M/s. Sharda Syntex, JAIPUR V. ITO, BHILWARA

ITA 371/JODH/2010

• Counselvise Citation: 37123314 RSA 2010
• Duration Of Justice: 1 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 01-12-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 31-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VARUN BANSAL

Judgement Text

1 ITA 371-10 IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH SMC JODHPUR. ( BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER ) ITA NO. 371/JODH/2010 ASSTT. YEAR : 2004-05. M/S. SHARDA SYNTEX, VS. THE INCOME-TAX OFFICER, LAXMI BHAWAN, BZAAR NO. 3, WARD-3, BHILWARA. BHILWARA. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P.C. PARWAL & SHRI VARUN BANSAL RESPONDENT BY : SHRI MAHESH KUMAR DATE OF HEARING : 01.12.2011. DATE OF PRONOUNCEMENT : 09.12.2011. ORDER DATED : 09.12.2011. THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF LD. CIT (A) RELATING TO ASSESSMENT YEAR 2004-05. 2. THROUGH GROUND NO. 1, THE ASSESSEE IS OBJECTING IN NOT ALLOWING THE CREDIT OF TAX DEDUCTED AT SOURCE AT RS. 46,282/-. 3. THE ASSESSING OFFICER OBSERVED THAT ASSESSEE HAS DECLARED COMMISSION AND BROKERAGE INCOME OF RS. 48,90,169/-. AS PER TDS CE RTIFICATE GROSS RECEIPTS ARE SHOWN AT RS. 57,37,892/-. ASSESSEE WAS REQUIRED TO EXPLAIN THE REASON FOR DIFFERENCE. AFTER CONSIDERING THE REPLY, THE ASSESSING OFFICER DID NO T ALLOW THE DEDUCTION OF TDS OF RS. 46,282/-. THE LD. CIT (A) HAS ALSO CONFIRMED THE AC TION OF THE ASSESSING OFFICER. 2 4. THE LD. A/R FILED COPY OF WRITTEN SUBMISSIONS WH ICH WERE FILED BEFORE LD. CIT (A) AND SUBMITTED THAT IF CREDIT OF TDS IS NOT GIVEN IN A.Y. 2004-05, THEN ASSESSEE WILL NOT GET CREDIT OF THIS TDS IN ANY OF THE YEARS. THERE FORE, TO MEET THE ENDS OF JUSTICE, CREDIT OF TDS SHOULD BE ALLOWED. 5. ON THE OTHER HAND LD. D/R PLACED RELIANCE ON THE ORDER OF THE LD. CIT (A). 6. THE FACTS AND SUBMISSIONS EXPLAINED IN THE WRITT EN SUBMISSIONS ARE AS UNDER :- ASSESSEE IS A C & F AGENT AND EARNS INCOME FROM COM MISSION AND INTEREST. ASSESSEE IS FOLLOWING CASH SYSTEM OF ACCO UNTING IN RESPECT OF INTEREST AND COMMISSION INCOME. IT IS REGULARLY OFF ERING COMMISSION AND INTEREST RECEIVED AND THE AMOUNT OF TAX DEDUCTED ON INCOME CREDITED BY PARTIES TO ITS ACCOUNT BUT FOR WHICH PAYMENT IS NOT MADE DURING THE YEAR. SUCH TDS AMOUNT IS INCLUDED IN INCOME U/S198 OF THE ACT. SAME WAS ALSO ACCEPTED BY THE DEPARTMENT IN PAST. DURING THE YEAR ASSESSEE HAS OFFERED COMMISSION AND BROKERAGE INCOME AT RS.48,90,169/- AND CLAIMED TDS FOR RS.3,1 3, 264/-. PARTY WISE DETAIL OF INCOME SO OFFERED AND TDS CLAIMED DURING THE YEAR WAS FURNISHED TO AO DURING ASSESSMENT PROCEEDINGS AND S AME IS APPEARING AT PAGE 6 & 7 OF THE ASSESSMENT ORDER. THE LD. AO OBSERVED THAT THE RECEIPTS AS PER THE TD S CERTIFICATE IS RS.57,37,892/- WHEREAS ASSESSEE HAS OFFERED RS.48, 90,169/- AS ITS INCOME. HE ACCEPTED THE CASH SYSTEM OF ACCOUNTING FOLLOWED BY ASSESSEE BUT HELD THAT THE CREDIT OF TDS WOULD BE ALLOWED TO THE EXTE NT OF TOTAL COMMISSION RECEIPTS DECLARED BY THE ASSESSEE ON PROPORTIONATE BASIS. HE ACCORDINGLY REDUCED THE ASSESSEES CLAIM OF TDS BY RS.46,282/- BY COMPUTING PROPORTIONATE TDS ON RS.8,47,723 (57,37,892-4890169 ) AS UNDER: 8,47,723 X 313264 = 46282 5737892 3 LD. CIT(A) CONFIRMED THE REDUCTION IN CLAIM OF TDS BY HOLDING THAT THE CREDIT OF TDS CAN BE ALLOWED ONLY IN THE Y EAR IN WHICH SUCH INCOME IS OFFERED FOR TAX. SUBMISSION WE MAY MENTION THAT AS PER SECTION 198 OF THE INCOM E TAX ACT ALL SUMS DEDUCTED IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER XVII SHALL FOR THE PURPOSE OF COMPUTING THE INCOME OF THE ASSE SSEE BE DEEMED TO BE INCOME RECEIVED OF THE ASSESEE. IN THE PRESENT CAS E ASSESSEE HAS INCLUDED THE AMOUNT OF TAX DEDUCTED AT SOURCE IN THE INCOME .THIS IS NOT IN DISPUTE. SECTION 199 OF THE INCOME TAX ACT PROVIDED THAT ANY DEDUCTION MADE IN ACCORDANCE WITH AND PAID TO THE CENTRAL GOV ERNMENT SHALL BE TREATED AS PAYMENT OF TAX ON BEHALF OF THE PERSON F ROM WHOSE INCOME THE DEDUCTION WAS MADE AND CREDIT SHALL BE GIVEN TO HIM FOR THE ASSESSMENT YEAR FOR WHICH SUCH INCOME IS ASSESSABLE. FROM THE COMBINED READING OF SECTION 198 & 199 IT C AN BE NOTED THAT TAX DEDUCTED IS INCOME RECEIVED AND ONCE SUCH INCOME IS OFFERED FOR TAX, CREDIT OF TAX DEDUCTED HAS TO BE ALLOWED IN TH E ASSESSMENT YEAR FOR WHICH SUCH INCOME IS ASSESSABLE. IN THE PRESENT CAS E ASSESSEE OFFERED THE AMOUNT OF TDS IN INCOME AND THEREFORE CREDIT OF SUC H TAX IS TO BE ALLOWED TO THE ASSESSEE. IT MAY BE POINTED OUT THAT THERE IS NO PROVISION FO R ALLOWING PROPORTIONATE CREDIT OF TDS AS DONE BY THE LOWER AU THORITIES. IF THIS VIEW IS ACCEPTED IT WOULD RESULT IN INCONSISTENCIES. FOR INSTANCE, SUPPOSE A, BY FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING, CREDITS COMMISSION OF RS. 50 LACS IN BS ACCOUNT FOR THE YEAR ENDING 31.03.2004 AND DEDUCTS TDS @ 10% ON THE SAME. ON THE OTHER HAND, B FOLLOWS CASH SYSTEM OF ACCOUNTING AND RECEIVES COMMISSION OF RS. 3.5 LACS IN A.Y. 200 4-05 ALONG WITH TDS 4 CERTIFICATE OF RS. 1.5 LACS AND RS. 5 LACS EACH IN A.Y. 05-06 & 06-07. IN THIS SITUATION THE DEDUCTOR WOULD ISSUE THE TDS CER TIFICATE FOR THE PERIOD 1.04.2003 TO 31.03.2004. THUS ACTUAL RECEIPT OF COM MISSION IN A.Y. 2004- 05 WOULD BE 5 LACS AND CREDIT OF TDS OF 1.5 LACS IS TO BE ALLOWED IN A.Y. 2004-05 IN VIEW OF SECTION 198 & 199. IF THE TDS IS NOT CLAIMED IN A.Y. 2004-05 IT WOULD NOT BE ALLOWED IN A.Y. 2005-06 & 2 006-07 AS THE TDS CERTIFICATE DO NOT PERTAIN TO THESE YEARS. THEREFOR E THE HARMONIOUS INTERPRETATION OF SECTION 198 & 199 IS THAT THE AMO UNT OF TDS OF RS. 1.5 LACS IS INCOME RECEIVED FOR A.Y. 2004-05 AND CREDIT FOR THE SAME IS TO BE ALLOWED IN THIS A.Y. ONLY. IF CREDIT OF TDS IS NOT GIVE IN AY 2004-05 IT WOULD NEVER BE ALLOWED. SUPREME COURT IN THE CASE O F CIT VS. HINDUSTAN BULK CARRIERS 259 ITR 449 HAS HELD THAT THE PROVISIONS OF ONE SECTION OF STATUE CANNOT BE USED TO DEFEAT THOS E OF ANOTHER UNLESS IT IS IMPOSSIBLE TO EFFECT RECONCILIATION BETWEEN THEM. T HUS A CONSTRUCTION THAT REDUCES ONE OF THE PROVISIONS TO A USELESS LUMBER OR DEAD LETTER IS NOT A HARMONIZED CONSTRUCTION. TO HARMONIES IS NOT DEST ROY. IN VIEW OF THIS DECISION ALSO CREDIT OF TDS CANNOT BE PROPORTIONATE LY REDUCED. LD. CIT(A) HAS NOT APPRECIATED THE ABOVE INTENTION OF THE ASSESSEE WITHOUT GIVING ANY BASIS FOR HIS DISAGREEMENT. IN VIEW OF THE ABOVE THE AO BE DIRECTED TO ALLOW TH E CREDIT OF RS.46,282/-. 7. AFTER CONSIDERING THE WRITTEN SUBMISSIONS AND PE RUSING OTHER MATERIAL ON RECORD, I FIND THAT THE ASSESSEE DESERVES TO SUCCEED IN THIS GROUND AS ASSESSEE HAS CLAIMED DEDUCTION ON ACCOUNT OF TDS WHICH HAS BEEN DEPOSITE D IN THE GOVERNMENT ACCOUNT AND THERE IS NO DISPUTE IN THIS REGARD. IF CREDIT OF T DS IS NOT GIVEN IN THE YEAR UNDER CONSIDERATION, THEN ASSESSEE WILL NOT GET DEDUCTION IN ANY OF THE YEARS AND REVENUE CANNOT KEEP THE TDS AMOUNT IN SUSPENSE ACCOUNT. WHEN ASSE SSEE HAS SHOWN TURNOVER AND TDS 5 HAS BEEN DEDUCTED, THEN IN MY VIEW THERE SHOULD NOT BE ANY PROBLEM IN ALLOWING THE SAME. EXPLANATION OF THE ASSESSEE IS ALSO REASONAB LE WHICH IS REPRODUCED ABOVE IN THIS ORDER. IN VIEW OF THE SAME, I DIRECT TO ALLOW THE TDS CLAIMED. THIS GROUND OF THE ASSESSEE IS ALLOWED. 8. SECOND GROUND IS AGAINST CONFIRMING ADDITION OF RS. 28,665/- BY CONSIDERING COMMISSION AND BROKERAGE RECEIVED AT RS. 48,34,681/ - AGAINST RS. 48,06,016/- SHOWN BY ASSESSEE. 9. THE BRIEF FACTS DISCUSSED IN THE WRITTEN SUBMISS IONS ARE AS UNDER :- AO ON PAGE 8 OF HIS ORDER OBSERVED THAT AS PER THE DETAILS FILED BY THE ASSESSEE, THE COMMISSION AND BROKERAGE RECEI VED IS RS.48,34,681/- WHEREAS ASSESSEE HAS DECLARED THE RECEIPTS AT RS.48 ,06,016/-. HE THEREFORE MADE ADDITION FOR THE DIFFERENCE. CIT(A) HAS CONFIRMED THE ADDITION. WE MAY SUBMIT THAT THE GROSS COMMISSION AND BROKERA GE INCOME DECLARED DURING THE YEAR IS RS.48,23,950/- AND NOT RS.48,06,016/- TAKEN BY THE AO. AS PER THE STATEMENT SUBMITTED BY THE ASSES SEE FOR RECONCILIATION OF THE TDS CERTIFICATE, GROSS COMMISSION IS RS.48,3 4,681/-. THIS DIFFERENCE IS RS.10,731/- AND NOT RS.28,665/-. THI S DIFFERENCE IS ON ACCOUNT OF THE AMOUNT OF COMMISSION SHOWN IN THE BO OKS AND AS PER THE STATEMENT FILED IN RESPECT OF THE FOLLOWING PARTIES : NAME OF PARTY AMOUNT AS PER BOOKS AMOUNT AS PER STATEMENT DIFFERENCE SH. ROHITH SPINNERS (P) LTD. 5,51,269 5,67,420/- 16,151/- SH. AYYANAR SPINNING AND WEAVING 13,956/- 11,331/- (2,625/-) VIBHA SYNTHETICS 3,59,035/- 3,61,603/- 2,568/- THE SAGAR TEXTILE LTD. 7,863/- 0 (7,863/-) MALLAPURAM SPINNING MILLS 44,066/- 46,566/- 2,500/- TOTAL 9,76,189/- 9,86,920/- 10,731/- 6 THIS DIFFERENCE IS BECAUSE THE AMOUNT HAS BEEN INCO RRECTLY TAKEN IN THE STATEMENT. AFTER CONSIDERING THIS THERE IS NO D IFFERENCE AND THEREFORE THE ADDITION OF RS.28,665/- BE DIRECTED TO BE DELET ED. 10. AFTER GOING THROUGH THESE FACTS AND SUBMISSIONS OF THE ASSESSEE, I FIND THAT IN FACT THERE IS A DIFFERENCE OF ONLY RS. 10,731/- AND RECO NCILIATION OF THE SAME WAS ALSO FILED. HOWEVER THE SAME WAS NOT TAKEN INTO CONSIDERATION. COPY OF RECONCILIATION IS PLACED ON RECORD AND IF THIS RECONCILIATION IS TAKEN INTO CON SIDERATION, THEN NO DIFFERENCE REMAINS. KEEPING IN MIND ALL THESE FACTS AND THE SMALLNESS O F ADDITION, I HOLD THAT THERE IS NO JUSTIFICATION IN SUSTAINING THE ADDITION. ACCORDIN GLY THE SAME IS DELETED. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. 12. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 09 .12.2011. SD/- ( R.K. GUPTA ) JUDICIAL MEMBER JODHPUR, COPY FORWARDED TO :- M/S. SHARDA SYNTEX, BHILWARA. THE ITO WARD-3, BHILWARA. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 371/JODH/2010) BY ORDER, AR ITAT JODHPUR.