TDS claimed by the assessee can be treated as income of the assessee if the same has been taxed on substantive basis

Brief Facts of the Case and Question

Brief Facts: The assessee has filed its return of income with correct TDS Details and TDS certificates for which credit has been claimed by the assessee, the amount of TDS is Rs.27,37,175/- with the corresponding income is Rs.13,51,17,561/- and whereas the Assessing officer added the amount of TDS as income of the Assessee.

Question Raised:

The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.13,51,17,561/- made by the AO without appreciating the facts brought on record by the Assessing Officer that the TDS was claimed by the assessee but without any receipt of the same during the course of assessment proceedings.

Contention of the Assessee

The Representative of Assessee contended that Assessing Officer has not properly appreciated the facts of the case. Assessing Officer has made this addition in the hands of this assessee on protective basis only The issue was decided by CIT(A) in favour of the assessee. And no such objection was put forward by the department when the scheme of Arrangement was being approved by the Hon’ble Allahabad High Court.

The Assessee contended that Ld Assessing Officer cannot doubt the said Scheme or refuse to abide by the terms of the Scheme of Arrangement so approved. The same issue has been well settled with the decision of CIT vs J.K Corporation reported in 331 ITR 330(Cal)

Contention of Revenue:

Department submitted that as per section 199 of the Act, only that TDS can be considered as payment of tax on behalf of the assessee from whose income, the deduction was made of tax. As per Rule 37BA of the Income Tax Rules a credit for TDS shall be given to the person to whom the payment has been made or credit has been given .

He contended that as per the TDS certificates for which credit has been claimed by the assessee, the amount of TDS is Rs.27,37,175/- with the corresponding income is Rs.13,51,17,561/-And since the assessee has claimed credit of TDS and as per TDS certificate also, which are in the name of J.TV/IBN, it is clear that the entire business was transacted in the name of the assessee and the assessee is owner of this income

So the contention of Assessing officer was correct in law and he rightly added the same as income of Assessee.

Held by ITAT:

ITAT held that if any amount is required to be payable to the Income-tax Department by the transferor company, the Income-tax department can be said to be a creditor. Although the Scheme of Arrangement was approved by the Hon’ble Allahabad High Court vide order dated 23rd September, 2008, however during the intervening period, the appellant was held deemed to have been carrying on all business and activities relating to the merged undertaking for and on behalf of M/s IBN 18 Broadcast Ltd.

The documents produced by the appellant in this regard i.e. the Income Tax Returns, Annual Accounts and Assessment Orders of M/s IBN 18 Broadcast clearly show that for AY 08-09 and AY 09-10 the income from demerged News Undertaking Business has been assessed to tax in the hands of M/s IBN 18 Broadcast in New Delhi by the Deputy Commissioner of Income Tax, Circle 11(1), New Delhi. Facts on record further show that the Scheme of Arrangement was accepted by the predecessor of the Assessing Officer in his order of assessment doted 21st December 2010 passed under section 143(3) of the Act in appellant’s case for AY 2007-08. And the action of Assessing Officer in again making addition of the income pertaining to the demerged undertaking for AY 2009-10 in hands of the appellant is not sustainable.

This finding of CIT(A) could not be controverted by learned D.R. Hence, the protective assessment made by the Assessing Officer in the present case cannot be sustained because substantive addition has been made in the hands of IBN-18 Broadcast and therefore, if any addition is made in the present case, it will amount to double addition. But merely because the assessee has claimed TDS credit in the present case, it cannot be concluded that the income is also assessable in the hands of the assessee particularly when the same income is already taxed on substantive basis in the case of IBN-18 Broadcast Limited.

As a result, the appeal of the Revenue stands dismissed.