M/s Krishnandan Rai, Bhojpur V. DCIT, Circle-1, Patna

ITA 138/PAT/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 1417 (ITAT-PATNA)
• Duration Of Justice: 3 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 21-09-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: A K RASTOGI; RAKESH KUMAR AR S
• Keywords: TDS; FORM 26AS

Judgement Text

1 ITA NO. 138/PAT/2017 M/S. KRISHNANDAN RAI, AY 2010-11 IN THE INCOME TAX APPELLATE TRIBUNAL PATNA BENCH, VIRTUAL HEARING AT KOLKATA ( ) . . , ) [BEFORE SHRI A. T. VARKEY, JM] I.T.A. NO. 138/PAT/2017 ASSESSMENT YEAR:2010-11 M/S. KRISHNANDAN RAI (PAN: AADFK0831A) VS. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-1, PATNA APPELLANT RESPONDENT DATE OF HEARING 10.12.2020 DATE OF PRONOUNCEMENT 16.12.2020 FOR THE APPELLANT S/SHRI A. K. RASTOGI & RAKESH KUMAR, ARS FOR THE RESPONDENT SHRI AJAY KUMAR, DR ORDER THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-1, PATNA DATED 27-06-2017 FOR ASSESSMENT YEAR 2010-11. 2. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SHRI A. K. RASTOGI BROUGHT TO OUR NOTICE THAT THIS IS THE SECOND ROUND OF LITIGATION BEFORE THIS TRIBUNAL AND SINCE IN THE FIRST ROUND THE TRIBUNAL WHILE PASSING THE ORDER ON 08.06.2018 DID NOT ADJUDICATE ONE ISSUE I.E. GROUND NO. 8 & 9 RAISED BEFORE IT. SO, THE TRIBUNAL WAS PLEASED TO RECALL THE TRIBUNALS ORDER DATED 08.06.2018 FOR THE LIMITED PURPOSE OF ADJUDICATING THE ISSUE RAISED IN GROUND NO. 8 &9 WHICH READS AS UNDER: 8. FOR THAT THE LD. CIT(A) HAS ERRED IN NOT GIVING SPECIFIC DIRECTION TO THE AO FOR ALLOWING CREDIT OF TDS WHICH HAVE BEEN DEDUCTED UNDER THE PAN OF ONE OF THE PARTNERS OF THE APPELLANT FIRM NAMELY KRISHNANDAN RAI ON THE CONTRACT RECEIPT DULY ACCOUNTED FOR IN THE FIRMS BOOKS OF ACCOUNTS. 9. FOR THAT THE DISMISSAL OF APPEAL, APPLICATION OF NET PROFIT RATE OF 8% AND NOT GIVING SPECIFIC DIRECTION FOR ALLOWING CREDIT OF TDS TO THE AO, BY THE LD. CIT(A) IS WRONG, ILLEGAL AND UNJUSTIFIED ON THE FACTS AND IN THE CIRCUMSTANCES OF THE PETITIONERS CASE. 4. THE LD. AR SUBMITTED THAT ON THIS ISSUE, DESPITE THE DIRECTION OF THE LD. CIT(A), THE AO HAS NOT ALLOWED THE CREDIT OF TDS OF RS.8,47,187/- AND RS.7,194/-, THE DETAILS OF WHICH 2 ITA NO. 138/PAT/2017 M/S. KRISHNANDAN RAI, AY 2010-11 WAS/IS GIVEN AT PAGE 60 OF PAPER BOOK I.E. FORM 26AS OF THE PARTNER SHRI KRISHNANDAN RAI FROM WHICH IT CAN BE SEEN THAT TDS HAS BEEN DEDUCTED BY THE PAYEES FOR THE PAYMENTS MADE TO ASSESSEE FIRM, IN THE PAN OF ONE OF THE PARTNERS OF THE ASSESSEE FIRM, SHRI KRISHNANDAN RAI. ACCORDING TO LD. AR, IT IS UNDISPUTED FACT THAT THE RECEIPT CORRESPONDING TO THESE TWO TDS CREDIT HAVE BEEN DECLARED IN THE