The CIT(A) also noted that the provisions of section 199 and rule 37BA, which relate to tax deducted at source (TDS), do not apply to TCS. 2. Non-granting of TDS/TCS Credit: For AY 2010-11, the assessee argued that the TCS credit should be granted to the firm since the sales were accounted for in the firm's name and the individual members had not claimed the TCS credit. The CIT(A) rejected this argument, stating that the TCS certificates were in the names of individual partners, and as per section 206C(4), credit is to be given to the person from whom the amount has been collected. Similar facts and rejection were noted for AY 2012-13. 3. Applicability of Section 199/Rule 37BA for Credit of TDS/TCS: The assessee contended that the provisions of section 199 read with rule 37BA should apply to TCS as well. However, the CIT(A) noted that these provisions relate to TDS and not TCS. The assessee cited several judgments, including the Andhra Pradesh High Court's decision in CIT-I vs. Bhooratnam & Co., and ITAT decisions in ACIT vs. M/s Krishanlal Meel & others and ITO vs. Harish Kumar Sachdeva, which supported the view that TCS credit should be allowed to the entity where the income is finally assessed. Tribunal's Findings: The Tribunal referred to the provisions of sections 190, 199, 206C, and rule 37BA(2)(i) of the Income Tax Rules. It concluded that the nature of TCS is identical to TDS and should be treated as tax on income, which should be credited to the person in whose hands the income is assessed. The absence of specific rules for TCS credit does not disentitle the assessee from claiming it. The Tribunal directed the AO to verify whether the corresponding income, for which TCS credit is claimed, has been brought to tax in the hands of the assessee firm. If verified, the AO should allow the TCS credit to the firm. Conclusion: The Tribunal set aside the matter to the AO for both assessment years with the direction to verify the inclusion of corresponding income in the firm's hands and to allow TCS credit accordingly. The appeal for AY 2010-11 was partly allowed for statistical purposes, and for AY 2011-12, it was allowed for statistical purposes. The ground relating to non-grant of TDS credit for AY 2010-11 was dismissed as non-pressed.
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