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TMI Blog2015 (9) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... iled return of income on 29.9.2009 declaring total income of Rs. 1,19,89,080/-. The scrutiny assessment of the case was completed on 23rd December, 2011 u/s 143(3) of the Income Tax, 1961 (in short 'Act'). 4. During the year under consideration, the assessee received commission of Rs. 2,61,18,048/- from M/s. Arvind mill. However, in P&L a/c, the assessee credited only Rs. 1,53,18,478/- as her income. Pursuant to the query raised by the Assessing Officer, it was explained by the assessee that the balance amount of commission was transferred by the assessee to Shri Kapil Ahluwalia i. E. the step son of the assessee, in compliance to direction of the High Court given in a dispute between the assessee and Sh. Kapil Ahluwalia. The amount of commission given to Sh. Kapil Ahluwalia was treated by the assessee as diversion of income on the account of overriding title and not as application of income, by relying on the judgment in the case of Raja Bijoy Singh Didhuria vs. CIT,1 ITR 135(PC). The assessing officer accepted this treatment of income by the assessee, however, referring to the provisions of Section 199 of the Act, allowed TDS credit of Rs. 17,35,607/-, in proportion to the recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the credit of Central Government, a right is created in favour of the deductee which cannot be taken away or abridged or diluted in any manner by any of action of the Tax Authority. The ld. AR further relied on the following decisions :- "1. Arvind Murjani Brands (P) Ltd. vs. ITO, 137ITD 173 Mum 2. Escorts Ltd. vs. DCIT [2007] 15 SOT 368 ( DELHI) 3. Supreme Renewable Energy Ltd. vs. ITO 124ITD 394 Chennai 4. Lucent Technologies GRL LLC vs. DDIT 45 SOT 311 Mum" 7. On the other hand, ld Department Representative (DR), relying on the lower authorities, submitted that assesses is not having any case as the Assessing Officer and the CIT(Appeals) has rightly restricted the credit of TDS in proportionate to the amount of the receipt declared by the assessee in its Profit and Loss Account. 8. We have heard the rival submissions and arguments advanced by both the parties. The assessing officer has denied the credit of part of TDS deducted, invoking section 199 of the Act. Therefore, we feel it necessary to look into Section 199 of the IT Act, which reads as under :- Credit for tax deducted. "199. (1) Any deduction made in accordance with the foregoing provisions of this Chapter a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be; (d) the income from a property, deposit, security, unit or share held in the name of a deductee is owned jointly by the deductee and other persons and the income is assessable in their hands in the same proportion as their ownership of the asset : Provided that the deductee files a declaration with the deductor and the deductor reports the tax deduction in the name of the other person in the information relating to deduction of tax referred to in sub-rule (1). (ii) The declaration filed by the deductee under clause (i) shall contain the name, address, permanent account number of the person to whom credit is to be given, payment or credit in relation to which credit is to be given and reasons for giving credit to such person. (iii) The deductor shall issue the certificate for deduction of tax at source in the name of the person in whose name credit is shown in the information relating to deduction of tax referred to in sub-rule (1) and shall keep the declaration in his safe custody. (3) (i) Credit for tax deducted at source and paid to the Central Government, shall be given for the assessment year for which such income is assessable. (ii) Where tax has been deducte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the credit is being allowed as per Rule 37BA(4) of the Rules on the basis of information available in the Income Tax Statement (ITS) of the assessee on the data base of Income Tax Department or on the basis of form no. 26AS of Income Tax forms. In the case of the assessee the information as to the income and the tax deducted was available in the ITS. The Assessing Officer, has accepted the diversion of income in the hand of Shri Kapil Ahluwalia but denied the credit of the total tax deducted by the deductor. We find that the action of the assessing officer was on the basis of the incorrect interpretation of the sub section (1) of section 199 of the Act. The Income-tax Appellate Tribunal, Mumbai Bench A in the case of Arvind Murjani Brands (P) Ltd. vs. ITO, Ward 5 (1), Mumbai reported (Supra) has held as under :- "That this section recognizes a very important position of law, that the tax deducted at source is "treated as a payment of tax on behalf of the person from whose income the deduction was made" and consequently "credit shall be given to him for the amount so deducted."So the role of section 199 is confined to allowing the credit for the tax deducted at source to the payee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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