AUDITED ACCOUNTS OF THE ASSESSEE FIRM AS WOULD BE EVIDENT FROM PAGE 14 OF PAPER BOOK. ACCORDING TO LD. AR THESE TDS HAVE BEEN DEDUCTED BY SR. DIVISIONAL FINANCE MANAGER, EASTERN RAILWAY, ASANSOL AMOUNTING TO RS.8,47,187/- ON RECEIPT OF RS.3,68,34,218/- TO ASSESSEE FIRM; AND BY RURAL WORKS DEPARTMENT, DIVISION BUXAR AMOUNTING TO RS.7,194/- ON RECEIPT OF RS.3,17,477/-. HE DREW OUR ATTENTION TO PAGE 114 OF THE PAPER BOOK FROM WHICH IT IS SEEN THAT BOTH THE RECEIPTS I.E. RS.3,68,34,218/- AND RS.3,17,477/- HAVE BEEN DULY ACCOUNTED FOR IN THE BOOKS OF THE ASSESSEE FIRM AND THUS, ACCORDING TO HIM, AS PER THE PROVISION OF SECTION 199 OF THE ACT CREDIT OF TDS SHOULD HAVE BEEN GIVEN IN THE HANDS OF THE ASSESSEE FIRM. FOR THIS PROPOSITION OF LAW, HE RELIED ON THE DECISION OF THE HONBLE ANDHRA PRADESH HIGH COURT IN CIT VS. BHOORATNAM & CO. (2013) 29 TAXMANN.COM 275 (A.P) WHEREIN ON IDENTICAL SET OF FACTS EVEN THOUGH CERTAIN TDS CERTIFICATES WERE ISSUED IN THE NAME OF JOINT VENTURE CONCERN WHICH EXECUTED THE MUNICIPALITYS WORKS CONTRACT AND SINCE THE JOINT VENTURE CONCERN DID NOT FILE RETURN AND CLAIMED TDS CREDIT, THE ASSESSEE IN THAT CASE A FIRM WHICH CONSTITUTED THE JOINT VENTURE CONCERN WAS DIRECTED BY THE HONBLE HIGH COURT TO BE GIVEN CREDIT IN CAPACITY OF CO-JOINT VENTURER. PER CONTRA, THE LD. DR SUPPORTED THE ACTION OF AO AND DOES NOT WANT US TO INTERFERE. 5. I HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. IT IS NOTED THAT THE ASSESSEE FIRM HAD BEEN PAID RS.3,68,34,218/- BY SR. DIVISIONAL FINANCE MANAGER, EASTERN RAILWAY, ASANSOL AFTER DEDUCTING TDS OF RS.8,47,187/- WHICH WAS CREDITED IN THE NAME OF THE PARTNER OF THE ASSESSEE FIRM I.E., SHRI KRISHNANDAN RAI AND NOT IN THE NAME OF ASSESSEE FIRM. LIKEWISE, AN AMOUNT OF RS.3,17,477/- HAS BEEN PAID TO THE ASSESSEE FIRM BY RURAL WORKS DEPARTMENT, DIVISION BUXAR AND THE TDS OF RS.7,194/- HAS BEEN DEDUCTED FROM THIS AMOUNT AND DEPOSITED IN THE CREDIT OF PARTNERS INDIVIDUAL ACCOUNT I.E. SHRI KRISHNANDAN RAI. THE ASSESSEE FIRM BROUGHT TO THE NOTICE OF THE AO AND THE LD. 3 ITA NO. 138/PAT/2017 M/S. KRISHNANDAN RAI, AY 2010-11 CIT(A) THAT THE PARTNER SHRI KRISHNANDAN RAI IN HIS INDIVIDUAL CAPACITY OR AS A PARTNER OF THE ASSESSEE FIRM HAS NOT TAKEN THE CREDIT OF THESE TWO (2) TDS AMOUNT I.E. RS.8,47,187/- AND RS.7,194/-. I NOTE THAT THE PAYMENTS CORRESPONDING TO THESE TDS CREDIT OF RS. 8,47,187/- & RS. 7,194/- I.E. RS.3,68,34,218/- AND RS.3,17,477/- ARE RECEIPTS IN THE HANDS OF THE ASSESSEE FIRM AND SINCE THE PARTNER (SHRI KRISHNANDAN RAI) TO WHOM THE TDS HAS BEEN CREDITED HAS NOT AVAILED FOR THE TDS CREDIT. IN SUCH FACTS AND CIRCUMSTANCES, THE ASSESSEE FIRM SHOULD