M/S. AVINASH CHALANA & CO., Bhopal V. THE ACIT, CPC BANGALORE/ ACIT CIRCLE 1(2), Bhopal

ITA 13/IND/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6242 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 18-04-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 07-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI B.C.MEENA, ACCOUNTANT MEMBER I.T.A.NO.13/IND/2015 A.Y. : 2012-13 M/S.AVINASH CHALANA & CO., ACIT,CPC, BANGALORE/ ACIT, BHOPAL VS CIRCLE 1(2), BHOPAL APPELLANT RESPONDENT PAN NO. AALFA4929P APPELLANTS BY : SHRI SUMIT NEMA, ADV. RESPONDENT BY : SHRI R. A. VERMA, DR O R D E R PER D.T.GARASIA, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A)-I, BHOPAL, DATED 07.10.2014 FOR THE ASSE SSMENT YEAR 2012-13. DATE OF HEARING : 18 . 0 4 .2016 DATE OF PRONOUNCEMENT : 18. 0 4 .2016 AVINASH CHALANA & CO., BHOPAL VS. ACIT, 1(2), BHOPA L I.T.A.NO. 13/IND/2015 A.Y. 2008-09 2 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FURNISHED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2012-13 ON 28.09.2012DECLARIGN TAXABLE INCOME OF RS.1,36,75,65 0/-. THE RETURN WAS PROCESSED BY ACIT (CPC), BANGALORE VIDE O RDER DATED 31.12.2013, AT THE RETURNED INCOME. THE ASSES SEE HAD CLAIMED CREDIT OF TCS OF RS. 35,26,813/- IN ITS RET URN OF INCOME BUT IN THE INTIMATION U/S 143(1) OF THE ACT, THE CLAIM OF TCS WAS RESTRICTED AT RS. 89,163/- AS REFLECTED I N THE 26AS FORM OF THE ASSESSEE FOR ASSESSMENT YEAR 2012-13. 3. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT(A) DISMISSED THE APPEAL. 4. THE LD.AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE H AS ARGUED BEFORE US THAT IN THIS CASE, THE ONLY DISPUT E IS GIVING SHORT CREDIT OF TCS. THE ASSESSEE CLAIMED THAT THE ASSESSEE IS A PARTNERSHIP FIRM. PARTNERS WERE LICENSE-HOLDER AN D THEY HAVE FORMED THE PARTNERSHIP FIRM TO CARRY ON BUSINESS IN LIQUOR. THEREFORE, TCS CERTIFICATE WAS ISSUED IN THE NAME OF PARTNERS. THE ENTIRE INCOME OF THE FIRM WAS OFFERED FOR TAX IN WHOSE NAME THE LICENSE WAS ISSUED. THE INCOME HAS BEEN ASS ESSED IN THE HANDS OF THE FIRM, BUT CREDIT OF CORRESPONDING TCS WAS NOT AVINASH CHALANA & CO., BHOPAL VS. ACIT, 1(2), BHOPA L I.T.A.NO. 13/IND/2015 A.Y. 2008-09 3 3 ALLOWED. THE ASSESSEE CONTENDED THAT PARTNERS HAVE NOT CLAIMED THEIR CREDIT OF TCS IN INDIVIDUAL CASES. TH EREFORE, IT MAY BE ALLOWED. 5. THE LD.AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE D REW OUR ATTENTION TO SECTION 199(1) OF THE INCOME-TAX A CT, 1961, PROVIDES THAT ANY DEDUCTION OF TAX MADE IN ACCORDAN CE WITH THE PROVISIONS OF CHAPTER XVII OF THE ACT AND PAID TO THE CENTRAL GOVERNMENT SHALL BE TREATED AS A PAYMENT OF TAX ON BEHALF OF THE PERSON FROM WHOSE INCOME THE DEDUCTION WAS MADE. UNDER SUB SECTION (3) OF SECTION 199, THE CBD T MAY, FOR THE PURPOSE OF GIVING CREDIT IN RESPECT OF TAX DEDUCTED AT SOURCE OR PAID IN TERMS OF THE PROVISIONS OF CHAPTE R XVII OF THE ACT, MAKE SUCH RULES AS MAY BE NECESSARY, INCLUDING THE RULES FOR THE PURPOSE