9911796707
TMI Blog2025 (3) TMI 717X X X X Extracts X X X X X X X X Extracts X X X X ..... citly clarifies that TDS should not be deducted on the GST component if it is separately indicated in the invoice. In the present case, it is evident that government departments, who are customers of the assessee, deducted TDS on the gross invoice amount, including GST, leading to a mismatch between the turnover reflected in Form 26AS and the turnover recorded in the assessee's books. CPC, while processing the return u/s 143(1), proportionately restricted the TDS credit based on turnover as per books, thereby creating a tax demand instead of granting the refund claimed by the assessee. Upon reviewing the data, we observe that while the assessee claims the entire difference arises due to GST at 18%, in certain cases, the percentage difference does not exactly match the GST rate. We find that the CPC acted beyond its jurisdiction by making such an adjustment u/s 143(1), as the verification of TDS credit requires detailed examination, which falls within the scope of scrutiny assessment under section 143(3) rather than summary processing under section 143(1). The CIT(A) also failed to appreciate this jurisdictional issue and did not independently verify whether the amounts reflected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee also argued that the TDS disallowance was erroneous since the mismatch arose due to the deductor's method of deducting TDS on the gross invoice amount (including GST). Further the assessee argued that the CPC had no jurisdiction to proportionately restrict TDS credit under section 143(1), as such an adjustment requires detailed verification under scrutiny assessment (section 143(3)). The assessee also argued that the CPC failed to correctly apply CBDT Circular No. 23/2017, which clarifies that TDS should not be deducted on the GST component if separately indicated. 5. The CIT(A) dismissed the appeal on the ground that the assessee itself admitted that the tender amount always included GST and did not provide a bifurcation. Therefore, th CIT(A) concluded that the deduction of TDS on the gross invoice amount was in line with the contractual terms and CPC was justified in restricting TDS credit in proportion to turnover as per books. 6. Aggrieved by the order of CIT(A), the assessee is in appeal with following tabulated grounds of appeal: Sr. No. Relevant Section(s)/Rules of the IT Act Issue Ground of Appeal 1 Rule 37BA Erroneous/Proportionate Disallowance of TDS Cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the grounds of appeal during the appeal proceedings. 6. The assessee also raised following additional grounds of appeal: Sr. No. Relevant Section(s) of the IT Act Issue Ground of Appeal 1 143(1) Disallowance made by CPC, ITD u/s 143(1) of the Act is beyond its jurisdiction. On the facts and circumstances of the case as well as law on the matter, the Centralized Processing Center of the Income Tax Department has erred in disallowing the TDS credit claimed by the Assessee Company on a proportionate basis. 7. During the course of the hearing, the Authorised Representative (AR) of the assessee submitted that the CPC erroneously disallowed a portion of the TDS credit claimed by the assessee. It was explained that the assessee, being engaged in executing government contracts, issues invoices to government departments, which include GST. However, the government departments (customers) deducted TDS on the gross invoice amount, including GST, instead of the taxable value (excluding GST). As a result, Form 26AS reflected a higher turnover compared to the assessee's books, leading the CPC to proportionately restrict the TDS credit while processing the return under section 143(1), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present case, it is evident that government departments, who are customers of the assessee, deducted TDS on the gross invoice amount, including GST, leading to a mismatch between the turnover reflected in Form 26AS and the turnover recorded in the assessee's books. 11. We further note that the CPC, while processing the return under section 143(1), proportionately restricted the TDS credit based on turnover as per books, thereby creating a tax demand of Rs. 21,23,920/- instead of granting the refund claimed by the assessee. Upon reviewing the data, we observe that while the assessee claims the entire difference arises due to GST at 18%, in certain cases, the percentage difference does not exactly match the GST rate. Specifically, for the following parties: Sr. No. PARTY NAME Income as per Books Income as per 26AS Difference (26AS - Books) % Difference w.r.t Books Represented by GST as claimed by the assessee 1 EXECUTIVE ENGINEER PANAM PROJECT DIVISION - GODH 23,02,10,549.00 21,92,86,304.00 1,09,24,245.00 -4.75% 3 EXECUTIVE ENGINEER WATRAK PROJECT CANAL DIVISION 76,73,01,276.00 86,18,44,716.00 -9,45,43,440.00 12.32% 2 EXECUTIVE ENGINEER SUJALAM SUFLAMGWRDCL ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
