M/s. Mahesh Software Systems Pvt. Ltd., Pune V. Assistant Commissioner of Income tax, Pune

ITA 1288/PUN/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9230 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 22-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ARISES OUT OF PASSED
• Keywords: Business income; TDS

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER . / ITA NO.1288/PUN/2017 / ASSESSMENT YEAR : 2011-12 M/S. MAHESH SOFTWARE SYSTEMS PVT. LTD., FIRST FLOOR, KUMAR POOJA, 104, KARVENAGAR, PUNE 411 052 PAN : AABCM2679P VS. ACIT, CIRCLE-11(2), PUNE APPELLANT RESPONDENT / ORDER PER R.S.SYAL, VP : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER PASS ED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-7, PUNE ON 12.0 1.2017 IN RELATION TO THE ASSESSMENT YEAR 2011-12. 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINST THE DENIA L OF CREDIT FOR TAX DEDUCTED AT SOURCE AMOUNTING TO RS.8,41,050/- . APPELLANT BY SHRI NIKHIL PATHAK RESPONDENT BY MS. BRINDHA DATE OF HEARING 19-09-2019 DATE OF PRONOUNCEMENT 20-09-2019 ITA NO.1288/PUN/2017 M/S. MAHESH SOFTWARE SYSTEMS PVT. LTD., 2 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESS EE IS ENGAGED IN THE BUSINESS OF PROVIDING SOFTWARE SERVICES. I T CLAIMED CREDIT FOR TDS AMOUNTING TO RS.8,41,050/- WHICH WAS NOT APP EARING IN FORM NO.26AS. ON BEING CALLED UPON TO EXPLAIN AS TO HOW THE BENEFIT OF THIS TDS WAS CLAIMED, THE ASSESSEE SUBMITTED THAT IT RAISED INVOICE ON ASHOKA LEYLAND, CHENNAI, FOR RS.84,10 ,500/- IN MARCH, 2011. SINCE TAX OF RS.8,41,010/- ON THE INVOICE A MOUNT WAS DEPOSITED BY ASHOKA LEYLAND IN APRIL, 2011, THEY SHOWED IT IN THE SUCCEEDING YEAR. THE ASSESSING OFFICER (AO) DID NOT ACC EPT THE CONTENTION OF THE ASSESSEE BY RELYING ON RULE 37BA(1) OF TH E INCOME-TAX RULES, 1962. THE LD. CIT(A) ALSO AFFIRMED THE ASSESSMENT ORDER ON THIS POINT. 4. WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH THE RELE VANT MATERIAL ON RECORD. A COPY OF THE SALE REGISTER OF THE ASS ESSEE HAS BEEN PLACED AT PAGES 46 AND 47 OF THE PAPER BOOK DEPIC TING TOTAL SALES FOR THE YEAR UNDER CONSIDERATION AT RS.3,69,53,687 .33. THIS AMOUNT OF TURNOVER OF RS.3.69 CRORE INCLUDES THE INVOICE D ATED 28-03-2011 AMOUNTING TO RS.80,10,000/- RAISED ON ASHOKA LEYLAND. IT IS IN RESPECT OF THIS AMOUNT OF INVOICE RS.80,10,000 PLU S OTHER TAXES ETC. TOTALLING TO RS.84,10,000/-, THAT ASHOKA LEYLAND DE DUCTED ITA NO.1288/PUN/2017 M/S. MAHESH SOFTWARE SYSTEMS PVT. LTD., 3 TAX AT SOURCE AMOUNTING TO RS.8,41,050/-. THUS, IT IS ESTA BLISHED THAT THE ASSESSEE RECORDED INVOICE OF RS.84.10 LAKH IN ITS ACCO UNTS FOR THE YEAR UNDER CONSIDERATION. IT IS ALSO EQUALLY TRUE THAT A SHOKA LEYLAND DEDUCTED TAX AT SOURCE ON SUCH AMOUNT TO THE TUNE OF RS.8,41,050/- BUT DEPOSITED IT WITH THE EXCHEQUER IN THE MO NTH OF APRIL, 2011. THE DISPUTE HAS ARISEN BECAUSE OF