OF GIVING CREDIT TO A PERSON OTHER THAN THOSE REFERRED TO IN SUB SECTION (1) AND SUB SECTION (2) AND ALSO THE ASSESSMENT YEAR FOR WHICH SUCH CREDIT MAY BE GIVEN. RULE 37BA OF THE RULES FRAMED UNDER SECTION 199(3) OF TH E ACT (INTRODUCED WITH EFFECT FROM 01.04.1999. THEREFORE, THE APPEAL MAY BE ALLOWED AND THE MATTER MAY BE RESTORED TO AO TO GIVE AVINASH CHALANA & CO., BHOPAL VS. ACIT, 1(2), BHOPA L I.T.A.NO. 13/IND/2015 A.Y. 2008-09 4 4 NECESSARY DOCUMENTS BEFORE THE AO AS PER AMENDED RU LE 37BA. 6. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON TH E ORDERS OF THE AUTHORITIES BELOW. 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT AS PER SECTION 199, WHICH READS AS UNDER :- SECTION 199(1) OF THE INCOME-TAX ACT, 1961, PROVIDES THAT ANY DEDUCTION OF TAX MADE IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER XVII OF THE ACT AND PAID TO THE CENTRAL GOVERNMENT SHALL BE TREATED AS A PAYMENT OF TAX ON BEHALF OF THE PERSON FROM WHOSE INCOME THE DEDUCTION WAS MADE. UNDER SUB SECTION (3) OF SECTION 199, THE CBDT MAY, FOR THE PURPOSE OF GIVING CREDIT IN RESPECT OF TAX DEDUCTED AT SOURCE OR PAID IN TERMS OF THE PROVISIONS OF CHAPTER XVII OF THE ACT, MAKE SUCH RULES AS MAY BE NECESSARY, INCLUDING THE RULES FOR THE PURPOSE OF GIVING CREDIT TO A PERSON OTHER THAN THOSE AVINASH CHALANA & CO., BHOPAL VS. ACIT, 1(2), BHOPA L I.T.A.NO. 13/IND/2015 A.Y. 2008-09 5 5 REFERRED TO IN SUB SECTION (1) AND SUB SECTION (2) AND ALSO THE ASSESSMENT YEAR FOR WHICH SUCH CREDIT MAY BE GIVEN. RULE 37BA OF THE RULES FRAMED U/S 199(3) OF THE ACT (INTRODUCED W.E.F. 01.04.2009 BY INCOME TAX (SIXTH AMENDMENT) RULE, 2009, BY THE CBDT) IS AS FOLLOWS :- CREDIT FOR TAX DEDUCTED AT SOURCE FOR THE PURPOSE OF SECTION 199. 37BA. (1) CREDIT FOR TAX DEDUCTED AT SOURCE AND PAID TO THE CENTRAL GOVERNMENT IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER XVII, SHALL BE GIVEN TO THE PERSON TO WHOM PAYMENT HAS BEEN MADE OR CREDIT HAS BEEN GIVEN (HEREINAFTER REFERRED TO AS DEDUCTEE) ON THE BASIS OF INFORMATION RELATING TO DEDUCTION OF TAX FURNISHED BY THE DEDUCTOR TO THE INCOME-TAX AUTHORITY OR THE PERSON AUTHORISED BY SUCH AUTHORITY. AVINASH CHALANA & CO., BHOPAL VS. ACIT, 1(2), BHOPA L I.T.A.NO. 13/IND/2015 A.Y. 2008-09 6 6 (2) (I) IF THE INCOME ON WHICH TAX HAS BEEN DEDUCTED AT SOURCE IS ASSESSABLE IN THE HANDS OF A PERSON OTHER THAN THE DEDUCTEE, CREDIT FOR TAX DEDUCTED AT SOURCE SHALL BE GIVEN TO THE 'OTHER PERSON IN CASES WHERE- (A) THE INCOME OF THE DEDUCTEE IS INCLUDED IN THE TOTAL INCOME OF ANOTHER PERSON UNDER THE PROVISIONS OF SECTION 60, SECTION 61, SECTION 64, SECTION 93 OR SECTION 94; (B) THE INCOME OF A DEDUCTEE BEING AN ASSOCIATION OF PERSONS OR A TRUST IS ASSESSABLE IN THE HANDS OF MEMBERS OF THE ASSOCIATION OF PERSONS, OR IN THE HANDS OF TRUSTEES, AS THE CASE MAY (C) THE INCOME FROM AN ASSET HELD IN THE NAME OF A DEDUCTEE, BEING A PARTNER OF A FIRM OR A KARTA OF A HINDU UNDIVIDED FAMILY, IS ASSESSABLE AS THE