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TMI Blog2010 (12) TMI 334X X X X Extracts X X X X X X X X Extracts X X X X ..... e CIT (Appeals)-VI, Chennai dated 27.4.2009, and the relevant assessment year is 2006-07. 2. The short point arising in appeal is the denial of credit for tax deducted at source (TDS) for Rs. 2,35,493 to the assessee by the Assessing Officer as the relevant income, i.e., on which TDS stands deducted, had not been admitted by the assessee for the relevant year. In appeal, the assessee, a firm in the business of investments and finance, maintaining its books on cash basis, stated that the interest stands credited to its account in their books by the corporate concerns - to whom money is advanced by it in the course of its business - on accrual basis and, accordingly, tax deducted at source therefrom at the prescribed rates. The assessee, however, would recognize interest as income only to the extent actually received by it. Now, that should not imply that it be denied credit for TDS on the tax actually deducted and deposited with Government treasury. The ld. CIT(A) allowed assessee relief by following the decision by Tribunal [Chennai Bench] in the case of a group concern, M/s. Shriram Investments [ITA No. 1124 and 1125/Mds/2001 dated 21.4.2006 for assessment years 1999-2000 and 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the statutory duty cast on the payer, i.e., to deduct and pay tax to the credit of the Central Government, and no inference as to the tax liability in its respect or even the taxability of the same follows. The payee-deductee may, rather, have incurred losses for the relevant year, as it is only the income, after setting off all the expenses and/or other claims, that is assessable for the year. Further, he drew attention to Rule 37BA of Income-tax Rules, 1962 [`the Rules for short], placing a copy of the same on record. Sub-rule 3(ii) of the Rules reads as under : Where tax has been deducted at source and paid to the Central Government and income is assessable over a number of years, credit for tax deducted at source shall be allowed across those years in the same proportion in which the income is assessable to tax. Though, no doubt, it states the same thing as what the Revenue in the present case contends, or as held by the ld. Third Member, the sub-rule is only prospective, i.e., w.e.f.1/4/2009. If what stands held by tribunal per its Third Member decision were to be the only view, the lawmaker would have made the sub-rule operative from an earlier date. Also, it needs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Part B to Chapter XVII of the Act titled Collection and Recovery of Tax . Part A of the said Chapter is titled `General and contains two provisions, which are in the nature of a prelude to the ensuing parts of the Chapter. Section 190 of the Act clarifies that the tax shall be deducted and collected, as the case may be, as per the provisions of the Chapter, notwithstanding that the regular assessment in respect of income (which is subject to tax deduction or collection) is to be made in a later assessment year and, further, that the said provision is without prejudice to the charge of tax on income u/s. 4(1) of the Act. Section 191 states that TDS is only one of the modes of recovery of tax, and that the same does not preclude direct payment of tax by the person receiving income. TDS on interest is covered by section 194A of the Act. Sub-section (1) thereof obliges persons specified thereunder responsible for paying interest [other than interest on securities] to deduct tax at source at the time of credit of such interest to the account of the payee or at the time of payment thereof, whichever is earlier. As such, the obligation cast u/s. 194(1), to which with some exceptions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... near thinking would suggest, given Rule 37BA(3)(i) of the Act. In other words, there is a complete harmony between the erstwhile section 199 and section 199 as it now reads [after substitution by Finance Act, 2008 w.e.f. 1.4.2008] r.w.r. 37BA. In fact, the tribunal in most cases, including those cited before us, has de hors the said provision held exactly what r. 37BA(3)(ii) states, that is, prior to the said rule, and only on the basis that the credit for TDS is to be allowed only for the assessment year for which the income is assessable. As such, the assessee s case gets no support with reference to Rule 37BA of the Rules, as sought to be drawn by the ld. A.R. The said rule, rather, further endorses and validates the Third Member decision of the tribunal in the case of Pradip Kumar Dhir (supra). This also explains as to why the ld. D.R. was at pains to show the necessity for r. 37BA. As we see it, the said rule seeks to address the various contingencies that may arise in allowing the credit for TDS, viz. qua the years to which corresponding income is allocated; qua the persons in whose hands the corresponding income is assessable, as where the underlying security or asset yieldi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear for which the credit for TDS is to be allowed, and which, as per the clear prescription of law, is to be the year for which corresponding income is assessable to tax. 4.5 Coming to the decisions cited before us, none of them, as pointed out by the ld. D.R., advert to the Third Member decision; all but one, i.e., Supreme Renewable Energy Ltd. (supra), being prior to the same or its reporting. As such, we fail to see as to how these would prevail over the clear provisions of the Act, i.e., sections 198 199 of the Act [r/w sections 190 191]. The hon ble apex court in Escorts Ltd. v. Union of India [1993] 199 ITR 43 (SC) has held that where a provision is clear as to its scope, that interpretation is to be adopted, irrespective of acceptance of a contrary view by some authority and raised by the assessee. The said understanding gets further validated by r. 37BA as well as by the Third Member decision by the tribunal. In fact, as our perusal of the said orders reveal, the controversy in those cases arose due to the peculiar circumstances, so that the matter required adjudication by reading the provision purposively; as where the corresponding income represented a capital rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e., what section 198, in fact, mandates. The denial of credit for TDS in only on account for the income not received by the assessee and, as such, not recognized and returned by it, so that there is no scope of the impugned TDS being inclusive of such a proportionate amount, and toward which we also do not find any claim by the assessee before any forum, including us, and the assertion made - without even attempting to substantiate the same - was only in response to a query by the Bench. Further, even assuming hypothetically of the impugned TDS amount having been returned as income for the year, the assessee could claim credit in its respect only to the extent of the amount of TDS proportionate to the same. That is, if the TDS rate is 10% (say), at Rs. 0.214 lacs. In fact, in this context, we may also add that the credit [for TDS] is to be allowed for the year for which the income is assessable, and not assessed, so that income has to, as per assessee s consistently followed method of accounting, be assessable for that year. As such, strictly speaking, the assessee would not be entitled to any credit for TDS even if the same stands returned for the year, being not assessable for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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