ACIT, Hyderabad V. M/s. Bhoorathnam & Company, Secunderabad

ITA 1671/HYD/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3280 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 27-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V SRINIVAS
• Assessee Lawyers: C P RAMASWAMY
• Keywords: Search and seizure
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER I .T.A. NO. 1671/HYD/2010 A.Y. 2004-05 ASST. COMMISSIONER OF INCOME-TAX, CENT. CIRCLE-5, HYDERABAD VS. M/S. BHOORATHNAM & COMPANY, SECUNDERABAD PAN: AAAFB7677G APPELLANT RESPONDENT APPELLANT BY: SHRI V. SRINIVAS RESPONDENT BY: SHRI C.P. RAMASWAMY O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE CIT(A)-VII, HYDERABAD DATED 28.10.2010 FOR A SSESSMENT YEAR 2004-05. 2. THE FOLLOWING GROUNDS ARE RAISED BY THE REVENUE: 1. THE ORDER OF THE LD. CIT(A) IS ERRONEOUS ON FACTS AND IN LAW. 2. THE LD. CIT(A) ERRED IN ACCEPTING THE CONTENTION OF THE ASSESSEE AND ALLOWED RELIEF AT RS. 6.60,150/- TOWARDS CHARGING OF INTEREST U/S. 234B AND 234C. 3. THE LD. CIT(A) ERRED IN ALLOWING THE CREDIT OF TDS AT RS. 56,90,053/- IN THE NAME OF THE COMPANY OR IN THE NAME OF THE DIRECTORS AS PER RULE 37BA OF I.T. RULES. 3. FACTS OF THE CASE IN BRIEF ARE THAT THERE WAS A SEARCH AND SEIZURE OPERATION U/S. 132 OF THE I.T. ACT, 1961 IN THE GROUP CASES OF M/S. BHOORATNAM & COMPANY ON 30.08.2007 AN D SOME INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED DURIN G THE COURSE OF SEARCH. THE CASE WAS NOTIFIED WITH THE A CIT, CENTRAL CIRCLE-5, HYDERABAD. I.T.A. NO. 1671/HYD/10 M/S. BHOORATHNAM & COMPANY ======================== 2 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE LEARNED COUNSEL FOR THE ASSESSEE ARGUED THAT THE AS SESSING OFFICER WAS NOT JUSTIFIED IN LEVYING INTEREST U/S. 234B AND U/S. 234C OF THE I.T. ACT, 1961 AS THE ASSESSEE HAD CLAI MED TDS AT RS. 56,90,053 WHERE THE ASSESSING OFFICER HAD GIVEN CREDIT FOR TDS AT RS. 29,09,173 ON THE GROUND THAT THE TDS CER TIFICATES FILED WERE NOT MATCHING WITH NAME OF THE ASSESSEE-C OMPANY. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMIT TED THAT AS PER RULE 37BA OF I.T. RULE, 1962, EVEN THE TDS CERT IFICATES ISSUED FOR THE PURPOSE OF SECTION 199 EVEN IF THEY ARE IN THE NAME OF EITHER COMPANYS NAME OR DIRECTORS NAME, T DS BENEFIT HAS TO BE GIVEN IN THE HANDS OF THE COMPANY AND THE ASSESSING OFFICER CANNOT REJECT WITHOUT GIVING CREDIT TO THE TDS CERTIFICATE FILED BY THE ASSESSEE. HE RELIED ON THE JUDGEMENT OF THE APEX COURT IN THE CASE OF CENTRAL PROVINCES MANGANESE OR E CO. LTD. V. CIT (1986) 160 ITR 961 (SC). 5. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUB MITTED THAT EVEN AFTER ALL THE ADDITIONS ARE MADE IN THE R ETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S. 153A, THE TAX PAYA BLE (ON THE INCOME DETERMINED FOR A SUM OF RS. 1,32,10,233) WAS RS. 47,39,172. AS AGAINST THE AMOUNT, TDS CREDIT WAS G IVEN ONLY FOR A SUM OF RS. 29,09,173 AS AGAINST CREDIT CLAIME D FOR A SUM OF RS. 56,90,053 IN RETURN OF INCOME. CONSEQUENTLY , THE ASSESSING OFFICER ARRIVED AT A SHORTFALL IN THE PAY MENT OF PREPAID TAXES AGAINST 90% OF ASSESSED TAX. IF FULL CREDIT FOR TDS WERE GIVEN, THEN THERE WOULD NOT BE ANY SHORT FALL IN FU LL SATISFACTION OF THE ASSESSED TAX AND IN FACT, THERE WOULD HAVE BEEN REFUND OF MORE THAN RS. 9.60 LAKHS. HE SUBMITTED THAT THERE WOULD BE NO LIABILITY TO PAY ADVANCE TAX UNDER SECTION 209(1)(D ) IN TERMS OF WHICH INCOME TAX CALCULATED UNDER CLAUSE (A) OR CLA USE (B) OR CLAUSE (C) OF SUBSECTION (1) SHALL BE REDUCED BY TH E AMOUNT OF INCOME-TAX DEDUCTIBLE. EVEN IN TERMS OF EXPLANATION -1 TO I.T.A. NO. 1671/HYD/10 M/S. BHOORATHNAM & COMPANY ======================== 3 SUBSECTION (1) OF SECTION 234B ASSESSED TAX MEAN S THE TAX ON THE TOTAL INCOME DETERMINED UNDER REGULAR ASSESSMEN T AS REDUCED BY THE TAX DEDUCTED. ONLY WHEN THE BALANCE OF SUCH COMPUTATION FALLS SHORT OF 90% OF THE ASSESSED TAX, INTEREST IS LEVIABLE EITHER UNDER SUBSECTION (1) OR UNDER SUBSE CTION (3) OF SECTION 234B. IN THE CASE OF THE ASSESSEE THERE IS NO SHORTFALL WITH REFERENCE TO ASSESSED TAX AFTER REDUCING THE T AX DEDUCTED AT SOURCE FROM THE TAX DETERMINED, THE COMPUTATION OF LEVYING INTEREST FALLS AND NO INTEREST CAN BE LEVIABLE IN T ERMS OF SECTION 234B IN THIS CASE. 6. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON T HE DECISION OF THE MUMBAI BENCH OF ITAT IN THE CASE OF DATAMATICS LTD. (2008) 299 ITR (AT) 286 AT PAGE 293 & 294. AC CORDINGLY HE SUBMITTED THAT THE INTEREST LEVIED U/S. 234B FOR A SUM OF RS. 6,03,900 IS ENTIRELY WITHOUT ANY LEGAL BASIS AND LI ABLE TO BE CANCELLED. 7. REGARDING THE INTEREST U/S. 234C THE LEARNED COU NSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE WAS NOT LI ABLE TO PAY ADVANCE TAX BECAUSE THE TDS WAS MORE THAN THE TAX P AYABLE AS PER RETURN OF INCOME OR EVEN AT THE STAGE OF MAK ING AN ESTIMATE IT WAS KNOWN TO THE ASSESSEE THAT THERE WO ULD BE NO ADVANCE TAX LIABILITY SINCE TAX DEDUCTIBLE WAS MORE THAN ANY TAX PAYABLE. IT WAS FURTHER SUBMITTED THAT FOR LEVYING INTEREST UNDER SECTION 234C THERE SHOULD BE SHORTFALL BETWEEN PREP AID TAX AND TAX PAYABLE ON THE RETURNED INCOME. IN THE CASE OF THE ASSESSEE THE SHORTFALL WAS WORKED OUT BY THE ASSESS ING OFFICER ONLY BECAUSE FULL CREDIT WAS NOT GIVEN FOR THE TDS OF A GROSS SUM OF RS. 56,90,053. ACCORDINGLY THE LEARNED COUN SEL FOR THE ASSESSEE PLEADED BEFORE THE ASSESSING OFFICER THAT THE INTEREST LEVIED U/S. 234C FOR A SUM OF RS. 56,252 BE DELETED . THE ASSESSING OFFICER DID NOT AGREE WITH THE CONTENTION S OF THE LEARNED COUNSEL FOR THE ASSESSEE AND MADE THE ADDIT ION OF I.T.A. NO. 1671/HYD/10 M/S. BHOORATHNAM & COMPANY ======================== 4 INTEREST U/S. 234B AT RS. 6,03,900 AND RS. 56,252 U /S. 234C AGGREGATING TO RS. 6,60,152. 8. THE LEARNED CIT(A) AFTER CONSIDERING THE SUBMISS IONS OF THE LEARNED AR AND AFTER PERUSING THE ORDER OF THE ASSESSING OFFICER HELD AS UNDER: HAVING VERIFIED THE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE VIEW THAT AS PER RULE 37BA OF I.T . RULES, 1962, THE ASSESSING OFFICER IS REQUIRED TO GIVE CREDIT FOR THE TDS CERTIFICATES FILED BY THE APPELLANT COMPANY WHETHER THEY ARE IN THE NAME OF THE COMPANY OR IN THE NAME OF THE DIRECTORS. IF THE CREDIT IS GIVEN WHICH IS AMOUNTING TO RS.56,90,053 THERE WOULD NOT BE ANY TAX LIABILITY AND THEREFORE, THE CHARGING OF INTEREST U/S. 234B AND 234C WILL NOT ARISE. THEREFORE, THE ASSESSING OFFICER IS DIRECTED TO GIVE CREDIT TO THE TDS CERTIFICATES FILED BY THE APPELLANT COMPANY AND ACCORDINGLY RE-COMPUTE THE APPELLANTS TAX LIABILIT Y OR REFUND. 9. ACCORDING TO THE LEARNED DR, THE REASON FOR NOT GIVING CREDIT FOR THE TDS CERTIFICATES WHICH ARE IN THE NA ME OF THE DIRECTOR IS NOT APPARENT FROM THE ORDERS OF THE LOW ER AUTHORITIES AND HE SUBMITTED THAT THE ISSUE MAY BE REMITTED BAC K FOR RE- CONSIDERATION TO THE LOWER AUTHORITIES. 10. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE INCOME INCLUDED IN THE TDS CERTI FICATES HAS BEEN CONSIDERED FOR THE PURPOSE OF DETERMINING THE TOTAL INCOME OF THE ASSESSEE. ON THE SAME LOGIC DUE CREDIT HAS TO BE GIVEN TO THE TDS INVOLVED IN THAT CERTIFICATE. HE DREW O UR ATTENTION TO SECTION 208 OF THE INCOME-TAX ACT, 1961 FOR THE PRO POSITION THAT ADVANCE TAX IS REQUIRED TO BE PAYABLE BY THE ASSESS EE DURING THE FINANCIAL YEAR ONLY WHEN SUCH TAX IS PAYABLE BY THE ASSESSEE DURING THAT YEAR. ACCORDING TO THE LEARNE D COUNSEL FOR THE ASSESSEE FOR THE ASSESSMENT YEAR UNDER CONSIDER ATION THE TAX PAYABLE IS COVERED BY THE TDS AND AS SUCH THERE IS NO QUESTION OF LEVYING OF INTEREST U/S. 234B AND 2 34C OF THE ACT. I.T.A. NO. 1671/HYD/10 M/S. BHOORATHNAM & COMPANY ======================== 5 FURTHER HE DREW OUR ATTENTION TO SECTION 199 OF THE INCOME-TAX ACT FOR THE PROPOSITION THAT DUE CREDIT HAS TO BE G IVEN TO THE PAYMENT OF TAX ON BEHALF OF THE ASSESSEE. FINALLY, HE RELIED ON THE ORDER OF THE CIT(A). 11. WE FIND FORCE IN THE ARGUMENTS OF THE LEARNED C OUNSEL FOR THE ASSESSEE. THERE IS NO DISPUTE THAT THERE HAS B EEN A TDS EITHER IN THE NAME OF THE COMPANY OR IN THE NAME OF THE DIRECTOR AND IT COVERS ALL THE TAX PAYABLE BY THE ASSESSEE. AS PER RULE 37BA OF THE INCOME-TAX RULES, 1962 THE ASSESSING OF FICER IS REQUIRED TO GIVE CREDIT FOR THE TDS CERTIFICATE FIL ED BY THE ASSESSEE COMPANY EITHER IN THE NAME OF THE ASSESSEE OR IN THE NAME OF THE DIRECTOR. BEING SO WHEN DUE CREDIT HAS BEEN GIVEN TO THIS TDS CERTIFICATE THERE WOULD BE NO BALANCE O F TAX PAYABLE BY THE ASSESSEE. ACCORDINGLY, THE ASSESSEE IS NOT LIABLE FOR INTEREST U/S. 234B AND 234C OF THE I.T. ACT, 1961. THE GROUNDS RAISED BY THE REVENUE ARE DEVOID OF MERIT AND THE S AME ARE DISMISSED. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 03.06.2011. SD/ - (G.C. GUPTA) VICE PRESIDENT SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 03.06.2011 TPRAO COPY FORWARDED TO: 1. THE ACIT, CENTRAL CIRCLE-5, ROOM NO. 807, 8 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD. 2. M/S. BHOORATHNAM & COMPANY, 7-3-720, R.P. ROAD, SECUNDERABAD. 3. THE CIT(A)-VII, HYDERABAD. 4. THE CIT (CENTRAL), HYDERABAD. 5. THE DR A BENCH, ITAT, HYDERABAD