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TMI Blog2024 (11) TMI 1199X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of the Income-tax Officer is erroneous but is not prejudicial to Revenue or if it is not erroneous but is prejudicial to Revenue, recourse cannot be had to section 263 of the Act. Since both the conditions for invoking section 263 of the Act are not satisfied in the present case, therefore, the impugned order passed by the learned PCIT under section 263 of the Act is quashed. Accordingly, the grounds raised by the assessee are allowed. - Ms. Padmavathy S., Accountant Member And Shri Sandeep Singh Karhail, Judicial Member For the Assessee : Shri V.G. Ginde, Shri Kumar Kale For the Revenue : Shri Ankush Kapoor, CIT (DR) ORDER PER SANDEEP SINGH KARHAIL, J.M. The assessee has filed the present appeal challenging the impugned order dated 26/03/2024, passed under section 263 of the Income Tax Act, 1961 ( the Act ) by the learned Principal Commissioner of Income Tax, Mumbai - 17 [ learned PCIT ], for the Assessment Year ( A.Y. ) 2016-17. 2. In this appeal, the assessee has raised the following grounds: Being aggrieved by the order u/s. 263 of the Income-tax Act, 1961 ( Act ), dated 26.03.2024 ( impugned order ) passed by the learned Pr. Commissioner of Income Tax - 17, Mumbai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued under section 263 of the Act, revisionary proceedings were initiated in the case of the partnership firm on the basis that vide assessment order dated 15.03.2022 passed under section 147 r.w.s. 144B of the Act TDS credit of Rs. 15,84,582/- was granted to the partnership firm even though no income has been offered to tax by the partnership firm in its return of income filed on 25.04.2021. Further, it was noticed that apart from the aforesaid credit, interest of Rs. 5,70,420/- was also granted to the assessee resulting in a refund of Rs. 21,55,002/-. Accordingly, the learned PCIT alleged that in this case assessment was reopened under section 148 of the Act, however, the same has resulted in a refund being issued to the partnership firm even though no income was offered by the partnership firm for the A.Y. 2016-17 due to failure on the part of the AO to make due verification which was expected to be made under the facts and circumstances of the case. Accordingly, the ld. PCIT alleged that the assessment order is erroneous insofar as it is prejudicial to the interest of the Revenue within the meaning of Explanation-2 to Section 263(1) of the Act. 6. In response to the notice iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no income was earned by the dissolved partnership firm, no return of income was filed by it. However, the LLP duly accounted for all the transactions, offered to tax all the income credited to its account and filed its return of income for the year under consideration. As per the partnership firm, it has requested all the deductors to issue new TDS certificates in the name of LLP after the dissolution of the partnership firm so that the LLP can claim the TDS credit. However, certain deductors still issued the TDS certificate in the name of the erstwhile partnership firm. Since the TDS was reflected in the name of the erstwhile partnership firm, notice under section 148 of the Act was issued to the partnership firm on the basis that taxable income/receipt to the tune of Rs. 1,58,47,560/- has not been offered to tax by the erstwhile partnership firm. It is further undisputed that in response to the aforesaid notice, the partnership firm filed its return of income declaring income of Rs. Nil. From the paper book filed by the assessee, we find that during the reassessment proceedings, statutory notices under section 143(2) and section 142(1) were issued and served on the partnership fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the present case, the credit of TDS of Rs. 15,84,582/- was granted only to one entity, i.e., the partnership firm and there is no double grant of TDS credit. Therefore, we are of the considered view that no prejudice is caused to the Revenue in the present case. During the hearing, the learned AR placed reliance upon the decision of the Hon ble Delhi High Court in CIT vs. Relcom, reported in (2015) 62 tamann.com 190 (Delhi). In the aforesaid decision, the Hon ble High Court held that where due to an inadvertent mistake, TDS related to the assessee s sister concern was credited to the assessee s TDS account, the assessee can claim credit of such TDS, provided its sister concern had not availed the benefit of such TDS certificate. The relevant findings of the Hon ble Delhi High Court, in the aforesaid decision, are reproduced as follows: - 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e considered the terms of the agreement dated 12-03-2003 among the parties to the joint venture and held that credit for TDS certificates cannot be denied to the assessee while assessing the contract receipts mentioned in the said certificates as income of the assessee. The income shown in the TDS certificates has either to be taxed in the hands of 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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