DCIT, CHENNAI V. Kal Comm P Ltd., CHENNAI

ITA 126/CHNY/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95973 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 20-08-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 16-01-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN IRS
• Assessee Lawyers: K RAMAKRISHNAN; N DEVANATHAN ADVOC
• Section: 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . ! , ' #$ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER & SHRI V. DURGA RAO, JUDICIAL MEMBER ./ I.T.A. NO.126/MDS/2015 ( / ASSESSMENT YEAR : 2010-2011) THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 4(2) CHENNAI. ( %& /APPELLANT) VS M/S. KAL COMM P. LTD, 73, MRC NAGAR MAIN ROAD, MRC NAGAR, CHENNAI 600 028 [PAN:AABCK 3906B] ( '(%& /RESPONDENT) / APPELLANT BY : SHRI. P. RADHAKRISHNAN, IRS, JCIT / RESPONDENT BY : SHRI. K. RAMAKRISHNAN, C.A. AND SHRI. N. DEVANATHAN, ADVOCATE /DATE OF HEARING : 20.08.2015. ! /DATE OF PRONOUNCEMENT : 28.08.2015. ) / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER . THIS APPEAL BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-II, CHENNA I, DATED 08.10.2014 FOR THE ASSESSMENT YEAR 2010-2011. I.T.A.NO.126/MDS/2015 :- 2 -: 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS:- 2.1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS) ERRED IN ALLOWING THE ASSESSEES CLAIM ON CREDIT FOR TDS OF 2,46,80,256/-. 2.2 THE LD. COMMISSIONER OF INCOME TAX (APPEALS) OU GHT TO HAVE APPRECIATED THE FACT THAT CREDIT FOR TAX DEDUC TED AT SOURCE CAN BE GIVEN ONLY TO THE EXTENT OF PROPORTIONATE IN COME OFFERED FOR ASSESSMENT. 2.3 HAVING REGARD TO THE HONBLE HIGH COURTS DECIS IONS IN THE CASE OF CIT VS. PUSHPA VIJAY & ANR (KER) 67 DTR 354 (2012) WHEREIN IT IS HELD THAT CREDIT FOR TDS CAN B E GIVEN ONLY WHERE TAX IS DEDUCTED ON THE INCOME WHICH IS OFFERE D FOR ASSESSMENT, THE LD. COMMISSIONER OF INCOME TAX (APP EALS) OUGHT TO HAVE UPHELD THE ACTION OF THE ASSESSING OF FICER IN DISALLOWING THE ASSESEES CLAIM ON CREDIT FOR TDS. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED I TS RETURN OF INCOME FOR ASSESSMENT YEAR 2010-2011 ON 24.09.2010 DECLARING AN INCOME OF C13,62,81,800/-. THE RETURN WAS PROCESSE D U/S.143(1) AND SELECTED FOR SCRUTINY. THE ASSESSING OFFICER WHILE COMPUTING THE ASSESSMENT U/S.143(3) OF THE ACT, ASSESSEE THE INCO ME AT C13,62,81,800/- HOWEVER, THE ASSESSING OFFICER HAS NOT ALLOWED THE ASSESSEES CLAIM OF CREDIT FOR TDS OF C2,46,80,256/ - ON THE GROUND THAT THE CONCERNED INCOME WAS NOT OFFERED TO TAX IN THE RETURN OF INCOME. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). 4. THE COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT THE ASSESSING OFFICERS ACTION OF DISALLOWING THE ASSES SEES CLAIM OF CREDIT I.T.A.NO.126/MDS/2015 :- 3 -: FOR TDS OF C2,46,80,256/- ON THE GROUND THAT THE CO NCERNED INCOME (SUBSCRIPTION CHARGES) WAS NOT OFFERED TO TAX IN TH E RETURN OF INCOME . THE ASSESSING OFFICER IN HIS ORDER NOTICED THAT THE ASSESSEE, THE SUBSCRIPTION CHARGES OF C.86,34,97,146/- TO WHICH T HE TDS OF C2,46,80,256/- WAS NOT INCLUDED IN THE PROFIT AND L OSS ACCOUNT AND THE ASSESSING OFFICER DISALLOWED THE CREDIT FOR THE COR RESPONDING TDS. THE LD. AUTHORISED REPRESENTATIVE FOR ASSESSEE COMPANY SUBMITTED THAT THE ISSUE HAS ALREADY BEEN ADJUDICATED BY THE TRIBUNAL, IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2006-2007 IN ITA NO.88 4/MDS/2011, DATED 21.10.2013, ALLOWED THE APPEAL IN FAVOUR OF THE ASSESSEE, AND THE SAME ORDER IS ALSO APPLICABLE FOR THE ASSESSMEN T YEAR 2009-2010 UNDER CONSIDERATION ALSO. THE COMMISSIONER OF INCOM E TAX (APPEALS) OBSERVED THAT THE TRIBUNAL HAD HELD THAT THE SUBSCR IPTION CHARGES COLLECTED BY THE ASSESSEE WAS NOT THE INCOME OF TH E ASSESSEE. IT WAS COLLECTED ON BEHALF OF M/S. SUN NETWORK LTD, AND IN -TURN REMITTED TO SUN NETWORK LTD. THE CABLE OPERATORS ARE DEDUCTING THE TDS IN THE NAME OF THE ASSESSEE AS IT WAS PAID TO THE ASSESSEE . HENCE, THE ASSESSEE IS ENTITLED FOR THE CREDIT ON THE TDS MADE BY THE CABLE OPERATORS. THE RELEVANT PORTION OF THE ORDER OF TH E TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2006-20 07 IN ITA NO.884/MDS/2011, DATED 21.10.2013 ARE REPRODUCED:- I.T.A.NO.126/MDS/2015 :- 4 -: 3. FROM THE PERUSAL OF THE FACTS WHICH HAVE NOT BE EN DISPUTED BY THE REVENUE, IT IS CLEAR THAT THE ASSESSEE HAS REMI TTED THE ENTIRE GROSS AMOUNT RECEIVED FROM THE CABLE OPERATORS TO M /S. SUN TV NETWORK LTD., THE AMOUNT REMITTED BY THE ASSESSEE T O M/S. SUN TV NETWORK LTD., INCLUDES THE AMOUNT OF TDS DEDUCTED B Y THE CABLE OPERATORS AT THE TIME OF PAYMENT MADE BY THEM TO TH E ASSESSEE. IN LIEU OF THE SERVICES RENDERED BY THE ASSESSEE, THE ASSESSEE IS ENTITLED TO RECEIVE FIXED COMMISSION. SINCE TAX HAS ALREADY BEEN DEDUCTED AND PAID TO THE GOVERNMENT AT THE TIME OF MAKING COLLECTIONS, THE ASSESSEE IS ENTITLED TO GET THE CR EDIT OF THE SAME WHILE RECEIVING COMMISSION INCOME. M/S. SUN TV NETW ORK LTD., HAD ENGAGED THE SERVICES OF THE ASSESSEE FOR COLLEC TION OF THE SUBSCRIPTION AMOUNT AGAINST COMMISSION. HOWEVER, TH E CABLE OPERATORS AT THE TIME OF PAYMENT OF SUBSCRIPTION, D EDUCTED THE TAX AT SOURCE AND REMITTED THE REMAINING AMOUNT TO THE ASSESSEE. THE SUBSCRIPTION COLLECTED BY THE ASSESSEE IS NOT ITS I NCOME AND HENCE IS NOT TAXABLE IN THE HANDS OF THE ASSESSEE. THE AS SESSEE IS ONLY A NODAL AGENCY FOR COLLECTING SUBSCRIPTION ON BEHALF OF M/S. SUN TV NETWORK LTD. THE AMOUNTS COLLECTED BY THE ASSESSEE ARE CREDITED TO THE SEPARATE ACCOUNT SUBSCRIPTION CHARGES. THE SAID ACCOUNT IS DEBITED AT THE END OF FINANCIAL YEAR WHEN THE AM OUNTS ARE PAID TO M/S. SUN TV NETWORK LTD. AS THE SUBSCRIPTION COL LECTED BY THE ASSESSEE FROM VARIOUS CABLE OPERATORS IS NOT THE IN COME OF THE ASSESSEE, THE SAME IS NOT SHOWN IN PROFIT & LOSS AC COUNT. THE SUBSCRIPTION AMOUNT IS THE INCOME OF M/S. SUN TV NE TWORK LTD. AND AS SUCH IS TAXABLE IN THE HANDS OF M/S. SUN TV NETWORK LTD. HOWEVER, THE CABLE OPERATORS ARE DEDUCTING TAX AT S OURCE ON THE PAYMENTS OF SUBSCRIPTION MADE TO ASSESSEE, WHEREAS, THE ASSESSEE IS REMITTING THE GROSS AMOUNT TO M/S. SUN TV NETWOR K LTD., THE ASSESSEE IS ENTITLED TO RECEIVE CREDIT OF THE TAX D EDUCTED AT SOURCE U/S. 199 OF THE ACT SUBJECT TO PRODUCTION OF TDS CE RTIFICATES RECEIVED FROM RESPECTIVE DEDUCTORS. THE LEVY OF TAX ON THE COMMISSION RECEIVED WOULD AMOUNT TO DOUBLE TAXATION . 