DEEPAK MUNILALJI HIRANI,MUMBAI V. CENTRAL CIRCLE 2, THANE

ITA 2036/PUN/2024

AI Insights

The case involves Deepak Munilalji Hirani, the appellant, contesting the decision of the CIT(A) regarding the credit of TDS on interest income for the Assessment Year 2023-24. The primary issue was the Assessing Officer's (AO) decision to not give full credit for prepaid taxes, resulting in a demand of Rs.12,790. The AO had processed the return by considering only the net interest income declared, rather than the gross amounts, which led to a reduced TDS credit. The CIT(A) upheld the AO's decision, which was then challenged in the Tribunal. The Tribunal found that the CIT(A) had erred in upholding the AO's decision, leading to the setting aside of the CIT(A)'s order and directing the AO to allow the full TDS claim as per the amounts reflected in Form No.26AS.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 471143 (ITAT-PUNE)
• Duration Of Justice: 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2023-2024
• Appeal Filed On: 26-09-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARVIND DESAI
• Keywords: TDS; Rectification of order; FORM 26AS

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “B”, PUNE BEFORE DR.MANISH BORAD, ACCOUNTANT MEMBER AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपील सं. / ITA No.2036/PUN/2024 \u000bनधा\u000fरण वष\u000f / Assessment Year : 2023-24 Deepak Munilalji Hirani, Shop No.8, 13/39, J.M. Compound, Chandi Gally, 3rd Bhoiwada, Mumbai-400 002 Maharashtra PAN : ACZPH7823H Vs. Central Circle-2, Thane Appellant Respondent आदेश / ORDER PER DR.MANISH BORAD, ACCOUNTANT MEMBER: This appeal filed by the assessee pertaining to the Assessment Year (in short \"AY\") 2023-24 is directed against the order passed u/s.250 of the Income Tax Act, 1961 [in short “the Act\"] by the ld.CIT(A), Pune-11, dated 29.07.2024 arising out of the Rectification order passed u/s.154 of the Act, dated 30.01.2024. 2. Assessee has raised following grounds of appeal : “1. On the facts and in the circumstances of the case and in law, the Ld AO erred in passing an order u/s.154 of the Income Tax Act, 1961 by not giving the full credit of prepaid taxes and consequently raising a demand of Rs.12,790/- and the reasons for doing so are wrong and contrary to the Provisions of Income Tax Act and rules made there under. Assessee by : None Revenue by : Shri Arvind Desai Date of hearing : 06.11.2024 Date of pronouncement : 12.11.2024 ITA No.2036/PUN/2024 Deepak Munilalji Hirani 2 2. Your Appellant crave, leave to add, alter, amend or modify any or all grounds of appeal on or before the date of hearing.” 3. When the matter was called for, none appeared on behalf of the assessee despite due service of notice of hearing. We therefore proceed to dispose of this appeal exparte qua the assessee after hearing the ld. Departmental Representative. 4. We have heard the ld. Departmental Representative and perused the record placed before us. From perusal of the solitary ground, the grievance of the assessee is that the Assessing Officer (AO) has not given credit of the total TDS claimed in the return merely for the reason that assessee had shown the net interest income rather than giving bifurcation of gross interest received and interest paid during the year. We notice that the assessee in the return of income for A.Y. 2023-24 furnished on 27.07.2023 has declared net taxable income of Rs.1,09,45,600/-. This taxable income includes ‘Income from other sources’ at Rs.28,33,250/- which is the net interest income (difference of gross interest received at Rs.1,22,54,810/- and gross interest expenditure at Rs.94,99,495/-). The tax has been deducted at source on the gross interest received and the same has been claimed by the assessee in the tax return and is duly matching with the TDS credit appearing in Form No.26AS. However, in the return processed u/s.143(1)(a) and thereafter, the order framed u/s.154 of the Act, the AO/CPC only took the net interest income of Rs.28,33,250/- and gave TDS credit for amount deducted on Rs.28,33,250/- and declined the claim of TDS deducted on the remaining amount of interest income. Even ITA No.2036/PUN/2024 Deepak Munilalji Hirani 3 the