INCOME OF THE FIRM, OR HINDU UNDIVIDED FAMILY, AS THE CASE MAY BE; (D) THE INCOME FROM A PROPERTY, DEPOSIT, SECURITY, AVINASH CHALANA & CO., BHOPAL VS. ACIT, 1(2), BHOPA L I.T.A.NO. 13/IND/2015 A.Y. 2008-09 7 7 UNIT OR SHARE HELD IN THE NAME OF A DEDUCTEE IS OWNED JOINTLY BY THE DEDUCTEE AND OTHER PERSONS AND THE INCOME IS ASSESSABLE IN THEIR HANDS IN THE SAME PROPORTION AS THEIR OWNERSHIP OF THE ASSET: PROVIDED THAT THE DEDUCTEE FILES A DECLARATION WITH THE DEDUCTOR AND THE DEDUCTOR REPORTS THE TAX DEDUCTION IN THE NAME 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 CLAUSE (I) SHALL CONTAIN THE NAME, ADDRESS, PERMANENT ACCOUNT NUMBER OF THE PERSON TO WHOM CREDIT IS TO BE GIVEN, PAYMENT OR CREDIT IN RELATION TO WHICH CREDIT IS TO BE GIVEN AND REASONS FOR GIVING 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 CREDIT IS SHOWN IN THE INFORMATION RELATING TO DEDUCTION OF TAX REFERRED AVINASH CHALANA & CO., BHOPAL VS. ACIT, 1(2), BHOPA L I.T.A.NO. 13/IND/2015 A.Y. 2008-09 8 8 TO IN SUB-RULE (1) AND SHALL KEEP THE DECLARATION IN HIS SAFE CUSTODY. (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 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. (4) CREDIT FOR TAX DEDUCTED AT SOURCE AND PAID TO THE ACCOUNT OF THE CENTRAL GOVERNMENT SHALL BE GRANTED ON THE BASIS OF - (I) THE INFORMATION RELATING TO DEDUCTION OF TAX FURNISHED 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 AVINASH CHALANA & CO., BHOPAL VS. ACIT, 1(2), BHOPA L I.T.A.NO. 13/IND/2015 A.Y. 2008-09 9 9 RESPECT OF THE CLAIM FOR THE CREDIT, SUBJECT TO VERIFICATION IN ACCORDANCE WITH THE RISK MANAGEMENT STRATEGY FORMULATED BY THE BOARD FROM TIME TO TIME. BY THE INCOME TAX (8 TH AMENDMENT) RULES 2011, THE CBDT AMENDED RULE 37 BA AND IN SUB RULE (2), FOR CLAUSE (I), THE FOLLOWING CLAUSE WAS SUBSTITUTED : (I) WHERE UNDER ANY PROVISIONS OF THE ACT, THE WHOLE OR ANY PART OF THE INCOME ON WHICH TAX HAS BEEN DEDUCTED AT 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 SOURCE, AS THE CASE MAY BE, SHALL BE GIVEN TO THE OTHER PERSON AND NOT TO THE DEDUCTEE. THIS AMENDMENT HAS DONE AWAY WITH THE SPECIFIED FOUR CLAUSES IN THE PRE-AMENDED RULE 37BA WHICH RESTRICTED THE BENEFIT OF THE RULE ONLY IN FOUR SPECIFIED SITUATIONS. IT HAS THUS WIDENED THE SCOPE OF THE RULE AVINASH CHALANA & CO., BHOPAL VS. ACIT, 1(2), BHOPA L I.T.A.NO. 13/IND/2015 A.Y. 2008-09 10 10 37BA THEREBY ENABLING THE CREDIT OF TAXES TO THE ACTUAL PAYEE IN WHOSE HANDS THE INCOME IS ASSESSABLE AND NOT RESTRICTING THIS BENEFIT ONLY TO THE SPECIFIED FOUR SITUATIONS. 