NOT BE DENIED THE TDS CREDIT. I NOTE THAT IN THE CASE OF BHOORATNAM & CO. (SUPRA) THE HONBLE ANDHRA PRADESH HIGH COURT TOOK NOTE OF THE INCOME TAX (8 TH AMENDMENT) RULE, 2011, AND THAT CBDT AMENDED RULE 37BA AND IN SUB-RULE (2) FOR CLAUSE (1), THE FOLLOWING CLAUSE WAS SUBSTITUTED AND THE HONBLE HIGH COURT HELD AS UNDER:- 15. BY THE INCOME TAX (8TH 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' 16. 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 37 BA 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. 17. IN OUR VIEW, THE CIT (APPEALS) AND THE TRIBUNAL HAVE RIGHTLY HELD THAT THE ASSESSEE IS ENTITLED TO THE CREDIT OF THE TDS MENTIONED IN THE TDS CERTIFICATES ISSUED BY THE CONTRACTOR, WHETHER THE SAID CERTIFICATE IS ISSUED IN THE NAME OF THE JOINT VENTURE OR IN THE NAME OF A DIRECTOR OF THE ASSESSEE COMPANY. THEY HAVE CONSIDERED THE TERMS OF THE AGREEMENT DATED 12-03-2003 AMONG THE PARTIES TO THE JOINT VENTURE AND HELD THAT CREDIT FOR TDS CERTIFICATES CANNOT BE DENIED TO THE ASSESSEE WHILE ASSESSING THE CONTRACT RECEIPTS MENTIONED IN THE SAID CERTIFICATES AS INCOME OF THE ASSESSEE. THE INCOME SHOWN IN THE TDS CERTIFICATES HAS EITHER TO BE TAXED IN THE HANDS OF THE JOINT VENTURE OR IN THE HANDS OF THE INDIVIDUAL CO-JOINT VENTURER. AS THE JOINT VENTURE HAS NOT FILED RETURN OF INCOME AND CLAIMED CREDIT FOR TDS CERTIFICATES AND THE TDS CERTIFICATES HAVE NOT BEEN DOUBTED, CREDIT HAS TO BE GRANTED TO THE TDS MENTIONED THEREIN FOR THE ASSESSEE. 18. RULE 37BA IS A PROCEDURAL PROVISION DEALING WITH THE MANNER OF GIVING CREDIT FOR TAX DEDUCTED AT SOURCE FOR THE PURPOSES OF SECTION 199. IT THEREFORE APPLIES TO PENDING PROCEEDINGS. AS OBSERVED IN STATE OF MADRAS V. LATEEF HAMID & CO. AIR 1972 SC 1781, WHERE A NEW PROCEDURE IS PRESCRIBED BY LAW, IT GOVERNS ALL PENDING CASES. 6. APPLYING THE RATIO LAID BY THE HONBLE ANDHRA PRADESH HIGH COURT IN BHOORATNAM & CO. (SUPRA) I DIRECT THE AO TO VERIFY THE VERACITY OF THE AFORESAID CONTENTION AND IF IT IS 4 ITA NO. 138/PAT/2017 M/S. KRISHNANDAN RAI, AY 2010-11 FOUND TO BE CORRECT THEN BENEFIT OF THE TDS AMOUNT OF RS.8,47,187/- AND RS.7,194/- SHOULD BE GIVEN TO THE ASSESSEE FIRM. IT IS ORDERED ACCORDINGLY. 7. IN THE RESULT, THIS GROUND OF APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER IS PRONOUNCED IN THE OPEN COURT ON 16 TH DECEMBER, 2020. SD/- (ABY. T. VARKEY) JUDICIAL MEMBER DATED : 16TH DECEMBER, 2020 JD(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT M/S. KRISHNANDAN RAI, VILL KHAWANI GAHARUAN, DIST. BHOJPUR 2 RESPONDENT DCIT, CIRCLE-1, PATNA 3. 4. 5. CIT(A)-1, PATNA CIT, PATNA DR, ITAT, PATNA. / TRUE COPY, BY ORDER, SENIOR PVT. SECY/DDO.