ld. CIT(A) also upheld the action of the CPC observing as under : “6. I have considered the facts of the case and submission made by the appellant. A perusal of facts of the case suggests that the total receipts as per form 26AS comes to Rs.2,08,95,410/- (page 17 of impugned rectification order). However, against these receipts, the appellant has declared receipts of only Rs.88,57,020/-. Thus, by applying the rule 37BA of I.T. Rules, the CPC restricted the TDS credit to Rs.8,19,870/- against the claim of Rs.19,34,231/- on proportionate basis as per rule 37BA(3) of I.T. Rules. The appellant has however argued that the difference in the receipts shown in the ITR are due to the fact that the interest income of Rs.28,33,250/- was shown on net basis after deducting the amount of interest paid. As per the appellant, he received gross interest of Rs.1,22,54,810/- and against this interest income, an amount of Rs.94,99,495/- was paid as interest. The appellant has accordingly submitted that since correct amount of interest income is declared in the income tax return on netting basis, the TDS credit as claimed in the ITR should be allowed. 7. A perusal of Schedule OS of ITR filed by the appellant suggests that it has declared 'Gross Interest of Rs.28,33,250/- under the column 1(b) of Schedule OS and thereafter under the column 3(c) to Schedule OS, it has claimed 'Nil' amount interest expenditure as deduction. Thus, the claim of the appellant that it has incurred an interest expenditure of Rs.94,99,495/- for earning interest income of Rs. 1,22,54,810/- cannot be accepted at this stage. It is a well-settled legal position that the processing of return u/s.143(1) of the Act is required to be completed on the basis of information provided in the ITR. Since no deduction u/s.57(1) on account of interest expenditure is claimed in the ITR, same cannot be allowed by the CPC while processing the return or while processing the rectification application. The facts of the present case clearly suggest that the gross amount of interest declared in the Schedule OS of ITR does not match with the gross receipts reflected in the form 26AS. Also, as discussed above, no deduction towards the interest expenses has been claimed u/s.57(1) of the Act in the ITR. In such situation, the submission now filed by the appellant cannot be accepted while dealing with the appeal against the rectification order u/s.154 of the Act. Accordingly, the action of the CPC in restricting the credit for TDS by applying the rule 37BA of the I.T.Rules is upheld. The ground no.1 raised by the appellant is DISMISSED.” 5. On going through the finding of the ld.CIT(A), we find that the same do not have any merit because even when the ld. CIT(A) was aware about the gross interest received and gross interest expenditure incurred by the assessee and also aware that the TDS has been deducted on the gross interest received, even then just for the technical mistake at the end ITA No.2036/PUN/2024 Deepak Munilalji Hirani 4 of assessee having shown net interest income in the income- tax return rather than giving the total bifurcation, did not allow the claim of TDS appearing in Form No.26AS. We therefore fail to find any logic in the finding of the ld. CIT(A). The finding given by the ld. CIT(A) is unsustainable under the given facts and circumstances of the case. Therefore, the finding of the CIT(A) is set-aside and the jurisdictional Assessing Officer is directed to allow the TDS claim of Rs.19,34,231/- as against the lower amount of TDS allowed at Rs.8,19,870/-. Ground of appeal No.1 raised by the assessee is allowed. Ground No.2 being general in nature needs no adjudication. 6. In the result, the appeal of the assessee is allowed. Order pronounced on this 12th day of November, 2024. Sd/- Sd/- (VINAY BHAMORE) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; \u0001दनांक / Dated : 12th November, 2024. Satish आदेश क\u0002 \u0003ितिलिप अ\tेिषत / Copy of the Order forwarded to : 1. अपीलाथ\f / The Appellant. 2. \r\u000eयथ\f / The Respondent. 3. The Pr. CIT concerned. 4. िवभागीय \rितिनिध, आयकर अपीलीय अिधकरण, “B” ब\u0014च, पुणे / DR, ITAT, “B” Bench, Pune. 5. गाड\u0004 फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune. "