8. AS PER ABOVE RULES AND INTERPRETATION OF THE ACT, WE ARE OF THE VIEW THAT IF THE ASSESSEE IS A PARTNERSHI P FIRM TO CARRY ON THE BUSINESS IN LIQUOR AND TCS IS CLAIMED IN THE NAME OF PARTNER OF THE FIRM, THE TCS COLLECTED BY T HE PARTY IN THE NAME OF DIFFERENT PERSONS, WHICH READS AS UNDER :- S.NO. NAME OF PARTNERS AMOUNT OF TCS ( RS.) 1. AVINASH CHALANA & CO. 5,52,525/ - 2. AVINASH CHALANA & CO. 89,163/ - 3. MILLION TRADERS 82,054/ - 4. MAXIMA TRADERS 1,17,035/ - 5. GUNDADEEN PATEL 9,11,330/ - 6. SHIV CHARAN SINGH 5,42,017/ - 7. BANA SINGH 12,97,658/ - 8. PRADEEP CHATURVEDI 4,87,556/ - 34,37,650/ - 9. ON PERUSAL OF THESE TCS CERTIFICATE, IT IS FOUND TH AT ALL THESE TCS CERTIFICATES WERE IN THE NAME OF THE ABOV E PERSONS AVINASH CHALANA & CO., BHOPAL VS. ACIT, 1(2), BHOPA L I.T.A.NO. 13/IND/2015 A.Y. 2008-09 11 11 HAVING THEIR OWN PAN NUMBERS, TCS COLLECTED OF SUCH PERSONS IS ALLOWED IN THE HANDS OF THE ASSESSEE PARTNERSHIP FIRM. THE TCS WAS CLAIMED IN THE NAME OF DIFFERENT PERSONS. TH E ASSESSEE IS ENTITLED TO GET CREDIT OF TCS OF RS. 3 4,37,650/-. WE FIND THAT AS PER RULE 37BA, WHICH HAS BEEN AMENDED F ROM 1.4.2009, IN ABOVE SITUATION, THE PERSON TO WHOM THE PAYMENT HAS BEEN MADE OR CREDIT HAS BEEN GIVEN ON THE BASIS OF INFORMATION RELATING TO DEDUCTION OF TAX FURNISHED BY THE DEDUCTOR TO THE INCOME OF TAX AUTHORITIES OR THE PE RSONS AUTHORIZED BY SUCH AUTHORITY. RULE 37BA PROVIDES TH AT WHERE ANY INCOME ON WHICH THE TAX HAS BEEN DEDUCTED AT SO URCE IS ASSESSABLE IN THE HANDS OF PERSONS OTHER THAN DEDUC TEE, THE CREDIT FOR TAX DEDUCTED AT SOURCE, AS THE CASE MAY BE, SHALL BE GIVEN TO THE PERSONS AND NOT TO THE DEDUCT EE. WE FIND THAT IN THIS CASE, THE ASSESSMENT WAS MADE U/S 143(1). THEREFORE, IN THE INTEREST OF JUSTICE AND F AIR PLAY, WE ARE OF THE VIEW THAT THE MATTER REQUIRES VERIFIC ATION. WE, THEREFORE, RESTORE THIS MATTER TO THE FILE OF A O. THE AO IS DIRECTED TO VERIFY THE CLAIM OF THE ASSESSEE. WE CLARIFY THAT THE ASSESSEE IS A PARTNERSHIP FIRM DOI NG THE AVINASH CHALANA & CO., BHOPAL VS. ACIT, 1(2), BHOPA L I.T.A.NO. 13/IND/2015 A.Y. 2008-09 12 12 BUSINESS OF LIQUOR AND ALL THE PARTNERS ARE LICENSE -HOLDERS AND THEY HAVE FORMED PARTNERSHIP TO CARRY ON THE BUSINESS OF LIQUOR. THE TCS CREDIT MAY BE GIVEN TO THE PARTNERS IF THE PARTNERS HAVE NOT CLAIMED ANY TCS I N THEIR RETURNS OF INCOME. THE ASSESSEE IS DIRECTED T O CLARIFY BEFORE THE AO AS PER THE AMENDED RULES OF SECTION 3 7BA AND SUB RULE (2) OF CLAUSE (I) OF THE AMENDED RULE. WE FOUND THAT THE AO IS DIRECTED JUSTICE MAY BE DONE. THE AO IS FURTHER DIRECTED TO GIVE CREDIT OF THIS TAX, WHICH IS EFFECTIVE FROM 01.04.2009 AND THE NEW RULE HAS BEEN AMENDED FROM 2011. THEREFORE, THE CREDIT MAY BE GIV EN FOR 24.10.2011 TO THE ASSESSEE AFTER VERIFYING WHETH ER THE CREDIT HAS BEEN CLAIMED OR NOT IN THE HANDS OF PART NERS. IF THE PARTNERS HAVE NOT CLAIMED TCS CERTIFICATE, T HE CREDIT MAY BE GIVEN TO THE PARTNERSHIP FIRM AS PER THE DECISION OF HON'BLE A.P. HIGH COURT, IN THE CASE OF CIT VS. BHOORATNAM & COMPANY, (2013) 357 ITR 396 (AP). 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. AVINASH CHALANA & CO., BHOPAL VS. ACIT, 1(2), BHOPA L I.T.A.NO. 13/IND/2015 A.Y. 2008-09 13 13 THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 18 TH APRIL, 2016. (B.C.MEENA) ACCOUNTANT MEMBER ( D.T.GARASIA) JUDICIAL MEMBER DATED : 18 TH APRIL, 2016. CPU* 1827