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TMI Blog2023 (11) TMI 808X X X X Extracts X X X X X X X X Extracts X X X X ..... dit for TAS deducted in the present case by Ninex should not be given to the petitioner, fails to recognize the fact that the amount retained against remittance made by the payer is nothing but tax which the assessee/deductee has offered for tax by grossing up the remittance. If credit is not given, the respondents would end up doing indirectly what they cannot do directly i.e., that recover tax directly from the assessee i.e., the deductee. There is, in our view, another reason why the submission advanced on behalf of the respondents/revenue is untenable, that the deductee (i.e., the petitioner in this case) followed the regime put in place in the Act for collecting tax albeit, through an agent of the government. The agent for collecting the tax under the Act is the deductor i.e., Ninex in the present case. Since the agent/Ninex failed to deposit the tax with the government, recovery proceedings can only be initiated against the agent/Ninex. We may once again emphasize that payment of TAS to the government can only be construed as payment in accordance with the law. Thus, given the factual and legal position, the relief sought for by the petitioner would have to be granted. The pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... take a claim with respect to the tax which had been deducted at source on the interest paid by its borrower, namely, Ninex Developers Ltd. [hereafter referred to as Ninex ]. 3.2. This application was dismissed via the aforesaid order. 4. The petitioner, however, did not carry the matter any further by way of an appeal and instead through the accompanying writ petition has sought a direction for being given credit Rs. 29,16,674/- qua the tax deducted at source by Ninex. 4. Issue notice to the respondents/revenue. 4.1 Mr Zoheb Hossain, learned senior standing counsel, accepts notice on behalf of the respondents/revenue. 5. Mr Hossain says that since there is no debate concerning the factual aspects of the matter, he does not wish to file a reply. 6. We may also note that Ninex is, presently, undergoing a Corporate Insolvency Resolution Process ( CIRP ). 6.1. It is also not in dispute that the Resolution Professional ( RP ) has issued a certificate dated 05.01.2021 evidencing that Tax at Source (TAS) amounting to Rs. 26,99,950/-, was, in fact, deducted against interest paid by Nenex qua the loan extended to it, although the petitioner, as noted, has sought credit of a slightly greater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RP/respondent no.3 has issued a certificate dated 05.01.2021 which clearly indicates that TAS was deducted by Ninex. 15. In order to get credit of TAS deducted by Ninex, the petitioner had preferred a representation on 31.01.2021. The representation was, however, rejected on 13.07.2021 with the following observations: As reported, as per 26AS no credit Rs. 29,16,674 is reflecting. AO have therefore restricted the TDS credits to provide only amount available in 26AS. Hence, no action is pending at AO end. 16. It is against this backdrop that the instant writ action has been filed by the petitioner. 18. The record shows that, although Ninex deducted TAS amounting to Rs. 29,16,674/-, it did not deposit the aforementioned amount with the revenue. 19. Given this position, the moot issues which arises for consideration are the following: (i). Firstly, whether any recovery towards TAS can be made against the petitioner? (ii). Secondly, whether the petitioner can obtain the credit of TAS? 20. Both the issues stand covered by the judgment rendered by this court in Sanjay Sudan v. Assistant Commissioner of Income Tax, [2023] 148 taxmann.com 329 (Delhi). The relevant observations made in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s put in place by the legislature via Section 205 of the Act. 10. Therefore, in our view, the petitioner is right inasmuch as neither can the demand qua the tax withheld by the deductor/employer be recovered from him, nor can the same amount be adjusted against the future refund, if any, payable to him. [Emphasis is ours] 21. Therefore, quite obviously, no recovery towards TAS can be made towards the petitioner i.e., the deductee, in view of the provisions of Section 205 of the Act. 21.1. Insofar as the second issue is concerned, the argument advanced on behalf of the respondent/revenue is that no credit for tax can be given having regard to the provisions of Section 199 of the Act. In other words, the submission is that unless the tax deducted at source is paid to the Central Government, no credit can be given to the deductee, i.e., the petitioner in this case. As would be evident upon perusing the extract culled out from the judgement rendered in Sanjay Sudan s case, this very submission was raised by the respondents/revenue, which, after being considered, was rejected. [See paragraph 5 of the judgement]. 21.2. Since repeated arguments are raised by the respondents/revenue based ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,674/-, notwithstanding the fact that it is not reflected in Form 26AS. (ii) The order dated 25.06.2020 passed under Section 154 of the Act, given the relief granted above, cannot survive, as, according to learned counsel for the parties, the only rectification that was sought was with regard to the aforementioned TAS deducted by Ninex. The order is, accordingly, set aside. 24. We may make it clear that since the petitioner has evidently lodged a claim with the RP, if it were to receive any amount, it will deposit the amount not exceeding TAS deducted at source by Ninex with the revenue forthwith. 25. The petitioner will ensure that, for whatever its worth, its claim with regard to TAS deducted by Ninex is pressed before the RP. 26. The deductee, i.e., the petitioner followed the regime framed in the Act, for collecting TAS albeit through an agent of the government, i.e., the deductor. It was the agent, i.e., Ninex who was required to deposit the tax with the government. 27. In this case, the agent is, as noticed hereinabove, undergoing CIRP, therefore, possibly the ability of the Central Government to recover the amount from the agent may seem remote. 27.1. However, where the agen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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