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TMI Blog2016 (4) TMI 1099X X X X Extracts X X X X X X X X Extracts X X X X ..... by the the State of Rajasthan and is only claimed by the Assessee being the nodal agency of the State of Rajasthan for this project . In our view, no prejudice will be caused to any person if the TDS is refunded to the assessee being the nodal agency with the undertaking to return the amount to the State of Rajasthan. The TDS deducted by the Income Tax Department is directed to be paid to the assessee and we accordingly hold the same. - Decided in favour of assessee - ITA Nos. 247 & 248/JP/2014 - - - Dated:- 18-3-2016 - SHRI T.R.MEENA, AM SHRI LALIET KUMAR, JM For The Assessee : Shri Shyam Lal Agarwal (C.A.) For The Revenue : Shri O.P. Bateja (Addl. CIT) ORDER PER SHRI LALIET KUMAR, J.M. These are two appeals filed by the assessee arising from two separate orders dated 24.01.2014 passed by the learned CIT (A)-II, Jaipur for the A.Y. 2009-10 and 2010-11. The effective ground raised by the assessee is as under :- ITA No. 247/JP/2014 (A.Y. 2009-10) : In the facts and circumstances of the case the ld. CIT (A) has erred in not allowing credit of TDS of ₹ 4502798/-, deducted by our Bank on interest and deposited to the Income Tax Departme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... HUDCO in FDRs with the Bank as the same were lying idle and got the interest of ₹ 2,18,15,365/- and on the said interest the Bank of Rajasthan had deducted TDS of ₹ 45,02,798/-. The assessee did not offer the interest income of ₹ 2,18,15,365/- for the purpose of tax in the return of income as the assessee was merely acting as a nodal agency for the State of Rajasthan and has deposited the amount with the bank for and on behalf of State of Rajasthan. It was also the case of the assessee that the interest income accrued on the FDRs was not taxable. The assessee has submitted that the assessee is entitled to the refund of entire amount of ₹ 45,02,798/- in the assessment year 2009-10. However, the ld. AO has denied the refund of TDS on the following grounds :- 4. The assessee has claimed credit of TDS of ₹ 1,26,78,670/- on examination it has come to notice that assessee has claimed credit of TDS of ₹ 45,02,798/- in respect of FDR interest of ₹ 2,18,65,365/-. On being asked to the assessee whether the said income was shown in profit loss account, the assessee has submitted that Avas Vikas Ltd. has been appointed as nodal agency by Governm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is no dispute on the taxability of interest income received in fiduciary capacity, these decisions are not relevant to the issue involved here hence not discussed here. The only issue involved in these grounds of appeal is about credit of TDS deducted on this income. Since interest income on which TDS was deducted was not offered for tax in the case of appellant, appellant is not entitled to claim TDS credit as per section 199 read with relevant rules. The credit of TDS can be claimed only by the person who is offering the said income for tax. Therefore it is clear that credit of TDS cannot be given to the appellant in view of express provisions of section 199 of IT act read with relevant rules. Credit of this TDS can be claimed only by recipient of the income which is police department which is part of State government. State government is not a taxable entity and therefore there is no question of offering interest income for tax. However, as far as credit of TDS deducted is concerned, appellant cannot claim the same in view of the provisions disclosed earlier. Accordingly, the AO s decision in not allowing credit of TDS to the appellant is confirmed. 4. Now the assessee i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus the ld. A/R requested to allow the appeal of the assessee. 4.2. On the other hand, the ld. D/R for the revenue supported the orders of the lower authorities. 4.3. We have heard rival contentions and perused the material available on record. In our view the issue involved in the present appeal had already been adjudicated in the matter of CIT vs. Relcom (2015) 62 Taxmann.com 190 (Delhi) wherein it was held as under :- 6. Having heard the submissions made on behalf of the revenue and after a perusal the orders passed by the CIT(A) and the ITAT, we are of opinion that the said orders do not call for any interference and were warranted and justified in the facts and circumstances of the case. Before we proceed to elaborate on our reasons for the same, a perusal of Section 199 of the Act is necessary. Section 199 reads as follows: 199. Credit for tax deducted. (1) Any deduction made in accordance with the foregoing provisions of this Chapter and paid to the Central Government shall be treated as a payment of tax on behalf of the person from whose income the deduction was made, or of the owner of the security, or of the depositor or of the owner of property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the joint venture or in the hands of the individual co-joint venturer. As the joint venture has not filed return of income and claimed credit for TDS certificates and the TDS certificates have not been doubted, credit has to be granted to the TDS mentioned therein for the assessee. The Revenue cannot be allowed to retain tax deducted at source without credit being available to anybody. If credit of tax is not allowed to the assessee, and the joint venture has not filed a return of income, then credit of the TDS cannot be taken by anybody. This is not the spirit and intention of law. (Emphasis Supplied) 9. At this stage, it is also relevant to note the provisions of Rule 37BA of the Income Tax Rules, 1962, which envisions grant of TDS credit to entities other than the deductee (herein, M/s REPL). We must clarify that we are not oblivious of the fact that Rule 37BA is not directly applicable in the facts of this case. The reliance placed on Rule 37BA is merely to demonstrate that in not all circumstances is TDS credit given to the deductee. In the present case the amount was deposited as FDR s by the assessee on behalf of State of Rajasthan with the Bank of Raj ..... X X X X Extracts X X X X X X X X Extracts X X X X
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