Societe D' Engineering Pour L', Jammu V. Additional Commissioner of Income Tax, Jammu

ITA 360/ASR/2010

• Counselvise Citation: 36020914 RSA 2010
• Duration Of Justice: 3 year(s) 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 20-01-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 16-08-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S K BANSAL
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.360(ASR)/2010 ASSESSMENT YEAR:2005-06 PAN :AABCS3225R SOCIETE D ENGINEERING POUR L VS. ASSTT. COMMR. OF INCOME TAX, INDUSTRIE ET. LES TRAVAUX PUBLICS, CIRCLE-2, JAMMU. (SEITP), JAMMU. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.S.K.BANSAL, ADVOCATE RESPONDENT BY:SH. MAHAVIR SINGH, DR DATE OF HEARING: 20/01/2014 DATE OF PRONOUNCEMENT:14/02/2014 ORDER PER BENCH ; THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER OF THE CIT(A), JAMMU DATED 11.05.2010 FOR THE ASSESSMEN T YEAR 2005-06.THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT THE ORDER OF THE LD. CIT(A) IS BAD IN LA W AND ON FACTS. 2. THAT THE LD. CIT(A) HAS GROSSLY ERRED IN LAW AND ON FACTS IN CONFIRMING THE ORDER OF THE AO WHEREIN THE AO DID N OT GRANT CREDIT FOR TDS OF RS.4,41,447/- THAT WAS EFFECTED B Y THE CUSTOMER IN ASSESSMENT YEAR 2005-06 THOUGH THE PAY MENT OF ITA NO.360(ASR)/2010 2 TAX BY THE CUSTOMER WAS MADE IN ASSESSMENT YEARS 20 06-07 AND 2007-08. 3. THAT THE LD. CIT(A) HAS GROSSLY ERRED IN STATING THAT THE CREDIT OF TDS CAN BE CLAIMED IN A YEAR IN WHICH THE INCOM E IS ASSESSABLE OR IN A LATER YEAR IF THE INCOME FROM WH ICH TAX HAS BEEN DEDUCTED HAS ALREADY BEEN ASSESSED IN AN EARLI ER YEAR IN AS MUCH AS THE INCOME TAX ACT IN SECTION 199 PROVIDES THAT THE TAX DEDUCTED SHOULD BE PAID TO THE CENTRAL GOVT. AND CR EDIT SHALL BE GIVEN TO THE ASSESSEE ON THE PRODUCTION OF CERTIFIC ATE FURNISHED U/S 203 IN THE ASSESSMENT MADE UNDER THIS ACT FOR T HE ASSESSMENT YEAR FOR WHICH SUCH INCOME IS ASSESSABLE . 4. THAT ANY CONSEQUENTIAL RELIEF TO WHICH THE ASSES SEE MAY BE ENTITLED UNDER THE FOREGOING GROUNDS OF APPEAL MAY KINDLY BE GRANTED TO THE ASSESSEE. 5. THAT THE APPELLANT MAY BE ALLOWED TO VARY OR ADD TO THE FOREGOING GROUNDS OF APPEAL, IF IT BECOMES NECESSAR Y TO DO SO IN THE INTEREST OF JUSTICE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 29.03.2006 DECLARING INCOME OF RS.3 7,60,340/-. THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT ON 30.03.2007 W ITH THE RESULTANT TAX DEMAND OF RS.5,78,691/-. THE CASE WAS LATER SELECT ED FOR SCRUTINY ON THE BASIS OF ACTION PLAN FOR F.Y. 2006-07. THE ASSESSEE S BUSINESS IN INDIA IS LIMITED TO THE EXECUTION OF THE CONTRACTS ENVISAGED IN THE AGREEMENT WITH NATIONAL HYDRO-ELECTRIC POWER CORPORATION. DURING T HE YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY RENDERED SERVIC E IN THE NATURE OF ADMINISTRATION, GENERAL MANAGEMENT, SITE SUPERVISIO N SERVICES AND PREPARATION OF PROGRESS REPORTS FOR THE WORK PERFO RMED AT THE DULHASTI SITE. ITA NO.360(ASR)/2010 3 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE REQUESTED THAT THE CREDIT OF TDS AS CLAIMED WAS NOT ALLOWED WHILE PROC ESSING THE RETURN AS A RESULT OF WHICH DEMAND OF RS.5,78,691/- WAS CREATED AGAINST THE COMPANY. IT WAS EXPLAINED BY THE ASSESSEE THAT THE INCOME IN R ESPECT OF WHICH TDS CREDIT WAS NOT ALLOWED, WAS SHOWN, IN THE AY 2005-0 6 ON ACCRUAL BASIS ON RAISING THE INVOICES OF NHPC BUT NHPC WITHHELD THE PAYMENTS AS WELL AS TDS WHICH WAS SUBSEQUENTLY PAID BY THEM AND TDS WAS ALSO DEPOSITED IN THE SUBSEQUENT YEARS. IN THE PROCESSING OF RETURN C REDIT OF TDS OF RS.3,91,704/- ONLY WAS ALLOWED AS AGAINST THE CLAIM OF RS.8,33,151/-. THE CREDIT OF TDS IN RESPECT OF TDS CERTIFICATE DATED 1 2.09.2005 FOR RS.2,17,561/- AND TDS CERTIFICATE FOR RS.2,23,886/- WAS NOT ALLOWED AS THE TDS CERTIFICATE FOR RS.2,17,561/- PERTAINED TO A.Y. 2006-07 AND IN RESPECT OF RS.2,23,886/-, THE TDS CERTIFICATE WAS NOT FILED. T HE AO, THEREFORE, DID NOT ALLOW THE CREDIT OF TDS AS ABOVE AND CONSEQUENTLY C HARGED INTEREST U/S 234B AND 234C OF THE ACT. 3. BEFORE THE LD. CIT(A) MADE SUBMISSIONS, WHO AFTE R CONSIDERING THE SAME DISMISSED THE APPEAL OF THE ASSESSEE. 4. THE LD. COUNSEL FOR THE ASSESSEE, MR. S.K.BAN SAL, ADVOCATE REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT (A) IN PARA 5 OF CIT(A)S ORDER AND MAINLY RELIED UPON THE DEC ISION OF THE ITAT, ITA NO.360(ASR)/2010 4 CHANDIGARH (SPECIAL BENCH) IN THE CASE OF PRADEEP K UMAR DHIR VS. ACIT REPORTED IN 303 ITR (AT) 45 (CHD.). 5. THE LD. JCIT(DR), MR. MAHAVIR SINGH, ON THE OTHE R HAND, RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. AT THE OUTSET, WE CONCUR WITH THE VIEWS OF THE LD. CIT(A) THAT THE CREDIT OF TDS SHALL BE ALLOWED IN THE ASSESSMENT YEAR IN WHIC H THE INCOME FROM WHICH TAX IS DEDUCTED, IS ASSESSABLE. HOWEVER, THE ASSESSMENT OF INCOME ALONE IS NOT THE CRITERIA FOR CLAIMING CREDIT OF T DS. THE CREDIT OF TDS IS ADMISSIBLE ON FULFILLMENT OF OTHER CONDITIONS PRESC RIBED IN SECTION 199 OF THE ACT NAMELY; I) THE TAX DEDUCTIBLE AT SOURCE IS ACTUALLY DEDUCT ED; II) THE TAX SO DEDUCTED IS PAID TO THE CENTRAL GOV ERNMENT; AND III) A CERTIFICATE OF DEDUCTION OF TAX AT SOURCE AS PROV IDED U/S 203 OF THE ACT IS FURNISHED FOR CLAIMING CREDIT OF TDS. IT IS ONLY ON FULFILLMENT OF THE ABOVE CONDITIONS CUMULATIVELY THAT THE CREDIT OF TDS WOULD BE ALLOWABLE IN A YEAR IN WHICH THE IN COME IS ASSESSABLE. THE PROVISIONS OF SECTION 205 OF THE ACT LAY DOWN THAT ONCE TAX HAS BEEN DEDUCTED AT SOURCE, THERE WOULD E NO DIRECT DEMAN D FROM THE ASSESSEE FROM WHOSE INCOME TAX HAS BEEN DEDUCTED. THUS, THE PROVI SIONS OF SECTION 205 ARE ITA NO.360(ASR)/2010 5 IN THE CONTEXT OF RECOVERY OF DEMAND AND HAVE NOTHI NG TO DO WITH THE CREDIT OF TDS. FOR THE PURPOSE OF CLAIMING CREDIT OF TDS, THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE IS ALSO OF NO R ELEVANCE. IT IS NOW WELL SETTLED THAT THE CREDIT OF TDS CAN BE CLAIMED IN A YEAR IN WHICH THE INCOME IS ASSESSABLE. OR IN A LATER YEAR IF THE INCOME FROM W HICH TAX HAS BEEN DEDUCTED HAS ALREADY BEEN ASSESSED IN AN EARLIER YEAR. IT IS SEEN THAT THE AO HAS ELABORATELY DISCUSSED THE REASONS FOR NOT GIVING CR EDIT OF TDS. THE AO HAS ALSO CARRIED OUT NECESSARY FACTUAL VERIFICATION FOR M THE NHPC. IT HAS BEEN HELD THAT THE CREDIT OF TDS OF RS.2,17,561/- IN RES PECT OF TDS CERTIFICATE DATED 12.09.2005 WAS NOT ALLOWED AS THIS TDS CERTIF ICATE PERTAINED TO AY 2006-07 AS THE PAYMENT OF TDS BY THE DEDUCTOR WAS M ADE IN FY 2005-06 AND THE CERTIFICATE WAS ACCORDINGLY ISSUED IN SEPT .,2005. WHEREAS IN RESPECT OF TDS OF RS.2,33,886/-, NO CERTIFICATE WAS FILED. BESIDES, THE ASSESSEE ALSO ANNEXED A NOTE IN THE COMPUTATION OF INCOME FILED A LONGWITH THE RETURN OF INCOME THAT REPRESENTS PROVISIONAL AMOUNTS OF TDS WITHHELD/ TO BE WITH BY NHPC FOR WHICH CREDIT HAS BEEN CLAIMED IN TERMS OF SECTION 199 OF THE ACT PENDING RECEIPT OF TDS CERTIFICATES. ACTUAL AMOUNTS WILL BE CLAIMED SUBSEQUENTLY AFTER THE RELEVANT TDS CERTIFICATES AR E RECEIVED. AS PER THE ENQUIRY CONDUCTED BY THE AO, THE TDS OF RS.2,17,56 1/- WAS DEPOSITED BY THE DEDUCTOR INTO THE CENTRAL GOVT. ACCOUNT ON 10.0 9.2005 VIDE CHALLAN NO.249/13 FOR RS.3,44,568/- (INCLUDING RS.2,17,561/ -) AND THIS AMOUNT WAS ITA NO.360(ASR)/2010 6 INCORPORATED IN E-TDS RETURN FOR THE PERIOD 1.7.200 5 TO 30.9.2005. THESE FACTS CLEARLY SHOW THAT THE TDS WAS ACTUALLY DEDUCT ED AND DEPOSITED INTO THE GOVT. ACCOUNT ON 10.9.2005 AND THE CREDIT OF SAME W AS ALLOWABLE IN AY 2006-07. AS REGARDS CREDIT OF TDS OF RS.2,23,886/- PROVISIONALLY CLAIMED BY THE ASSESSEE WITHOUT ANNEXING ANY TDS CERTIFICAT E WITH THE RETURN, THE ASSESSEE CLAIMED BEFORE THE AO THAT NHPC ISSUED TH REE CERTIFICATES AGGREGATING RS.3,97,742/- WAS CLAIMED IN THE AY 200 6-07 AFTER REDUCING THE AMOUNT OF RS.2,23,886/-, THE CREDIT OF WHICH WAS CL AIMED IN THE AY 2005- 06. HOWEVER, THE AO ON INQUIRY FOUND THAT NHPC ACTU ALLY DEDUCTED TDS OF RS.5,68,679/- AND DEPOSITED INTO THE GOVT. ACCOUNT ON 26.06.2006 AD THE PARTICULARS OF THIS AMOUNT WERE INCORPORATED IN E-T DS RETURN FOR THE PERIOD 1.4.2006 TO 30.6.2006 WHICH FALLS IN AY 2007-08. AS REGARDS JUDICIAL RULINGS, THE COUNSEL FOR THE ASSESSEE HAS RELIED ON THE DECISION OF HONBLE GAUHATI HIGH COURT IN THE CASE OF OM PRAKASH GATTAN I REPORTED IN 222 ITR 489 IN WHICH IT WAS HELD THAT EVEN IF THE TAX DEDUC TED AT SOURCE HAS NOT BEEN PAID BY THE DEDUCTOR INTO THE ACCOUNT OF CENTRAL GO VT.; THE CREDIT HAS TO BE GIVEN TO THE ASSESSEE AND THE DEMAND RAISED AGAINST THE ASSESSEE ON ACCOUNT OF NOT GIVING CREDIT OF TDS FOR THE REASONS OF NON -PAYMENT OF TDS BY THE DEDUCTOR INTO GOVT. ACCOUNT, CANNOT BE RECOVERED FR OM THE ASSESSEE IN VIEW OF THE PROVISIONS OF SECTION 205 OF THE ACT. HOWEVE R, THIS JUDGMENT WAS DELIVERED BY THE HONBLE SINGLE JUDGE AND A WRIT PE TITION WAS FILED BY THE ITA NO.360(ASR)/2010 7 REVENUE AGAINST THE AFORESAID ORDER. SUBSEQUENTLY, A LARGER BENCH OF HONBLE GAUHATI HIGH COURT, WHILE CONSIDERING THE WRIT FILE D BY THE DEPARTMENT AS WELL AS WRIT FILED BY THE SAME ASSESSEE AGAINST THE GARNISHEE PROCEEDINGS U/S 226(3) OF THE ACT, AS PER THE DECISION REPORTED IN 242 ITR 638,HELD THAT THE NOTICES ISSUED U/S 226(3) TO RECOVER THE DEMAND AGA INST THE ASSESSEE WERE ILLEGAL AND DEMAND CANNOT BE RECOVERED IN VIEW OF T HE PROVISIONS OF SECTION 205 OF THE ACT. HOWEVER, AS REGARDS THE ISSUE OF G IVING CREDIT OF TDS WHEN THE TDS WAS NOT PAID INTO THE ACCOUNT OF CENTRAL GO VT. BY THE DEDUCTOR, THE HONBLE COURT HELD THAT CREDIT FOR TAX DEDUCTED WOU LD BE GIVEN WHEN THE AMOUNT IS DEDUCTED AND PAID TO THE CENTRAL GOVT. A ND A CERTIFICATE OF DEDUCTION IS PRODUCED AS FURNISHED U/S 203 OF THE A CT. UNLESS THE AMOUNT IS PAID TO THE CENTRAL GOVT. THE TAX LIABILITY IS NOT DISCHARGED, NOT IT CAN BE SAID THAT THE ASSESSEE HAS PAID THE AMOUNT OF TAX PAYABL E TO THE GOVT. THEREFORE, CREDIT OF TAX DEDUCTED AT SOURCE CANNOT BE GIVEN ON MERE DEDUCTION OF AMOUNT. IT HAS BEEN FURTHER HELD THAT THE DEDUCTOR HAS TO BE DEEMED TO BE AN ASSESSEE IN DEFAULT AND DEPARTMENT CANNOT PROCEED T O RECOVER THE AMOUNT OF TAX FROM THE ASSESSEE. THUS, THE TWO ASPECTS DEALT WITH IN THE ABOVE CASE ARE THAT ONCE THE CREDIT OF TDS IS NOT ALLOWED ON THE G ROUND OF NON-PAYMENT OF TDS BY THE DEDUCTOR INTO GOVT. ACCOUNT AND DEMAND I S RAISED AGAINST THE ASSESSEE ON THAT SCORE, THE DEPARTMENT CANNOT RECOV ER THE DEMAND FROM THE ASSESSEE IN VIEW OF THE BAR ON DIRECT DEMAND PROVID ED U/S 205 OF THE ACT. ITA NO.360(ASR)/2010 8 SECONDLY, THE CREDIT OF TDS CANNOT BE ALLOWED UNLES S THE TDS HAS BEEN PAID BY THE DEDUCTOR INTO THE GOVT. INTO THE GOVT. ACCOU NT. THUS, THE BENCH CONSISTING OF HONBLE TWO JUDGES IN THE DECISION RE PORTED IN 242 ITR 638 UPHELD THE ACTION OF THE AO IN NOT GIVING CREDIT OF TDS AND SET ASIDE THE ORDER OF HONBLE SINGLE JUDGE REPORTED IN 222 ITR 4 89 TO THAT EXTENT. THE LD. COUNSEL HAS ALSO RELIED ON ANOTHER DECISION OF HONBLE ITAT,AHMEDABAD (122 TTJ 141) IN THE CASE OF AHLUWAL IA & ASSOCIATE VS. ITO WHEREIN IT WAS HELD THAT WHERE TAX IS DEDUCTIBL E AT SOURCE AND HAS ACTUALLY BEEN DEDUCTED, DEDUCTEE IS NOT LIABLE TO P AY TAX TO THAT EXTENT AND DIRECT DEMAND FROM DEDUCTEE IS BARRED BY SEC.205, N OTWITHSTANDING THAT TAX SO DEDUCTED HAS NOT BEEN PAID TO THE CREDIT OF THE CENTRAL GOVT. CONSEQUENTLY, AO HAS TO GIVE CREDIT OF TAX SO DEDUC TED TO THE DEDUCTEE AND IT IS FOR THE DEPARTMENT TO RECOVER SUCH AMOUNT FRO M THE DEDUCTOR AND TAKE SUCH ACTION AGAINST HIM AS MAY BE WARRANTED IN LAW . HOWEVER, THIS DECISION WAS RENDERED FOLLOWING THE JUDGMENT OF HONBLE GAUH ATI HIGH COURT REPORTED IN 222 ITR 489, WHICH HAS SUBSEQUENTLY BEE N SET ASIDE BY THE LARGER BENCH OF THE SAME COURT IN THE MATTER OF GIVING CRE DIT OF TDS. HENCE, THE JUDICIAL RULINGS RELIED ON THE LD. COUNSEL FOR THE ASSESSEE DO NOT RENDER ANY HELP TO THE ASSESSEE. THE HONBLE ITAT, RAJKOT BENC H IN THE CASE OF ACIT VS. SH.DIGVIJAY CEMENT CO. LTD (104 ITD 185) FOLLOW ING THE LATER JUDGMENT OF HONBLE GAUHATI HIGH COURT IN THE CASE OF OM PR KASH GATTANI (242 ITR ITA NO.360(ASR)/2010 9 638) HAS HELD THAT FOR THE PURPOSE OF SECTION 199 OF THE ACT, TDS MUST HAVE BEEN PAID TO THE CENTRAL GOVT. WITHIN THE RELEVANT FINANCIAL YEAR. THE TAX DEDUCTED AT SOURCE BUT NOT PAID TO THE CENTRAL GOVT . WITHIN THE FINANCIAL YEAR CANNOT BE TREATED AS PAYMENT OF TAX ON BEHALF OF AS SESSEE. THUS, IN VIEW OF THE FINDINGS OF THE AO THAT THE TDS WAS NOT DEDUCTE D BY THE NHPC IN THE FINANCIAL YEAR RELEVANT TO AY 2005-06 AND THAT THE TDS OF RS.2,17,561/- WAS PAID BY THE DEDUCTOR ON 109.09.2005 AND ALSO THE TD S OF RS.2,23,886/- WAS INCLUDED IN THE AMOUNT PAID ON 20.06.2006, THE CRE DIT OF TDS WAS RIGHTLY NOT ALLOWED IN THE YEAR UNDER APPEAL IN VIEW OF THE CLEAR AND UNAMBIGUOUS PROVISIONS OF SECTION 199 OF THE ACT. THE ACTION OF THE AO IN DENYING THE CREDIT OF TDS FURTHER STANDS UPHELD BY THE JUDICIAL RULINGS DISCUSSED ABOVE. IN THE WRITTEN SUBMISSIONS, THE ASSESSEE HAS REFERR ED TO THE AMOUNT OF TDS OF RS.2,27,472/- INSTEAD OF RS.2,23,886/- ON THE BA SIS OF A CERTIFICATE ISSUED BY THE NHPC DATED 30.06.2006 SUBMITTED TO THE AO D IRECTLY AND THE ASSESSEE HAS ACCORDINGLY CONTESTED CLAIM OF TDS OF RS.4,45,033/- AS AGAINST RS.4,41,447/- CLAIMED IN THE GROUNDS OF APPEAL. IT MAY BE MENTIONED THAT SINCE THE INCOME CORRESPONDING TO THE CLAIM OF TDS ALREADY STOOD TAXED IN AY 2005-06, THE ASSESSEE SHALL BE ELIGIBLE TO CLAIM CREDIT OF TDS OF RS.2,17,561/- IN A.Y.2006-07 AND THAT OF RS.2,23,88 6/- OR RS.2,27,472/- (SUBJECT TO VERIFICATION BY THE AO) IN A.Y.2007-08. ITA NO.360(ASR)/2010 10 7. IN THE FACTS AND CIRCUMSTANCES, THE ARGUMENTS MA DE BY THE LD. COUNSEL FOR THE ASSESSEE, MR. S.K.BANSAL, ADVOCATE AND RELI ANCE ON THE DECISION OF ITAT, CHANDIGARH (SPECIAL BENCH) IN THE CASE OF PRA DEEP KUMAR DHIR VS. ACIT REPORTED IN 303 ITR (AT) 45 (CHD.). IS NOT APP LICABLE IN THE PRESENT FACTS AND CIRCUMSTANCES OF THE CASE. ACCORDINGLY, W E FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A), WHO HAS RIGHTLY DISMISSED THE APPEAL OF THE ASSESSEE. THEREFORE, ALL THE GROUNDS OF THE ASSESSE E ARE DISMISSED. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO.360(ASR)/2010 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14TH FEBRUARY, 2014. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 14TH FEBRUARY, 2014 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SOCIETE D. ENGG. POUR : INDUSTRIES JA MMU. 2. THE ACIT CIR.,2, JAMMU 3. THE CIT(A), JAMMU 4. THE CIT, JAMMU 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR ITA NO.360(ASR)/2010 11