The ACIT, Circle-2(1), Vijayawada V. Sri Peddu Srinivasa Rao, Vijayawada

ITA 324/VIZ/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7138 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 01-03-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 08-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: TH L PETER
• Assessee Lawyers: Y SURYACHANDRA RAO
• Keywords: Depreciation

Judgement Text

ITA/324/V/09 P.S. RAO, VJA IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO. 324 /VIZAG/ 20 09 ASSESSMENT YEAR : 2006 - 07 ACIT CIRCLE - 2(1) VIJAYAWADA VS. PEDDU SRINIVASA RAO VIJAYAWADA (APPELLANT) (RESPONDENT) PAN NO.ACGPP 0454R CO NO.68/VIZAG/2009 ASSESSMENT YEAR : 2006 - 07 ACIT CIRCLE - 2(1) VIJAYAWADA VS. PEDDU SRINIVASA RAO VIJAYAWADA (APPELLANT) (RESPONDENT) PAN NO.ACGPP 0454R APPELLANT BY: SHRI TH.L. PETER, CIT(DR) RESPONDENT BY: SHRI Y. SURYACHANDRA RAO, CA ORDER PER SHRI S.K. YADAV, JUDICIAL MEMBER:- THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST T HE ORDER OF THE CIT(A) ON A SOLITARY GROUND THAT CIT(A) HAS ERRED I N HOLDING THAT ASSESSEE IS ENTITLED TO THE CREDIT OF TDS MADE IN RESPECT OF MO BILIZATION ADVANCE RECEIVED BY HIM THOUGH THE MOBILIZATION ADVANCE WAS NOT ADJU STED AGAINST THE WORK BILLS CERTIFICATE DURING THE YEAR AND DID NOT FORM PART OF THE GROSS CONTRACT RECEIPTS CREDITED TO THE P&L ACCOUNT. 2. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND DOCUMENTS PLACED ON RE CORD. THE FACTS BORNE OUT FROM THE RECORD ARE THAT DURING THE COURSE OF A SSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE A.O. THAT THE GROSS RECEIPTS AS PER TDS CERTIFICATE WAS OF RS.17,01,04,999/- AND IT IS INCLUSIVE OF SUB-CONTRA CT RECEIPT OF RS.8,08,59,383/- RECEIVED FROM M/S. GAMMON INDIA LI MITED. ASSESSEE WAS ASKED TO RECONCILE THE GROSS WORK RECEIPTS IN RESPE CT OF SUB-CONTRACT RECEIPTS ITA/324/V/09 P.S. RAO, VJA 2 RECEIVED FROM M/S. GAMMON INDIA LIMITED AND THE REC ONCILIATION STATEMENT WAS FILED. THE ASSESSEE HAS STATED THAT THE GROSS RECEIPTS FROM M/S. GAMMON INDIA LIMITED WAS RS.8,08,59,383/- AND THE B ALANCE AMOUNT OF RS.11,88,75,000/- AS PER TDS CERTIFICATE REPRESENTS MOBILIZATION ADVANCE RECEIVED FROM THE SAID PARTY. IT WAS ALSO EXPLAINE D THAT MOBILIZATION ADVANCE COULD BE ADJUSTED AGAINST THE SUB-CONTRACT BILLS IN THE SUBSEQUENT YEARS. THE A.O. OBSERVED THAT THE RECEIPT OF RS.11,88,75,000/- DO NOT REPRESENT REVENUE RECEIPT SINCE IT WAS A MOBILIZATION ADVANCE AND THE REFORE, IT CANNOT PARTAKE THE CHARACTER OF CONTRACT RECEIPT. HOWEVER, THE SA ME IS TO BE ADJUSTED AGAINST THE WORK BILLS TO BE RAISED BY THE ASSESSEE IN THE SUBSEQUENT YEARS. THE A.O. ACCORDINGLY DID NOT ALLOW THE CREDIT OF TD S FOR RS.3,22,915/- OUT OF 6 TDS CERTIFICATE ISSUED BY M/S. GAMMON INDIA LIMIT ED FOR RS.22,31,271/- BECAUSE THESE CERTIFICATES PERTAIN TO THE MOBILIZAT ION ADVANCES GIVEN TO THE ASSESSEE. THE A.O. WAS OF THE VIEW THAT CREDIT OF TDS IS ALLOWED AS PER PROVISIONS OF SECTION 199 IN THE ASSESSMENT YEAR IN WHICH RELATABLE INCOME IS ASSESSABLE. THE MOBILIZATION ADVANCE RECEIVED DURI NG THE PREVIOUS YEAR WERE NOT ADJUSTED AGAINST THE BILLS RAISED DURING THE YE AR. HOWEVER, THE SAID AMOUNT WILL PARTAKE THE CHARACTER OF INCOME ONLY WH EN SUCH MOBILIZATION ADVANCE IS TO BE ADJUSTED IN SUBSEQUENT YEARS AGAIN ST THE WORK BILL. THE MOBILIZATION ADVANCE RECEIVED DOES NOT FORM PART OF TOTAL INCOME OF THE ASSESSEE. THE CREDIT OF TDS CERTIFICATE CAN ONLY B E GIVEN IN THE SUBSEQUENT YEARS IN WHICH THE RELEVANT RECEIPTS ARE ASSESSABLE . 3. IT WAS ALSO NOTICED BY THE A.O. THAT M/S. GAMMON INDIA LTD. GOT CONTRACT WORKS FROM GOVERNMENT OF ANDHRA PRADESH AN D IN TURN, IT WAS AWARDED TO A SUB-CONTRACTOR I.E. THE ASSESSEE ON A BACK TO BACK BASIS. THE GOVERNMENT OF ANDHRA PRADESH HAS GIVEN MOBILIZATION ADVANCE TO M/S. GAMMON INDIA LTD. AND THE SAME WAS IN TURN GIVEN TO THE ASSESSEE. IT WAS URGED BEFORE THE A.O. THAT THIS MOBILIZATION ADVANC E IS IN THE NATURE OF LOAN, ON WHICH INTEREST @ 8% IS CHARGEABLE AS PER THE TER MS OF SUB-CONTRACT AGREEMENT. THE MOBILIZATION ADVANCE IS A CAPITAL R ECEIPT BEING IN THE NATURE OF A LOAN AND THEREFORE, THERE WAS NO LEGAL OBLIGAT ION TO DEDUCT TAX AT SOURCE. HOWEVER, M/S. GAMMON INDIA LIMITED DEDUCTED TAX AT SOURCE IN RESPECT OF ITA/324/V/09 P.S. RAO, VJA 3 SUCH MOBILIZATION ADVANCE ALSO. IT WAS FURTHER CON TENDED THAT PROVISIONS OF SECTION 199 IS THE ONLY ENABLING PROVISIONS TO CLAI M TDS RELATING TO A PARTICULAR INCOME WHEN THE SAME WAS RETURNED IN A P ARTICULAR ASSESSMENT YEAR. THE TDS SHOULD BE ALLOWED IN THE ASSESSMENT YEAR TO WHICH THE CERTIFICATES RELATE TO. HE HAS ALSO PLACED RELIANC E UPON CERTAIN DECISIONS BEFORE THE A.O. BUT THE A.O. WAS NOT CONVINCED WIT H IT AND HE DISALLOWED THE CREDIT OF THE TAX DEDUCTED AT SOURCE ON THE MOBILIZ ATION ADVANCE. 4. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT( A) WITH THE SUBMISSION THAT MOBILIZATION ADVANCE WAS GRANTED TO THE ASSESSEE IN ORDER TO ENABLE IT TO DEPLOY MACHINERY AND MAN POWER IN SUFF ICIENT QUANTITY AT THE WORK SITE, AWARDED TO THE ASSESSEE. IT WAS FURTHER CONTENDED THAT SINCE THE MOBILIZATION ADVANCE IS NOT IN THE NATURE OF INCOME , NO TDS CAN BE DEDUCTED BUT IT WAS HOWEVER, DEDUCTED BY M/S. GAMMON INDIA L IMITED. THEREFORE, THE CREDIT OF THE SAME IS TO BE ALLOWED TO THE ASSESSEE . THE CONTENTIONS OF THE ASSESSES WERE EXAMINED BY THE CIT(A) AND FOLLOWING THE ORDER OF THE TRIBUNAL, MUMBAI BENCH IN THE CASE OF TOYO ENGINEER ING INDIA LIMITED, 5 SOT 616 DIRECTED THE A.O. TO ALLOW THE CREDIT OF TDS IN THE YEAR UNDER CONSIDERATION. 5. THE REVENUE PREFERRED AN APPEAL BEFORE THE TRIBU NAL WITH THE SUBMISSIONS THAT TRIBUNAL HAS TAKEN A CONTRARY VIEW IN SIMILAR TYPE OF SITUATION. THEREFORE, THE CIT IS NOT JUSTIFIED IN ADOPTING THE VIEW THAT THE CREDIT OF TDS CAN BE ALLOWED IN THE YEAR OF RECEIPT OF TDS CERTIFICATE THOUGH THE CORRESPONDING INCOME WAS NOT OFFERED TO TAX IN THAT ASSESSMENT YEAR. THE LD. D.R. HAS ALSO INVITED OUR ATTENTION TO THE PROVISIONS OF SECTION 199 OF THE ACT WITH THE SUBMISSION THAT THE CREDIT OF TDS CAN ONLY BE GIVEN ON PRODUCTION OF THE CERTIFICATE FURNISHED U/S 203 IN THE ASSESSMENT MADE UNDER THIS ACT FOR THE ASSESSMENT YEAR FOR WHICH SUCH INC OME IS ASSESSABLE. SINCE THE CORRESPONDING INCOME IS NOT ASSESSABLE IN THE I MPUGNED ASSESSMENT YEAR, THE CREDIT OF TDS CANNOT BE ALLOWED TO THE AS SESSEE. ITA/324/V/09 P.S. RAO, VJA 4 6. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HA ND HAS SUBMITTED THAT HAVING REALIZED THIS PROBLEM FACED BY CERTAIN TYPE OF ASSESSEES, THE CORRESPONDING AMENDMENT WAS MADE IN THE PROVISIONS OF SECTION 199 OF THE ACT AND IN THE AMENDED PROVISIONS, THERE WAS NO SPE CIFIC MENTION ABOUT THE YEAR IN WHICH THE CREDIT OF TDS IS TO BE GIVEN. AS PER SUB-SECTION 1 OF SECTION 199, THE TDS DEDUCTED AS PER THE FOREGOING PROVISIO NS OF THIS CHAPTER AND PAID TO THE CENTRAL GOVERNMENT SHALL BE TREATED AS A PAYMENT OF TAX ON BEHALF OF THE PERSON FROM WHOSE INCOME, THE DEDUCTI ON WAS MADE. INTENTIONALLY, THE LEGISLATURE HAVE OMITTED THE WOR DS FOR THE ASSESSMENT YEAR FOR WHICH SUCH INCOME IS ASSESSABLE. THEREFORE, T HE CLARIFICATION MADE IN THE PROVISIONS BY MAKING THE AMENDMENTS IN THE SECTION SHOULD BE KEPT IN MIND WHILE ADJUDICATING THE ISSUE. UNDISPUTEDLY, THE TA X WAS DEDUCTED AT THE SOURCE ON PAYMENT OF THE MOBILIZATION AMOUNT THOUGH THIS MOBILIZATION AMOUNT IS MERELY AN ADVANCE GIVEN TO THE ASSESSEE A ND NOT CHARGEABLE TO TAX. BUT ONCE THE TAX IS DEDUCTED ON ANY PAYMENT M ADE TO THE ASSESSEE, THOUGH IT IS NOT CHARGEABLE TO TAX, A CREDIT OF THE SAME SHOULD BE GIVEN TO THE ASSESSEES. THE LD. COUNSEL FOR THE ASSESSEE FURTHE R CONTENDED THAT THIS MOBILIZATION AMOUNT WOULD NOT BE ADJUSTED AGAINST O NE CONTRACT RECEIPT. IT WOULD BE ADJUSTED IN PART IN SUBSEQUENT YEARS WHENE VER THE SUB-CONTRACT BILLS WERE RAISED. THEREFORE, IT WOULD BE VERY DIF FICULT TO CLAIM A PROPER SET OFF OF THE TDS DEDUCTED IN SUBSEQUENT YEARS IN WHIC H NO SEPARATE CERTIFICATE WOULD BE ISSUED. THE CERTIFICATE WAS ISSUED IN THE YEAR IN WHICH THIS MOBILIZATION AMOUNT WAS PAID TO THE ASSESSEES. THE LD. COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT ALL THESE ASPECTS W ERE EXAMINED BY THE TRIBUNAL IN THE CASE OF SUPREME RENEWABLE ENERGY LI MITED VS. ITO 32 DTR 140. 7. HAVING HEARD THE RIVAL SUBMISSIONS AND FROM A CA REFUL PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW AND DOCUMENTS PLACE D ON RECORD IN THE LIGHT OF ALL RELEVANT PROVISIONS OF THE ACT, WE FIND THAT UNDISPUTEDLY, THE ASSESSEE HAS RECEIVED THE MOBILIZATION AMOUNT WHICH IS TO BE ADJUSTED AGAINST SUB- CONTRACT BILLS RAISED IN SUBSEQUENT YEARS. IT IS A LSO EVIDENT FROM THE RECORD THAT ON THIS MOBILIZATION AMOUNT, ASSESSEE WAS REQU IRED TO PAY THE INTEREST. ITA/324/V/09 P.S. RAO, VJA 5 THEREFORE, ONCE THE ENTIRE MOBILIZATION AMOUNT IS N OT AN INCOME OF THE ASSESSEE, TDS SHOULD NOT HAVE BEEN DEDUCTED BY THE PAYER. BUT IN ANY CASE, THE TDS WAS DEDUCTED ON THIS PAYMENT OF MOBILIZATIO N AMOUNT THOUGH IT WAS NOT AN INCOME IN THE HANDS OF THE ASSESSEE ON ITS R ECEIPT. BUT SUBSEQUENTLY, WHENEVER IT IS TO BE ADJUSTED IN THE SUB-CONTRACT B ILLS TO BE RAISED IN THE SUBSEQUENT YEARS, IT WOULD GRADUALLY PARTAKE THE CH ARACTER OF THE INCOME OF THE ASSESSEES. NOW THE QUESTION ARISE, ONCE THE TD S WAS DEDUCTED ON THE RECEIPT, HOW THE CREDIT OF THE SAME IS TO BE ALLOWE D TO THE ASSESSEES? 8. WE HAVE CAREFULLY PERUSED THE PROVISIONS OF SECT ION 199 OF THE ACT AND ACCORDING TO THE PRE-AMENDED PROVISIONS OF SECTION 199, THE CREDIT OF DEDUCTION MADE IN ACCORDANCE WITH THE RELEVANT PROV ISIONS OF THIS CHAPTER AND PAID TO THE CENTRAL GOVERNMENT, SHALL BE GIVEN FOR THE AMOUNT SO DEDUCTED ON THE PRODUCTION OF THE CERTIFICATE FURNI SHED U/S 203 FOR THE ASSESSMENT MADE UNDER THIS ACT FOR THE ASSESSMENT Y EAR FOR WHICH SUCH INCOME IS ASSESSABLE. BUT IN THE AMENDED PROVISION S THE WORDS FOR THE ASSESSMENT YEAR FOR WHICH SUCH INCOME IS ASSESSABLE HAS BEEN OMITTED. MEANING THEREBY, THAT THE LEGISLATURE WAS QUITE CON SCIOUS ABOUT THE FACTS AND HARDSHIPS FACED BY SOME ASSESSEES, WHILE MAKING THE AMENDMENTS IN SECTION 199 AND IN AMENDED PROVISIONS NOTHING HAS BEEN STAT ED ABOUT THE YEAR IN WHICH THE CREDIT OF TDS IS TO BE CLAIMED. AS PER A MENDED PROVISIONS OF SECTION 199, IN SUB-SECTION 1, IT HAS BEEN STATED T HAT ANY DEDUCTIONS MADE IN ACCORDANCE WITH THE FOREGOING PROVISIONS OF THIS CH APTER 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. T HEREFORE, AS PER THE AMENDED PROVISIONS, ONCE THE TDS WAS DEDUCTED, A CR EDIT OF THE SAME TO BE GIVEN TO THE ASSESSEES, IRRESPECTIVE OF THE YEAR TO WHICH IT RELATES. THE PRE- AMENDED AND THE AMENDED PROVISIONS OF SECTION 199 A RE EXTRACTED HEREUNDER: SECTION 199 : CREDIT FOR TAX DEDUCTED (1) ANY DEDUCTION MADE IN ACCORDANCE WITH THE FOREGOING PRO VISIONS OF THIS CHAPTER AND PAID TO THE CENTRAL GOVERNMENT SHALL BE TREATED AS A PAYMENT OF TAX ON BEHALF OF THE PERSON FROM WHOSE I NCOME THE DEDUCTION WAS MADE, OR OF THE OWNER OF THE SECURITY , OR DEPOSITOR OR OWNER OF PROPERTY OR OF UNIT-HOLDER OR OF THE SH AREHOLDER, AS THE ITA/324/V/09 P.S. RAO, VJA 6 CASE MAY BE, AND CREDIT SHALL BE GIVEN TO HIM FOR T HE AMOUNT SO DEDUCTED ON THE PRODUCTION OF THE CERTIFICATE FURNI SHED UNDER SECTION 203 IN THE ASSESSMENT MADE UNDER THIS ACT F OR THE ASSESSMENT YEAR FOR WHICH SUCH INCOME IS ASSESSABLE : (3) THE BOARD MAY, FOR THE PURPOSES OF GIVING CRED IT IN 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 THOSE REFERRED TO IN SUB-SECTION (1) AND SUB-SECTION (2) AND ALSO THE ASSESSMENT YEAR FOR WHICH SUCH CREDIT MAY BE GIVEN. SECTION 199. (1) ANY DEDUCTION MADE IN ACCORDANCE WITH THE FOREGOING PROVISIONS OF THIS CHAPTER AND PAID TO TH E CENTRAL GOVERNMENT SHALL BE TREATED AS A PAYMENT OF TAX ON BEHALF OF THE PERSON FROM WHOSE INCOME THE DEDUCTION WAS MADE, OR OF THE OWNER OF THE SECURITY, OR OF THE DEPOSITOR OR OF TH E OWNER OF PROPERTY OR OF THE UNIT-HOLDER, OR OF THE SHAREHOLD ER, AS THE CASE MAY BE. (2) ANY SUM REFERRED TO IN SUB-SECTION (1A) OF SEC TION 192 AND PAID TO THE CENTRAL GOVERNMENT SHALL BE TREATED AS THE TAX PAID ON BEHALF OF THE PERSON IN RESPECT OF WHOSE INCOME SUCH PAYMENT OF TAX HAS BEEN MADE. 9. IN THE LIGHT OF THESE AMENDMENTS, WE HAVE ALSO E XAMINED THE JUDGEMENT OF THIS HYDERABAD TRIBUNAL IN THE CASE OF PROGRESSIVE CONSTRUCTIONS LIMITED VS. JCIT ITA 482 AND 557/HYD/ 2001 AND THE ORDER OF THE TRIBUNAL OF CHENNAI BENCH IN THE CASE OF SUPREM E RENEWABLE ENERGY LIMITED VS. ITO 32 DTR 140 AND TOYO ENGINEERING LIM ITED 5 SOT 616 IN WHICH THE TRIBUNAL HAS TAKEN A CONSISTENT VIEW THAT THE CREDIT OF TDS SHOULD BE GIVEN IN THE YEAR OF RECEIPT. THE FACTS OF THE CASE OF M/S. PROGRESSIVE CONSTRUCTIONS LTD. (SUPRA) AND TOYO ENGINEERING IND IA LIMITED (SUPRA) ARE ALMOST SIMILAR TO THAT OF THE PRESENT CASE. IN THE CASE OF SUPREME RENEWABLE ENERGY LIMITED (SUPRA), THE TRIBUNAL HAS HELD THAT WHEN THE INTEREST INCOME IS INCIDENTAL TO THE ACQUISITION AN D INSTALLATION OF AN ASSET AND IS NOT DIRECTLY LIABLE FOR TAX, ASSESSEE IS ENTITLE D FOR THE CREDIT OF TDS FROM THE INTEREST INCOME WHICH HAS BEEN DULY RECEIVED BY THE GOVERNMENT. THE RELEVANT OBSERVATION OF THE TRIBUNAL ARE EXTRACTED HEREUNDER: THE DEPOSIT ON WHICH INTEREST WAS EARNED BY THE ASS ESSEE IS MANDATORY AS PER STATUTORY REQUIREMENT. THEREFO RE, THE INTEREST INCOME EARNED ON THE DEPOSIT IS NOT OUT OF SURPLUS FUND OF THE ITA/324/V/09 P.S. RAO, VJA 7 ASSESSEE BUT DUE TO THE STATUTORY REQUIREMENT UNDER WHICH THE DEPOSIT WAS MADE FOR AVAILING THE CREDIT FACILITY O F INSTALLATION OF MACHINERY. WHEN THE INTEREST INCOME IS IN THE NATU RE OF CAPITAL THEN THE ASSESSEE HAS RIGHTLY DEDUCTED THE SAME FRO M THE COST OF THE ASSETS AND WHILE DOING SO THE ASSESSEE HAS OFFE RED THE SAID INCOME THOUGH CAPITALIZED FOR ASSESSMENT. WHEN THE INTEREST INCOME IS NOT DIRECTLY LIABLE FOR TAX AS THE SAME I S INCIDENTAL IN THE ACQUISITION AND INSTALLATION OF THE ASSET THEN THE TAX DEDUCTED AT SOURCE FROM THE INTEREST INCOME WHICH WAS DULY RECE IVED BY THE GOVERNMENT SHALL BE REFUNDED TO THE ASSESSEE OR THE ASSESSEE IS ENTITLED FOR THE CREDIT OF THE SAME. THE GOVERNMEN T CANNOT BENEFIT ITSELF BY TAKING ADVANTAGE OF LEGAL TECHNICALITIES. EVEN OTHERWISE, ONCE THE INCOME RECEIPT HAS BEEN DEDUCTED FROM THE COST OF MACHINERY TO BE INSTALLED THE ASSESSEE HAS INDIRECT LY OFFERED THE SAME FOR ASSESSMENT AND TAXATION BECAUSE DUE TO THE REDUCTION OF COST OF THE MACHINERY AND DEPRECIATION ON THE SAID MACHINERY WOULD BE LESSER AND THE NET RESULT OF THIS WOULD BE OFFERING THE SAME INCOME OTHERWISE. WHEN A PARTICULAR INCOME IS RECEIVED BY THE ASSESSEE AFTER DEDUCTION OF TAX AT SOURCE AND T HE SAID TDS HAS BEEN DULY DEPOSITED WITH THE GOVERNMENT AND THE ASS ESSEE HAS RECEIVED THE REQUISITE CERTIFICATE TO THIS EFFECT, THEN ON PRODUCTION OF THE SAID CERTIFICATE THE ASSESSEE BECOMES ENTITL ED FOR THE CREDIT OF TDS EVEN IF THE ASSESSEE HAS NOT DIRECTLY OFFERE D THE SAID INCOME FOR TAX AS THE ASSESSEE CONSIDERED THE SAME WAS NOT LIABLE TO TAX. WHEN THE ASSESSEE HAS EARNED INTEREST ON D EPOSIT MANDATORY FOR ACQUISITION ON INSTALLATION OF MACHIN ERY THEN THE INTEREST WAS EARNED BY THE ASSESSEE AND IS DIRECTLY INCIDENTAL TO THE ACQUISITION IN RESPECT OF MACHINERY AND THEREFORE T HE SAME HAS BEEN RIGHTLY REDUCED FROM THE COST OF THE MACHINERY . IN THIS WAY THE ASSESSEE HAS INDIRECTLY DISCLOSED INCOME AND HA S OFFERED FOR ASSESSMENT. EVEN IF THE INCOME EARNED BY THE ASSES SEE HAS NOT BEEN OFFERED FOR TAX BEING NOT LIABLE FOR TAX, THE ASSESSEE IS ENTITLED FOR CREDIT OF TDS MADE IN RESPECT OF THAT INCOME. ACCORDINGLY, ASSESSEE IS ENTITLED FOR CREDIT OF TDS RELATING TO INTEREST INCOME. 10. FROM A CAREFUL PERUSAL OF THE LEGAL PROPOSITION S LAID DOWN THROUGH THE AFORESAID ORDERS BY THE TRIBUNAL AND THE RELEVANT P ROVISIONS OF THE ACT, WE ARE OF THE VIEW THAT ONCE THE TDS WAS DEDUCTED AND PAID TO THE CENTRAL GOVERNMENT, A CREDIT OF THE SAME SHOULD BE GIVEN TO THE ASSESSEES IN ORDER TO AVOID ALL SORTS OF COMPLICATIONS IN THE YEAR OF DEDUCTION OF THE TDS. THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) WHO HAS RIGHTLY DIRECTED THE A.O. TO ALLOW THE CREDIT OF THE TDS IN THE IMPUGNED ASSESSMENT YEAR. ACCORDINGLY, THE ORDER OF THE CIT(A) IS CONF IRMED. ITA/324/V/09 P.S. RAO, VJA 8 11. THE C.O. OF THE ASSESSEE IS FILED IN SUPPORT OF THE ORDER OF THE CIT(A). SINCE WE HAVE CONFIRMED THE ORDER OF THE CIT(A), TH IS C.O. HAS BECOME INFRUCTUOUS AND WE ACCORDINGLY, DISMISS THE SAME. 12. IN THE RESULT, THE APPEAL OF THE REVENUE AND TH E C.O. OF THE ASSESSEE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 3.3.2011 SD/- SD/- (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 3 RD MARCH, 2011 COPY TO 1 THE ACIT, CIRCLE - 2(1), VIJAYAWADA 2 SRI PEDDU SRINIVASA RAO, PROP: INTEGRAL CONSTRUCTIO N CO., D.NO.38 - 8 - 42, GROUND FLOOR, WHITE HOUSE, M.G. ROAD, VIJAYAWADA-52 0 010. 3 THE CI T, VIJAYAWADA 4 THE CIT (A) , VIJAYAWADA 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM