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TMI Blog2010 (12) TMI 345X X X X Extracts X X X X X X X X Extracts X X X X ..... es deducted at source by Reliance Infocomm Limited of Rs. 24,41,58,046 and, consequently, grant refund of the said amount as the entire addition made by the AO was deleted by the CIT(A). 2. On the facts and in the circumstances of the case and in law, learned CIT(A) erred in not directing the AO to unconditionally grant credit, and, consequently, refund for a sum of Rs. 21,26,74,006, being the TDS deducted by the payer, in respect of which the original TDS certificates were submitted by your appellant with the AO during the course of assessment proceedings. 3. On the facts and in the circumstances of the case and in law, learned CIT(A), without appreciating the provisions of the Income Tax Act, 1961, and the fact that, as admitted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DS certificates so issued by the payer, Lucent claimed credits for taxes deducted at source. In the meantime, however, there were some noteworthy developments, which have material bearing on the issue in appeal before us, at the end of the payer also. It appears that the payer's stand was that no taxes are deductible from payments made for supply of copyrighted software, in as much the payments were only for the use of copyrighted article and not the copyright itself. Accordingly, Reliance Info moved an application to his Assessing Officer requesting permission to make the remittance to this assessee without any deduction of tax at source. This application was turned down by the Assessing Officer. Aggrieved, Reliance Info carried the matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Infocomm Limited filed a letter on 29.12.2008 stating that whatever taxes have been refunded to them, shall be paid back to the Government as per their indemnity bond dated 18.12.2006. However, till that time, no confirmation of the certificate was done. In view of the above, credit for TDS was not given to the assessee as no taxes have remained to be deposited. 4. The Assessing Officer further added that "the contention of the assessee that the recipient cannot be penalized for an invalid TDS certificate is also not acceptable, in view of the fact that this is an arrangement between the two parties and if credit is given to the certificates, it would amount to a payment by the department for software supplied by Lucent Technologies GRL L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eclined on the ground that the person who has issued the tax deduction certificates has been refunded the taxes which he had deposited with the Government. We may also point out that the legislature has now taken note of an anomalous situation like the one that we are in seisin of this appeal, by ensuring that, with effect from 1st July 2007, an appeal under section 248 can only be filed by the tax deductor when tax deductible under section 195 is to be borne by the tax deductor. However, right now, we are dealing with a situation in which appeal under section 248 was filed by the tax deductor much before1st July 2007. 7. There is no dispute that in terms of the provisions of Section 199 of the Income Tax Act, 1961, "any deduction made in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of law under which such a refund can be made - particularly as TDS certificates are already issued by the tax deductor, and no fault is found in the certificates so issued. 9. Our attention has been invited to circular No. 769 dated 6th August 1998 and circular No. 770 dated 20th April 2000, issued by the Central Board of Direct Taxes, which lay down the guidelines about circumstances under which taxes can be refunded to the tax deductor. We are, however, not inclined to go into the question whether the refund has been rightly made or not, or whether or not the interests of revenue authorities have been adequately protected by indemnity bond executed by the Reliance Info. All that concerns is in this appeal is that the legal implicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... horities and Reliance Info; we are sure that revenue authorities, while granting the refund, must have safeguarded their interests effectively, and perhaps by now Reliance Info may have even returned the monies, but assessee cannot be expected to get into these aspects of the matter. In this appeal, our concern is confined to the issue that the assessee, from whose payments taxes have been deducted at source and who is also in receipt of the appropriate certificates in accordance with the scheme of the Act, must get credit admissible under Section 199 of the Act - and that such a credit is not declined on the basis of an action which is neither contemplated by the provisions of the Act, nor even in the control of the assessee. 10. In view ..... X X X X Extracts X X X X X X X X Extracts X X X X
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