2022 (4) TMI 109 - AT - Income Tax

Credit of TDS - revenue offered to tax in earlier years - HELD THAT - In the present case where the assessee has claimed to have offered the revenues for tax in previous years and the Ld. F.A.A. has directed Ld. AO to verify the same and Revenue does not dispute the fact that in present assessment year, in the form no. 26AS of the appellant, ₹ 18,06,910/- TDS was made by M/s. Coastal Gujarat Power Ltd., the assessee is entitled to its credit by way of refund, in spite of not offering any income for tax, arising from P L Account, in present assessment year. Ld. FAA erred in making the credit dependent on offering of taxable income only. Thus, the ground no. 1 and 2 arising out of disallowing the credit of TDS deserve merit.

Summary

Issues Involved:
1. Delay in filing the appeal.
2. Addition of ?1,80,69,098/- as income.
3. Credit of TDS amounting to ?18,06,910/-.
4. Levy of interest under Section 234D.

Detailed Analysis:

1. Delay in Filing the Appeal:
The appellant, a subsidiary of a foreign company, faced a delay of 337 days in filing the appeal. The delay was attributed to the appellant not having any business since 2014 and the parent company deciding to wind up the appellant company. The decision-making process was further delayed due to the Covid-19 pandemic. The appellant relied on the Supreme Court judgment in *Collector Land Acquisition vs. Mst. Katiji* to argue that technical considerations should not override substantial justice. The Revenue opposed the delay, stating internal delays are not sufficient grounds. The tribunal acknowledged the lack of resources and the impact of the pandemic, finding sufficient cause for the delay and allowed the condonation application.

2. Addition of ?1,80,69,098/- as Income:
The appellant, engaged in energy supply consultancy, had a credit of ?1,80,69,098/- in Form 26AS from M/s. Coastal Gujarat Power Limited with TDS deducted. However, this amount was not reflected as revenue in the appellant's P&L account. The AO added this amount to the total income, asserting that the appellant maintained books on a mercantile basis and should have recognized it as income when received.

3. Credit of TDS Amounting to ?18,06,910/-:
The appellant claimed credit for TDS of ?18,06,910/- but did not disclose the corresponding income in the current year. The CIT(A) directed the AO to verify if the revenue was offered in earlier years and allow it if verified. However, the credit for TDS was disallowed as no income was offered in the year under consideration. The appellant argued that credit for TDS can be claimed based on TDS certificates, even if the income was offered in earlier years, citing Section 199 of the Act and Rule 37BA of the IT Rules. The tribunal agreed, stating that credit for TDS can be given even if the income offered is NIL, as TDS is a mode of tax payment and can result in a refund claim.

4. Levy of Interest under Section 234D:
The appellant contested the levy of interest under Section 234D, arguing it was unjustified as the credit for TDS should be allowed. The tribunal, having decided in favor of the appellant on the grounds of TDS credit, found no basis for the levy of interest under Section 234D.

Conclusion:
The tribunal allowed the appeal, directing the AO to allow the credit of TDS amounting to ?18,06,910/- for AY 2015-16, subject to verification of revenue offered in earlier years as per CIT(A)'s directions. The appeal was pronounced in open court on March 31, 2022.