KKM Associattes, Bhubaneswar V. ITO, Ward - 5(1), Bhubaneswar

ITA 373/CTK/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5331 (ITAT-CUTTACK)
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 13-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B K MOHAPATRA
• Keywords: Principle of natural justice; Diversion of income; TDS; Set aside; FORM 26AS
• Section: 192; 64; 2(A); 13

Judgement Text

P A G E 1 | 10 IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK SMC BENCH, CUTTACK BEFORE SHRI CHANDRA MOHAN GARG , JUDICIAL MEMBER ITA NO . 373 /CTK/20 19 ASSESSMENT YEAR : 2014 - 15 KKM ASSOCIATES, C/O RAJASHREE BHUYAN, N - 382, IRC VILLAGE, BHUBANESWAR. VS. ITO, WARD 5(1), BHUBANESWAR PAN/GIR NO. AAMFK 0338 H (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI B.K. MOHAPATR A , AR REVENUE BY : SHRI SUBHENDU DUTTA, DR DATE OF HEARING : 24 / 0 9 / 20 20 DATE OF PRONOUNCEMENT : 08 / 10 /20 20 O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A), 2 , BHUBANESWAR DATED 12.6.2019 FOR THE ASSESSMENT YEAR 2014 - 15 . 2. GROUNDS OF APPEAL RAISED BY THE ASSESSEE READ AS UNDER: 1. THAT THE ORDER OF THE LD CIT(A) DATED 12.6.2019 IN DISMISSING THE APPEAL, IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE, CONTRARY TO FACTS, ARBITRARY, EXCESSIVE, ERRONEOUS AND BAD BOTH THE EYE OF LAW AND ON FACTS. 2. NON CR E DIT OF TDS OF RS.12,88,214 / - A. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS) UPHOLDING THE ORDER OF THE ASSESSING OFFICER IN GIVING CREDIT FOR TDS OF ONLY RS.4,04,840/ - AS AGAINST TDS OF RS. 16,93,054 - AS PER RETURN AND ALSO DULY REFLECTED IN FORM 26AS OF THE ASSESSEE, THEREBY THE DENIAL OF TAX CREDIT FOR TDS OF RS. 1 2,88,214/ - I.E( RS. 1 6,93,054 - RS.4,04,840). IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE, CONTRARY TO FACTS, ITA NO.373/CTK/2019 ASSESSMENT YEAR : 2014 - 15 P A G E 2 | 10 UNJUSTIFIED, ARBITRARY, ERRONEOUS AND BAD, BOTH IN THE EYE OF LAW AND ON FACTS AND LEGALLY UNTENABLE. B. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED LOWER AUTHORITIES HAVE MISCONSTRUED/MIS - APPRECIATED THE FACTS AND LAW AND THE DENIAL OF TAX CREDIT FOR TDS OF RS. 1 2,88,214/ - I.E.(RS. 1 6,93,054 - RS.4,04,840 UNDER RULE 37BA OF THE I.T.RULES,1962 IS CONTRARY TO FACTS, UNJUSTIFIED, ARBITRARY, ERRONEOUS AND BAD, BOTH IN THE EYE OF LAW AND ON FACTS AND LEGALLY NOT TENABLE. C. THAT WITHOUT PREJUDICE TO GROUNDS 2(A) & (B) ABOVE, THE LEARNED CIT(APPEALS) HAS MIS - APPRECIATED/ MISINTERPRETED THE PROVISIONS OF RULE 37BA OF TH E I.T.RULES,1962 AND NOT FOLLOWING THE ITAT ORDER IS UNJUSTIFIED, ARBITRARY, ERRONEOUS AND BAD. BOTH IN THE EYE OF LAW AND ON FACTS. 3. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS PLACED ON THE RECORD OF THE TRIBUNAL. 4. THE RELE VANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS A DISTRIBUTOR OF RELIANCE TELECOM LTD (RTL) AND RECEIVES COMMISSION FOR GOODS SOLD ON BEHALF OF RTL. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT AS PER FORM NO.26AS, RTL H AS PAID COMMISSION TO THE ASSESSEE OF RS.1,64,54,014/ - , ON WHICH, AN AMOUNT OF RS.16, 93,054 / - TOWARDS TDS WAS PAID. FURTHER, THE AO NOTICED THAT THE ASSESSEE HAS CREDITED ONLY OF RS.40,48,009/ - TO THE PROFIT AND LOSS ACCOUNT. IN REPLY TO THE ASSESSING OFFICERS QUERY, THE ASSESSEE EXPLAINED THAT RTL HAS DIRECTLY PAID COMMISSION OF RS.1,28,82,141/ - TO THE RET AILERS. THEREFORE, THE ABOVE COMMISSION WAS NEVER THE INCOME OF THE ASSESSEE. IN THE ABOVE BACKDROP, THE ASSESSING OFFICER RELIED ON THE PROVISIONS OF RULE 37BA(2) OF THE INCOME TAX RULES, 1962 ALLOWED CREDIT OF RS.4,04,800/ - TO THE ASSESSEE AND ITA NO.373/CTK/2019 ASSESSMENT YEAR : 2014 - 15 P A G E 3 | 10 DISALLOW ED BALANCE AMOUNT OF RS.12,88,214/ - (RS.16, 93,054 RS.4,04,800) , WHICH WAS UPHELD IN FIRST APPEAL. 5. LD A.R. OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS CLAIMED CREDIT OF TDS OF ENTIRE AMOUNT OF TAX DEDUCTED AT SOURCE OF RS.16,93,054/ - AND THE AO OUG HT TO HAVE ALLOWED THE SAME. HE SUBMITTED CIT(APPEALS) UPHOLDING THE ORDER OF THE ASSESSING OFFICER IN GIVING CREDIT FOR TDS OF ONLY RS.4,04,840/ - AS AGAINST TDS OF RS. 16,93,054 - AS PER RETURN , WHICH WAS DULY REFLECTED IN FORM 26AS OF THE ASSESSEE . LD A.R. VEHEMENTLY POINTED OUT THAT THE DENIAL OF TAX CREDIT FOR TDS OF RS. 1 2,88,214/. IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE, CONTRARY TO FACTS, UNJUSTIFIED, ARBITRARY, ERRONEOUS AND BAD, BOTH IN THE EYE OF LAW AND ON FACTS AND LEGALLY UNSUSTAINABLE. LD A.R. SUBMITTED THAT THE AUTHORITIES BELOW HAVE MISCONSTRUED AND MIS - APPRECIATED THE FACTS AND LAW AND DENIAL OF TAX CREDIT FOR TDS OF RS. 1 2,88,214 / - UNDER RULE 37BA OF THE INCOME TAX RULES, 1962 IS CONTRARY TO THE FACTS AND THUS NOT TENABLE. LD A.R. SUBMITTED THAT WITHOUT PREJUDICE TO ABOVE SUBMISSION, LD CIT(A) HAS MIS - APPRECIATED AND MIS - INTERPRETED THE PROVISIONS OF RULE 37BA OF THE RULES 1962 AND NOT FOLLOWING THE ITAT ORDER IS UNJUSTIFIED, ARBITRARY AND ERRONEOUS . LD A.R. LASTLY CONTENDED THAT I F THE AUTHORITIES BELOW HAVE SOME DOUBTS IN THEIR MINDS AS TO WHETHER THE ASSESSEE IS CLAIMING DOUBLE TDS, THEN THE ISSUE MAY BE RESTORED TO THE FILE OF THE AO FOR LIMITED PURPOSES TO EXAMINE AND VERIFY AS TO WHETHER RESPECTIVE RECIPIENTS HAVE CLAIMED TDS IN THEIR RETURNS ITA NO.373/CTK/2019 ASSESSMENT YEAR : 2014 - 15 P A G E 4 | 10 OR NOT AND IF ANSWER IS NOT, THEN THE ASSESSEE IS ENTITLED FOR CLAIMING TDS AS PER FORM NO.26AS PERTAINING TO HIM. 6. REPLYING TO ABOVE, LD SR DR SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, LD A.R. OF THE ASSESSEE DID NOT SUBMIT ANY DETAILS OF RECIPIENTS (RETAILERS) OF SUCH DIRECT CREDITS TO THE TUNE OF RS.1,28,82,141/ - , THEREFORE, THE AO AS WELL AS LD CIT(A) WAS RIGHT IN DENYING CREDIT OF TDS RELATED TO THIS AMOUNT OF RS.12,88,214/ - . LD D.R., IN ALL FAIRNESS, ALSO SUBMI TTED THAT IF IT IS FOUND JUST, PROPER AND NECESSARY, THEN THE DEPARTMENT HAS NO SERIOUS OBJECTION IF THE ISSUE IS RESTORED TO THE FILE OF THE AO FOR LIMITED PURPOSES TO EXAMINE AND VERIFY AS TO WHETHER RESPECTIVE RECIPIENTS (RETAILERS) OF SUCH DIRECT CREDI TS HAVE CLAIMED TDS IN THEIR RESPECTIVE RETURNS OR NOT. 7. PLACING REJOINDER TO ABOVE, LD A.R. PLACED RELIANCE ON THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS RELECOM, 286 CTR 102 (DELHI) AND SUBMITTED THAT WHEN THE REVENUE HAVING ASSESSED INCOME IN RESPECT OF RETAILERS (RECIPIENTS) OF SUCH TDS CLAIM AND THESE RECIPIENTS HAVE NOT CLAIMED ANY CREDIT, THEN SUCH TDS CLAIMED CANNOT BE DENIED TO THE ASSESSEE ON A TECHNICAL GROUND THAT INCOME RESPECT OF TDS CLAIM WAS NOT THAT OF THE AS SESSEE. LD A.R. FURTHER PLACING RELIANCE ON THE DECISION OF ITAT DELHI IN THE CASE OF SUNITA DEVI VS ACIT, 2015 (9) TMI 64 - ITAT DELHI SUBMITTED THAT THE ISSUE WILL BE RESTORED TO THE FILE OF THE AO TO VERIFY WHETHER ANY CREDIT OF TDS HAS BEEN ALLOWED BY THE DEPARTMENT IN THE ITA NO.373/CTK/2019 ASSESSMENT YEAR : 2014 - 15 P A G E 5 | 10 HANDS OF RECIPIENTS (RETAILERS). IF IT HAS NOT BEEN ALLOWED, THEN THE CREDIT OF THIS AMOUNT SHOULD BE GIVEN IN THE HANDS OF THE ASSESSEE. 