Case Law Details
Case Name : Sadbhav Engineering Ltd. Vs Dy. CIT (ITAT Ahemdabad)
Related Assessment Year : 2005-06, 2006-07, 2007-08 & 2005-06
Courts :
All ITAT ITAT Ahmedabad
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The brief facts of the case are that the assessee claimed credit for TDS of Rs.1,73,52,062/- for the AY 2006-07 and Rs.2,25,09,037/- in AY 2007- 08 which was not allowed by the AO on the ground that the income in respect of the said TDS was not shown by the assessee in view of the provisions of section 199 of the Act. The ld.CIT(A) also confirmed the same.
The AR of the assessee submitted that the issue is now covered in favour of the assessee by the decision of Hon’ble Visakhapatnam Bench of the Tribunal in ITA No.324/Viz
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Quite right; even on the first blush, it is obvious that the issue has been decided in assessee’s favor,but without making a reference to and considering the implications of Rule 37BA framed by the Board in accordance with the powers given in sub-section (3) of section 199 itself. Going by the text of the reported ITAT order, the Revenue is not seen to have brought to the attention of the Bench this vital aspect.Had it done so, the decision could only have been to the contrary and different. As may be recalled, in fact,the very amended provision and the rule thereunder were brought on the statute only with a view to set at rest the obtaining controversies under the old section, one of which was as to in which year TDS credit was required to be allowed.
Incidentally, it is simply said that “The ld.CIT(A) also confirmed the same”. Thus, one is not clear whether both the AO and the CIT (A) took an adverse view with particular reference to and relying on the related Rule.In this context,worth a mention,it is recalled with nostalgia that in the good old days,in every order, be it in first or second appeal, for that matter even in court’s further judgment,at least a gist of the proceedings before the lower authorities, as a matter of healthy convention of a speaking order,used to be incorporated.
in the above judgement, reference of Sec 199 (1) is given however, sub section 3 of the same section empowers Board to make rules regarding allowability of tax credit. means to whom & in which year(s) credit should be given.
as per Rule 37BA (3)(i) credit for tax deducted at source & deposited to the CG, shall be given for the AY for which such income is assessable.
(ii) where tax has been deducted at source & paid to the CG & the income is assessable over a number of years, credit for tax deducted at source shall be allowed across those years in the same proportion in which the income is assessable to tax.
now what i interpret from the provisions of Sec 199 read with rule 37BA: if TDS was deducted from a payment out of which some portion is yet to be recognized as income, TDS pertaining to that portion can not be claimed as credit.
the above judgement contradicts with my understanding of the related provisions.
i request other members to share the rationale behind this judgement
Can the rule restrict in a manner that the act does not provide?
Pl. refer rule no. 37BA(3), AS PER IT CREDIT WILL BE GIVEN FOR THE ASSESSMENT YEAR FOR WHICH IT IS TAXABLE. SO IT APPEARS THAT RULE NOTIFIED UNDER SECTION 199 HAS NOT BEEN CONSIDERED…