THIS ONLY. WHEREAS THE CLAIM OF THE ASSESSEE IS THAT THE BENEFIT OF TDS SHOULD B E ALLOWED IN THE YEAR IN WHICH THE ASSESSEE HAS RECORDED THE CORRESPONDING INCOME AND THE REVENUE IS CONTENDING THAT SU CH BENEFIT CAN BE GIVEN ONLY IN THE YEAR OF DEPOSIT OF TDS. 5. SECTION 199(3) OF THE ACT, WHICH IS RELEVANT FOR OUR PUR POSE, READS AS UNDER: THE BOARD MAY, FOR THE PURPOSES OF GIVING CREDIT I N RESPECT OF TAX DEDUCTED OR TAX PAID IN TERMS OF THE PROVISIONS OF THIS CHAPTER, MAKE SUCH RULES AS MAY BE NECESSARY, INCLUDING THE RULES FOR THE PURPOSES OF GIVING CREDIT TO A PERSON OTHER THAN TH OSE REFERRED TO IN SUB-SECTION (1) AND SUB-SECTION (2) AND ALSO THE AS SESSMENT YEAR FOR WHICH SUCH CREDIT MAY BE GIVEN. 6. THE RELEVANT RULE IS 37BA WHICH IS REPRODUCED AS UNDE R: CREDIT FOR TAX DEDUCTED AT SOURCE FOR THE PURPOSES OF SECTION 199. (1) CREDIT FOR TAX DEDUCTED AT SOURCE AND PAID TO T HE CENTRAL GOVERNMENT IN ACCORDANCE WITH THE PROVISIONS OF CHA PTER XVII, SHALL BE GIVEN TO THE PERSON TO WHOM PAYMENT HAS BE EN MADE OR CREDIT HAS BEEN GIVEN (HEREINAFTER REFERRED TO AS D EDUCTEE) ON THE BASIS OF INFORMATION RELATING TO DEDUCTION OF TAX F URNISHED BY THE ITA NO.1288/PUN/2017 M/S. MAHESH SOFTWARE SYSTEMS PVT. LTD., 4 DEDUCTOR TO THE INCOME-TAX AUTHORITY OR THE PERSON AUTHORISED BY SUCH AUTHORITY. (2) (I) WHERE UNDER ANY PROVISIONS OF THE ACT, THE WHOLE OR ANY PART OF THE INCOME ON WHICH TAX HAS BEEN DEDUCTED A T SOURCE IS ASSESSABLE IN THE HANDS OF A PERSON OTHER THAN THE DEDUCTEE, CREDIT FOR THE WHOLE OR ANY PART OF THE TAX DEDUCTED AT SO URCE, AS THE CASE MAY BE, SHALL BE GIVEN TO THE OTHER PERSON AND NOT TO THE DEDUCTEE: PROVIDED THAT THE DEDUCTEE FILES A DECLARATION WITH THE DEDUCTOR AND THE DEDUCTOR REPORTS THE TAX DEDUCTION IN THE N AME OF THE OTHER PERSON IN THE INFORMATION RELATING TO DEDUCTION OF TAX REFERRED TO IN SUB-RULE (1). (II) THE DECLARATION FILED BY THE DEDUCTEE UNDER CL AUSE (I) SHALL CONTAIN THE NAME, ADDRESS, PERMANENT ACCOUNT NUMBER OF THE PERSON TO WHOM CREDIT IS TO BE GIVEN, PAYMENT OR CR EDIT IN RELATION TO WHICH CREDIT IS TO BE GIVEN AND REASONS FOR GIVI NG CREDIT TO SUCH PERSON. (III) THE DEDUCTOR SHALL ISSUE THE CERTIFICATE FOR DEDUCTION OF TAX AT SOURCE IN THE NAME OF THE PERSON IN WHOSE NAME CRED IT IS SHOWN IN THE INFORMATION RELATING TO DEDUCTION OF TAX REFERR ED TO IN SUB-RULE (1) AND SHALL KEEP THE DECLARATION IN HIS SAFE CUST ODY. (3) (I) CREDIT FOR TAX DEDUCTED AT SOURCE AND PAID TO THE CENTRAL GOVERNMENT, SHALL BE GIVEN FOR THE ASSESSMENT YEAR FOR WHICH SUCH INCOME IS ASSESSABLE. (II) WHERE TAX HAS BEEN DEDUCTED AT SOURCE AND PAID TO THE CENTRAL GOVERNMENT AND THE INCOME IS ASSESSABLE OVER A NUMB ER 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. (4) CREDIT FOR TAX DEDUCTED AT SOURCE AND PAID TO T HE ACCOUNT OF THE CENTRAL GOVERNMENT SHALL BE GRANTED ON THE BASIS OF (I) THE