TCS Credit Given to Person in Whose hand corresponding income is assessed to tax

Million Traders Bhopal Pvt. Ltd Vs ADIT (ITAT Indore)

ITAT Indore held that the credit of the tax collected at source should be given to the person in whose hands the income is rightfully and finally assessed to tax in accordance with law, irrespective of the person in whose hands the TDS/TCS certificate has been issued at first place.

Facts- The solitary grievance of the assessee is regarding non allowance of the credit of TCS collected by the Excise Department of State of M.P. in respect of the purchase of liquor due to nonappearance in the PAN account of the assessee company but reflected in the accounts of the individual license holders who are directors and associates of the assessee company.

Conclusion- Held that the credit of the tax deducted at source or collected at source should be given to the person in whose hands the income is rightfully and finally assessed to tax in accordance with law, irrespective of the person in whose hands the TDS/TCS certificate has been issued at first place. The only safeguard to be considered is that no double credit of the said amount of TCS is claimed.

Held that the credit of the tax deducted at source/tax collected at source be given to the de-facto prayer/recipient of the amount which is subjected to the collection/deduction of tax as in whose hands the corresponding income is going to be assessed. The only rider to this principle is that there should not be any double claim of credit. Accordingly if the assessee produces the record as well as undertaking/indemnity bond from the license holders that they have not claimed or not going to claim the credit of the said amount of TCS then the credit of the TCS on the transactions of purchase of liquor actually carried out by the assessee by using the license issued in name of the individuals shall be allowed to the assessee. Since the relevant facts regarding the purchase, sales of liquor by the assessee and consequential income offered to tax by the assessee as well as the undertaking/indemnity from the individual license holders are required to be produced and verified/examined therefore, the matter is set aside to the record of the AO.

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