2019 (11) TMI 633 - AT - Income Tax

Credit of tax deducted at source denied - HELD THAT - In this case the only issue is with regard to non granting of TDS credit qua which the TDS certificate could not be furnished by the assessee as the same were not given to the assessee, however, the assessee has filed the details of the of the deductors such as PAN numbers, TAN numbers who have deducted the TDS. We also observe that in the first round, the CIT(A) after following the order of Hon ble Bombay High Court in the case of Yashpal Sahni vs. Rekha Hajarnavis, ACIT Ors. 2007 (7) TMI 7 - HIGH COURT , BOMBAY has directed the AO not to recover the said TDS credit or to allow the TDS credit to the assessee, however, in the second round the CIT(A) denied the credit citing the reasons that the assessee has not furnished the TDS certificates before the AO. In the present case before us this is not the case of the Department that TDS has not been deducted at source on behalf of the assessee but the only contention of the Department is that the certificate was not filed before the AO. The assessee has already filed the details of deduction of TDS along with PAN, TAN and details of deductors. We are not in agreement with the conclusion drawn by the CIT(A) that TDS certificate has not been filed before the AO and therefore no credit could be granted. The case of the assessee is squarely covered by the decision in the case of Yashpal Sahni vs. Rekha Hajarnavis, ACIT Ors. (supra) wherein it has been held that it is sufficient that tax has been deducted at source and then Revenue can not recover the TDS amount with interest from the petitioner once again. We, therefore, respectfully following the decision of the Hon ble Bombay High Court set aside the order of Ld. CIT(A) and direct the AO to allow the credit to the assessee. Not granting the interest u/s 244A on TDS for the period from May 2007 to June 2014 - HELD THAT - As relying on LARSEN AND TOUBRO LTD. 2010 (6) TMI 414 - BOMBAY HIGH COURT we are of the considered view that the interest is to be allowed to the assessee from 1st May, 2007 to 20th June 2014 as the funds were with the department. Accordingly the order of CIT(A) is set aside and AO is directed to recompute the interest as stated above. Accordingly, the appeal is allowed.

Summary

Issues:
1. Denial of credit of tax deducted at source.
2. Non-granting of interest under section 244A of the Act.

Issue 1: Denial of credit of tax deducted at source

The assessee appealed against the order of the Commissioner of Income Tax (Appeals) regarding the denial of credit for tax deducted at source (TDS) amounting to ?14,08,733. Initially, the TDS credit was granted only to the extent of ?11,92,15,936, resulting in a shortfall of ?3,33,73,572. The assessee filed a rectification application under section 154 of the Act, leading to the grant of additional TDS credit. The Commissioner directed the Assessing Officer (AO) not to recover the TDS amount based on a Bombay High Court decision. Subsequently, the AO did not grant credit for a portion of the TDS amount as the certificate was not furnished before the AO. The Tribunal held that the assessee had provided details of TDS deductions, and the failure to furnish the certificate should not hinder the credit. Relying on the High Court decision, the Tribunal directed the AO to allow the credit of ?14,08,733 to the assessee.

Issue 2: Non-granting of interest under section 244A of the Act

The second issue pertained to the denial of interest under section 244A of the Act on a TDS amount of ?1,31,76,602 for the period from May 2007 to June 2014. The assessee claimed additional TDS credit, which was initially not granted in the assessment. The Commissioner directed the AO to verify the claim. The AO, however, did not grant interest for the period from May 2007 to June 2014, citing provisions of section 244A(2) of the Act. The Tribunal noted that the delay was not attributable to the assessee and that the TDS was deducted and deposited on time. Relying on a Bombay High Court decision, the Tribunal held that interest should be allowed to the assessee for the specified period. Consequently, the AO was directed to recompute the interest, and the appeal was allowed.

In conclusion, the Appellate Tribunal ITAT Mumbai ruled in favor of the assessee on both issues, directing the AO to grant the TDS credit and recompute the interest under section 244A of the Act.