4. THE OTHER GROUNDS FOR INVOKING THE PROVISIONS OF SECTION 263 ARE CONSEQUENTIAL TO THE MAIN ISSUE DISCUSSED ABOVE . SINCE, WE ARE STRIKING THE IMPUGNED ORDER ON THE MAIN ISSUE I TSELF, THE CONSEQUENTIAL ISSUES AUTOMATICALLY DO NOT SURVIVE. THUS, IN VIEW OF THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE , WE ALLOW THIS APPEAL OF THE ASSESSEE AND SET ASIDE THE IMPUGNED O RDER. I.T.A.NO.126/MDS/2015 :- 5 -: IN THE PRESENT CASE, THE FACTS AND CIRCUMSTANCES AR E EXACTLY IDENTICAL TO THOSE INVOLVED IN THE CASE OF THE ASSESSMENT YEA R 2006-07 OF THE ASSESSEES OWN CASE. RESPECTFULLY FOLLOWING THE DEC ISION OF THE TRIBUNAL THE ASSESSEE IS ENTITLED FOR THE CREDIT ON THE TDS MADE BY THE CABLE OPERATION ON THE SUBSCRIPTION CHARGES. THE A SSESSING OFFICER WAS DIRECTED TO ALLOW THE ASSESSEES CLAIM FOR TDS OF C2,46,80,256/-. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED TH E MATERIAL ON RECORD. THE MAIN CONTENTION OF THE ASSESSEES COU NSEL IS THAT THE ASSESSEE REMITTED THE ENTIRE SUBSCRIPTION INCOME TO M/S. SUN TV AND THERE IS NO ELEMENT OF INCOME IN THE HANDS OF THE A SSESSEE FROM SUBSCRIPTION RECEIVED FROM OTHER PARTIES ON BEHALF OF M/S. SUN TV AND THE ASSESSEE RECEIVED ONLY COMMISSION FROM IT. TO EXAMINE THE SAME, THE BENCH CALLED FOR PROFIT AND LOSS ACCOUNT AND LE GER ACCOUNTS TO KNOW, HOW THE SUBSCRIPTION RECEIVED WAS ACCOUNTED I N ASSESSEES BOOK. THE ASSESSEES COUNSEL FILED ONLY FINANCIAL STATEMENT AND NOT FILED LEDGER ACCOUNTS OF SUBSCRIPTION RECEIVED ACCO UNT. 6. HENCE, WE ARE NOT IN A POSITION TO EXPRESS ANY OPI NION WHETHER THE ASSESSEE IS HAVING ANY ELEMENT OF INCOME FROM SUBSCRIPTION I.T.A.NO.126/MDS/2015 :- 6 -: CHARGES RECEIVED FROM VARIOUS PARTIES. THEREFORE, IF THE ENTIRE SUBSCRIPTION RECEIVED BY THE ASSESSEE IS TRANSFERRE D TO M/S. SUN TV AND THE ASSESSEE IS ENTITLED ONLY FOR COMMISSION O N SUBSCRIPTION INCOME, THEN THE TRIBUNALS DECISION RELIED BY THE ASSESSEES COUNSEL IS APPLICABLE. ACCORDINGLY, WE ARE REMITTING THE EN TIRE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER TO CONSIDER THE ISSUE AFRESH IN THE LIGHT OF THE ABOVE OBSERVATION. 7. THE APPEAL OF THE REVENUE IN ITA NO.126/MDS/2015 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON FRIDAY, THE 28TH DAY OF AUGUST , 2015 AT CHENNAI SD/- SD/- ( . ! ) V. DURGA RAO ' / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER '# /CHENNAI. $% /DATED: 28.08.2015. KV %& '( )( /COPY TO: 1. * APPELLANT 2. / RESPONDENT 3. + ( )/CIT(A) 4. + /CIT 5. (,- . /DR 6. -/ 0 /GF. I.T.A.NO.126/MDS/2015 :- 7 -: