Case Law Details
GSR Ventures Private Limited Vs DCIT (ITAT Hyderabad)
Once any TDS is effected in accordance with the provisions of the Act and paid to the Central Government, such an amount shall be treated as a payment of tax on behalf of the person from whose income the deduction was made, and, therefore, a credit of the same must be given to the person on whose behalf such TDS was made, irrespective of the year to which it relates.
ITAT held that the refund of TDS though in fact was effected during the AY.2017-18 cannot be denied to the assessee when it was appearing in Form-26AS in the AY.2018-19 and claimed by the assessee. With this observation, we direct the Ld. AO to allow the claim of the assessee in respect of the TDS amount of Rs.12,57,976/- during the AY.2018-19.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
Aggrieved by the order dated 29/12/2021 for the AY.2018-19, passed u/s.250 of the Income Tax Act, 1961 (“the Act”) in the case of M/s.GSR Ventures Private Limited (“the assessee”), the assessee preferred this appeal, praying for refund of the TDS credit, in respect of the tax deducted during the Financial Year 2016-17, but remitted to the Central Government and reflected in the Form-26AS during the AY 2018-19.
Alongwith the appeal, assessee also preferred a Stay petition seeking stay of enforcement of the demand resulted on disallowance of the TDS credit.
2. Brief facts of the case are that the assessee is a company, involved in the business of executing civil contracts with various Government and non-Governmental entities. During the FY.2016-17, the assessee received Rs.6,28,98,875/- on 18/03/2017, which they declared in their return of income on accrual basis and paid the taxes thereon. The Government department, however, failed to remit the TDS, though deducted, within thirty days. Due to delay in the deposit, the TDS credit appeared in the FY.2017-18, corresponding to the AY.2018-19 in Form 26-AS.
3. For the AY.2018-19, the assessee filed the return of income on 27/09/2018 declaring an income of Rs.1,78,06,380/- and claimed credit of the TDS relatable to the receipt of Rs.6,28,98,875/- received on 18/03/2017. The reason for this is that the State Government deposited the deducted TDS amount with delay on 31/07/2017. Such a claim for credit for TDS of Rs.12,57,976/- was denied during the scrutiny by applying Rule 37BA(3)(i) of the Income Tax Rules (“the Rules”) on the ground that there was no corresponding income during the AY.2018-19.
4. Assessee is aggrieved by the said denial of TDS and preferred an appeal challenging the said action. The assessee pleaded that the assessee declared income during the AY.2017-18 on accrual basis, and TDS was deducted when the amount was paid to the assessee by the State Government, but due to the delay on the part of the State Government department in deposit of the TDS, such a credit appeared during the FY.2017-18 corresponding to the AY.2018-19 and, therefore, under the amended Section 199 of the Act, the assessee is entitled to benefit of the TDS credit in the AY.2018-19.
5. First appeal ended up in dismissal on the ground that each assessment year is separate and the claim that income was offered to tax in AY.2017-18 is not a ground to claim the credit of TDS in the subsequent assessment year.
6. Assessee is, therefore, in appeal before us contending that as per the amendment of Section 199 of the Act, the words “for the assessment year for which such income is assessable” were dropped/deleted and, therefore, the mapping of TDS to the income is not at all the legal requirement. It is further submitted by the Ld.AR that the TDS should be treated as ‘advance tax’ and credit of TDS cannot be denied. On this premise, Ld.AR prayed that the refund of TDS amount of Rs.12,57,976/-may be allowed. He placed reliance on the decisions reported in Zelan Projects (P) Ltd Vs. DCIT, ITA No.1361 (Hyd) of 2013 [2015] 63 com 334 (Hyderabad-Trib.) and ACIT Vs. Peddu Srinivasa Rao, ITA No.324/Vizag/2009, dt.03/03/2011.
7. Per contra, Ld. DR supported the orders of the authorities below, stating that each assessment year is separate and the claim that income has already been offered to tax in AY.2017-18 is not a ground to claim refund of credit in the AY.2018-19 before the AO; and that it is for the assessee to substantiate its claim under the law by taking recourse to appropriate remedy available under the Act for AY.2017-18 and accordingly, this ground fails.
8. We have gone through the record in the light of the submissions made on either side. So far as the facts are concerned, absolutely there is no dispute. What is required to be considered is, whether the refund of TDS amount of Rs.12,57,976/-, which was effected during the FY.2016-17 but remitted by the Government on 31/07/2017, resulting in such credit appearing in Form-26AS during the AY.2018-19 is allowable during the AY.2018-19? This question is no longer res integra. In the case of ACIT Vs. Peddu Srinivasa Rao (supra), a Co-ordinate Bench of this Tribunal observed that once any TDS is effected in accordance with the provisions of the Act and paid to the Central Government, such an amount shall be treated as a payment of tax on behalf of the person from whose income the deduction was made, and, therefore, a credit of the same must be given to the person on whose behalf such TDS was made, irrespective of the year to which it relates. For the sake of completeness, we deem it just and necessary to extract the relevant observations of the Co-ordinate Bench and they read as under:
“8. We have carefully perused the provisions of section 199 of the Act and according to the pre-amended provisions of section 199, the credit of deduction made in accordance with the relevant provisions of this chapter and paid to the Central Government, shall be given for the amount so deducted on the production of the certificate furnished u/s 203 for the assessment made under this Act for the assessment year for which such income is assessable. But in the amended provisions the words “for the assessment year for which such income is assessable” has been omitted. Meaning thereby, that the legislature was quite conscious about the facts and hardships faced by some assessees, while making the amendments in section 199 and in amended provisions nothing has been stated about the year in which the credit of TDS is to be claimed. As per amended provisions of section 199, in sub-section 1, it has been stated that any deductions made in accordance with the foregoing provisions of this chapter and paid to the Central Government shall be treated as a payment of tax on behalf of the person from whose income the deduction was made. Therefore, as per the amended provisions, once the TDS was deducted, a credit of the same to be given to the assessees, irrespective of the year to which it relates. …… ”
9. The said view is followed by the another Co-ordinate Bench of this Tribunal in the case of Zelan Projects (P) Ltd Vs. DCIT (supra). Since consistent view has been taken by the Co-ordinate Benches on this aspect, we are of the considered opinion that the refund of TDS though in fact was effected during the AY.2017-18 cannot be denied to the assessee when it was appearing in Form-26AS in the AY.2018-19 and claimed by the assessee. With this observation, we direct the Ld. AO to allow the claim of the assessee in respect of the TDS amount of Rs.12,57,976/- during the AY.2018-19. Consequent to our above direction, Stay application becomes infructuous and accordingly stands dismissed.
10. In the result, the appeal of assessee is allowed.
Order pronounced in the open court on this the 25th day of May, 2022
