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TMI Blog2023 (2) TMI 1069X X X X Extracts X X X X X X X X Extracts X X X X ..... d to assessee-erection contractor, credit of same was to be allowed, even if no income was assessable to tax as contract was not fully executed in relevant year. As decided in SUPREME RENEWABLE ENERGY LIMITED. VERSUS INCOME TAX OFFICER. [ 2008 (8) TMI 432 - ITAT MADRAS-C] assessee becomes entitled to credit of TDS even if he has not directly offered the relevant income for tax on the basis that it is not liable to tax. In the case of Sadbhav Engineering Ltd. [ 2014 (1) TMI 233 - ITAT AHMEDABAD] held that once the TDS deducted, credit of the same to be given to assessees, irrespective of year to which it relates. In the case of NCC Maytas JV [ 2013 (9) TMI 1294 - ITAT HYDERABAD] ITAT held that a part of TDS cannot be denied on the ground that the corresponding turnover has not been shown in the A.Y. in which credit is being claimed, if income relating to such TDS has already been offered for taxation in an earlier assessment year. Accordingly, in view of the above observations, we find no infirmity in the order of Ld. CIT(A) who has allowed the appeal of the assessee after appreciating all relevant factors. In the result, the appeal of the Department is dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee filed appeal before ld. CIT(A) in respect of the aforesaid non grant of TDS. 6. In appeal before ld. CIT(A), the assessee argued that firstly there is no mismatch in the amount of tax deducted at source claimed in the return of income as appearing in Form 26AS. The assessee submitted that the amount of Rs. 3,08,68,845/- claimed by the assessee is duly reflected in Form 26AS and hence credit of the same was duly allowable to the assessee. The assessee submitted that the only reason given for denial of TDS in the 143(1) order is that there is mismatch of TDS in intimation but notably, in Form 26AS such TDS, is already reflecting. The assessee produced relevant extracts of the Form 26AS before ld. CIT(A) for his perusal and submitted that even in the official website of the Income Tax Department, it is displayed that tax credit claimed by the assessee in the return of income is in accordance with the credit available as per Form 26AS. The second argument relied upon by the assessee before ld. CIT(A) was that credit of tax deducted at source cannot be denied even if related income is capitalized and not offered in the profit and loss account. The assessee submitted that in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce Sheet. On completion of the construction of funded works the total receipts against funded works will be considered as amortized over the concession period. The counsel for the assessee submitted that credit of TDS shall be allowed to the assessee in view of amended provisions of section 199 of the Act. Once when a particular amount is received by the assessee after deduction of tax at source has been duly deposited with the Government, then the assessee becomes entitled for credit of TDS even if the assessee has not directly offered the said income to tax. The assessee submitted that as per the amended definition of section 199, the words "for the assessment year for which such income is assessable" has been omitted. Therefore, as per the amended provisions, once the TDS has been deducted, credit of the same shall be given to the assessee irrespective of the fact whether related income has been offered during the said year or not. In support of his contention, the assessee relied upon various judicial precedents before ld. CIT(A). 7. The ld. CIT(A) allowed the assessee's appeal with the following observations:- "5.2 Decision: I have carefully considered the Rectification Or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant. Whether such income is capital receipt or revenue receipt is subject matter of regular assessment only and once appellant has shown such income as capital receipt or reduced its Cost of construction, TDS credit cannot be denied on the ground that such income are not offered to tax in current year. Hon'ble Chennai Bench in case of Supreme Renewable Energy Ltd. [2010] 3 ITR (Trib) 339 on identical facts has held as under: "The deposit on which interest was earned by the assessee is mandatory as per statutory requirement. Therefore, the interest income earned on the deposit is not out of surplus funds of the assessee but due to the statutory requirement under which the deposit was made for availing of the credit facility for installation of machinery. When the interest income is in the nature of capital then the assessee has rightly deducted the same from the cost of the assets and while doing so the assessee has offered the said income though capitalised for assessment. When the interest income is not directly liable for tax as the same is incidental in the acquisition and installation of the asset then the tax deducted at source from the interest income which wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Since landlords did not know franchisee very well, they did not prefer to enter into a direct agreement with 'G' - Thus, a rent agreement was executed between 'A' Ltd., a sister-concern of assessee and franchisee in terms of which 'G' paid rent to assessee after deduction of tax at source - Assessee paid over gross amount to 'A' Ltd. and 'A Ltd. in turn paid rent to landlords after deduction of tax at source - AO noted that assessee had claimed credit for tax deducted at source without offering amount of rent for taxation from which such tax was deducted - He, therefore, held that amount of TDS could not be refunded to assessee as assessee had not shown any income from rent - Whether since assessee received amount after deduction of tax at source from 'G1 and such amount was not admittedly chargeable to tax in its hands, credit for tax deducted at source was to be allowed in instant year - Held, yes [In favour of assessee]" Considering the facts discussed herein above, AO is directed to allow TDS credit of Rs 3,08,68,845/- as claimed in return of income. The A.O. is directed to avoid any double credit to the appellant in case some c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee, TDS was deducted by power company under section 194J. Since the said contract was not fully executed during year under consideration, assessee did not declare any income during the year.Theassessee submitted that since no bill was raised on power company, no income was recognised and expenditure incurred on payment made to sub-contractors was shown as work-in-progress. The Assessing Officer allowed assessee credit of said tax deducted.The Ld. Pr. CIT sought to revise assessment on ground that credit for TDS was liable to be given only in respect of income which was assessable to tax in relevant assessment year. The ITAT held that where TDS was deducted from mobilisation advance paid to assessee-erection contractor, credit of same was to be allowed, even if no income was assessable to tax as contract was not fully executed in relevant year. 9.3 In the case of Supreme Renewable Energy Ltd [2010] 124 ITD 394 (Chennai), the ITAT held that when a particular income is received by assessee after deduction of tax at source and said TDS has been duly deposited with Government and assessee has received requisite certificate to this effect, then on production of said certificate a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted at source was to be given to assessee alone. 9.6 In the case of Escorts Ltd v DCIT [2007] 15 SOT 368 (Delhi)[11- 05-2007], the ITAT held that once tax is deducted on income credited by assessee in its books of account and a requisite certificate to this effect is issued by deductors after deposit of tax amount in Government treasury, assessee becomes entitled to credit of such TDS while computing tax liability for relevant period. Further, ITAT held that credit for TDS must in every case be given to assessee from whom income-tax was deducted at source and paid to credit of Central Government. If recipient of income considers that he is not liable to tax in respect of income, wholly or partly and, therefore, does not disclose amount of such income in his return, income-tax department cannot refuse to give credit merely by contending that income had not been disclosed in return filed by assessee for assessment year. 9.7 In the case of Sadbhav Engineering Ltd. Vs Dy. CIT (ITAT Ahemdabad) in ITA Nos. 610/Ahd/2008, 1834&2054/Ahd/2009, 1835&2055/Ahd/2009 and 2053/Ahd/2009, the Ahmedabad ITAT held that once the TDS deducted, credit of the same to be given to assessees, irrespective ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rules as may be necessary, including the rules for the purposes of giving credit to a person other than those referred to in sub-section (1) and sub-section (2) and also the assessment year for which such credit may be given. Section 199. (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 or of the unit-holder, or of the shareholder, as the case may be. (2) Any sum referred to in sub-section (1A) of section 192 and paid to the Central Government shall be treated as the tax paid on behalf of the person in respect of whose income such payment of tax has been made." 9.9 In the case of NCC Maytas JV v. ACIT [A.Y. 2006-07, ITA No. 812 (Hyd.) of 2013, dated 13-9-2013, the ITAT held that a part of TDS cannot be denied on the ground that the corresponding turnover has not been shown in the A.Y. in which credit is being claimed, if income relating to such TDS has already been offered for taxation in an earlier assessment year. 10. Accord ..... 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