INFORMATION RELATING TO DEDUCTION OF TAX FU RNISHED BY THE DEDUCTOR TO THE INCOME-TAX AUTHORITY OR THE PERSON AUTHORIZED BY SUCH AUTHORITY: AND (II) THE INFORMATION IN THE RETURN OF INCOME IN RES PECT OF THE CLAIM FOR THE CREDIT, ITA NO.1288/PUN/2017 M/S. MAHESH SOFTWARE SYSTEMS PVT. LTD., 5 SUBJECT TO VERIFICATION IN ACCORDANCE WITH THE RISK MANAGEMENT STRATEGY FORMULATED BY THE BOARD FROM TIME TO TIME. 7. THE AO HAS RELIED ON SUB-RULE (1) OF SECTION 37BA FO R DENYING THE BENEFIT OF TDS DURING THE YEAR UNDER CONSIDERATIO N. THIS PART OF THE RULE PROVIDES THAT THE CREDIT FOR TDS SHALL BE GIVEN TO THE PERSON TO WHOM PAYMENT HAS BEEN MADE OR CREDIT HAS BEEN GIVEN ON THE BASIS OF INFORMATION RELATING TO TDS FURNISHED B Y THE DEDUCTOR. WHAT IS MATERIAL FOR SUB-RULE (1) IS THE BENEFICIA RY OF CREDIT FOR THE TDS, BEING THE PERSON TO WHOM PAYMENT HAS B EEN MADE, WHICH IN THE INSTANT CASE IS THE ASSESSEE. THE LD. CI T(A) HAS, IN ADDITION, RELIED ON SUB-RULE (4) OF RULE 37BA, WHICH AGA IN PROVIDES THAT THE CREDIT FOR TDS SHALL BE GRANTED ON THE BASIS OF INFORMATION RELATING TO DEDUCTION OF TAX AT SOURCE FURNISHED BY THE DEDUCTOR. HOW, THIS RULE PREJUDICES THE CLAIM OF THE ASSE SSEE IS ANYBODYS GUESS. OBVIOUSLY, THE INFORMATION ABOUT THE TDS BY ASHOK LEYLAND IS NOT DENIED. BOTH THE SUB-RULES SIMPLY PR OVIDE FOR GRANTING OF THE BENEFIT OF TDS. THE POINT OF TIME AT WHICH THE BENEFIT OF TDS IS TO BE GIVEN, IS GOVERNED BY SUB-RULE (3 ) OF RULE 37BA, WHICH UNEQUIVOCALLY PROVIDES THROUGH CLAUSE (I) THAT THE CREDIT FOR TAX DEDUCTED AT SOURCE AND PAID TO THE CENTRAL ITA NO.1288/PUN/2017 M/S. MAHESH SOFTWARE SYSTEMS PVT. LTD., 6 GOVERNMENT, SHALL BE GIVEN FOR THE ASSESSMENT YEAR FOR WHICH SUCH INCOME IS ASSESSABLE . IT IS, ERGO, ABUNDANTLY CLEAR FROM THE MANDATE OF RULE 37BA(3)(I) THAT THE BENEFIT OF TDS IS TO BE GIV EN FOR THE ASSESSMENT YEAR FOR WHICH THE CORRESPONDING INCOM E IS ASSESSABLE. SINCE THE INCOME OF RS.84.10 LAKH, ON WHICH TA X OF RS.8,41,050/- WAS DEDUCTED AT SOURCE, IS PATENTLY ASSESSA BLE IN THE YEAR UNDER CONSIDERATION, WE HOLD THAT THE BENEFIT OF THE TDS SHOULD ALSO BE ALLOWED IN THE SAME YEAR, NAMELY, THE YEAR UNDER CONSIDERATION. WE, THEREFORE, OVERTURN THE IMPUGNED ORD ER AND DIRECT ACCORDINGLY. 8. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH SEPTEMBER, 2019. SD/- SD/- (S.S. VISWANETHRA RAVI) (R.S.SY AL) JUDICIAL MEMBER VICE P RESIDENT PUNE; DATED : 20 TH SEPTEMBER, 2019 ITA NO.1288/PUN/2017 M/S. MAHESH SOFTWARE SYSTEMS PVT. LTD., 7 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A)-7, PUNE 4. 5. 6. THE PR. CIT-6, PUNE , , / DR B, ITAT, PUNE; / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR P RIVATE SECRETARY , / ITAT, PUNE DATE 1. DRAFT DICTATED ON 19-09-2019 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 19-09-2019 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *