9911796707
TMI Blog2023 (4) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... le Energy Vs. ITO [ 2008 (8) TMI 432 - ITAT MADRAS-C] the Tribunal following the decision in the case of CIT vs. Karnal Co-Op Sugar Mills Ltd. [ 1999 (4) TMI 7 - SC ORDER] held that when the interest income is incidental to the acquisition and installation of an asset and not directly liable for tax, assessee is entitled for the credit of the TDS from the interest income which has been duly received by the Government. Thus we are of the considered view that the assessee is eligible for TDS credit earlier not allowed to the assessee - Decided in favour of assessee. - ITA NO. 5989/MUM/2019 - - - Dated:- 21-3-2023 - SHRI G. S. PANNU, PRESIDENT And SHRI VIKAS AWASTHY, JUDICIAL MEMBER For the Appellant : Shri Anil Sathe For th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cing the said revenue from the cost incurred on the development of software. The net cost incurred was reflected under the head Advance Recoverable in the Balance Sheet. The assessee claimed credit for the tax deducted at source, but was denied the credit in the assessment proceedings in the earlier assessment years, for the reason that the said income was reduced from the capitalised cost. The assessee claimed disallowed tax credit aggregating to Rs.73,31,953/- during the year under consideration as the development of software was complete and the entire capitalised costs net of income earned was transferred to intangible assets. 4. Shri Anil Sathe appearing on behalf of the assessee submitted that the software was completed in AY 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preciation has been claimed on the intangible assets. The accounts of the assessee have been accepted by the AO. During the year under consideration, the development phase of the software has been completed and commercial phase has started. The revenue earned from the software would be gradually offered to tax in the coming years. Not allowing TDS credit now, would be that the credit will be lost forever which amounts to unjust enrichment. The TDS provisions are machinery provisions to ensure collection of tax and not charging provisions. As long as the assessee accounts for the revenue whether by crediting to the Profit and Loss Account or reducing the revenue from the cost of asset, the effect would be same. The learned AR submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... modules. In appeals filed by the assesee before the CIT(A), the assessee has been unsuccessful and thereafter no further appeal was filed. Insofar as method of recognition of revenue in the impugned assessment year, there has been no change. The material difference in assessment year under consideration is that the, software is fully developed and is ready for generating income. The assessee has capitalized the software as intangible asset. The assessee has reduced the revenue earned in preceding A.Y s from the cost of the software. This has resulted in reducing overall cost of the software. Consequently, the asssessee would be eligible for depreciation on the reduced cost of software. 7. In the instant case it is not in dispute that TD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sit is incidental to the acquisition and installation of the said asset. Accordingly, the interest is a capital receipt and would go to reduce the asset. We are of the view that 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 capitalized 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 was duly received by the Government shall be refunded to the assessee or the assessee is entitled for the credit of the same. The Government cannot benefi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the machinery. In this way the assessee has indirectly disclosed income and has offered for assessment. We are of the considered view that even if the income earned by the assessee has not been offered for tax being not liable for tax, the assessee is entitled for credit of TDS made in respect of that income. Accordingly, we set aside the orders of the lower authorities and hold that the assessee is entitled for credit of TDS relating to interest income of Rs. 51,21,287. 9. Thus, in light of facts of the case and the decision discussed above, we are of the considered view that the assessee is eligible for TDS credit earlier not allowed to the assessee. The assessee succeeds on ground No.1 of the appeal. 10. In the result, appeal by ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