8. ON CAREFUL CONSIDERATION OF THE RIVAL SUBMISSIONS AND PERUSING THE MATERIALS PLACED ON RECOR D, WE FIND THAT IN THIS CASE, THE ASSESSEE EXPLAINED THAT RTL HAS DIRECTLY PAID COMMISSION OF RS.1,28,82,141/ - TO THE RETAILERS AND, THEREFORE, THE ABOVE COMMISSION WAS NEVER THE INCOME OF THE ASSESSEE. LD A.R. OF THE ASSESSEE THAT RECIPIENTS HAVE NOT CLAIMED TDS IN THEIR RESPECTIVE RETURNS . THE ITAT DELHI IN THE CASE OF SUNITA DEVI (SUPRA) ON SIMILAR ISSUE HAS DIRECTED THE AO TO VERIFY WHETHER ANY CREDIT OF THE TDS HAS BEEN ALLOWED BY THE DEPARTMENT IN THE HANDS OF RECIPIENTS OF THE COMMISSION OR NOT AND IF T HE SAME IS NOT ALLOWED, THEN THE CREDIT OF THIS AMOUNT SHOULD BE GIVEN IN THE HANDS OF THE ASSESSEE, OBSERVING AS UNDER: 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ARGUMENTS ADVANCED BY BOTH THE PARTIES. THE ASSESSING OFFICER HAS DENIED THE CREDIT OF P ART OF TDS DEDUCTED, INVOKING SECTION 199 OF THE ACT. THEREFORE, WE FEEL IT NECESSARY TO LOOK INTO SECTION 199 OF THE IT ACT, WHICH READS AS UNDER : - CREDIT FOR TAX DEDUCTED. '199. (1) ANY DEDUCTION MADE IN ACCORDANCE WITH THE FOREGOING PROVISIONS 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 DEDUCTION WAS MADE, OR OF THE OWNER OF THE SECURITY, OR OF THE DEPOSITOR OR OF THE OWNER OF PROPERTY OR OF THE UNIT - HOLDER, OR OF THE SHAREHOLDER, AS THE CASE MAYBE. (2) ANY SUM REFERRED TO IN SUB - SECTION (1A) OF SECTION 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 HA S BEEN MADE. (3) THE BOARD MAY, FOR THE PURPOSES OF GIVING CREDIT IN RESPECT OF TAX DEDUCTED OR TAX PAID IN TERMS OF THE PROVISIONS OF THIS CHAPTER, MAKE SUCH RULES53 AS MAY BE NECESSARY, INCLUDING THE RULES FOR THE PURPOSES OF GIVING ITA NO.373/CTK/2019 ASSESSMENT YEAR : 2014 - 15 P A G E 6 | 10 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.]' 9. FURTHER, IN TERMS OF THE PROVISIONS OF SUB SECTION (3) OF SECTION 199 OF THE ACT, THE CBDT HAS MADE RULES FOR THE PU RPOSE OF GIVING CREDIT OF TDS IN THE CASE OF DEDUCTEE AND OTHER PERSONS AS WELL AS FOR MULTIPLE ASSESSMENT YEARS, WHICH READS AS UNDER : - 'CREDIT FOR TAX DEDUCTED AT SOURCE FOR THE PURPOSES OF SECTION 199. 37BA. (1) CREDIT FOR TAX DEDUCTED AT SOURCE AND P AID TO THE CENTRAL GOVERNMENT IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER XVII, SHALL BE GIVEN TO THE PERSON TO WHOM PAYMENT HAS BEEN MADE OR CREDIT HAS BEEN GIVEN (HEREINAFTER REFERRED TO AS DEDUCTEE) ON THE BASIS OF INFORMATION RELATING TO DEDUCTION OF TAX FURNISHED BY THE DEDUCTOR TO THE INCOME - TAX AUTHORITY OR THE PERSON AUTHORIZED BY SUCH AUTHORITY. (2) (I) IF THE INCOME ON WHICH TAX HAS BEEN DEDUCTED AT SOURCE IS ASSESSABLE IN THE HANDS OF A PERSON OTHER THAN THE DEDUCTEE, CREDIT FOR TAX DEDUCTED AT SOURCE SHALL BE GIVEN TO THE OTHER PERSON IN CASES WHERE (A) THE INCOME OF THE DEDUCTEE IS INCLUDED IN THE TOTAL INCOME OF ANOTHER PERSON UNDER THE PROVISIONS OF SECTION 60, SECTION 61, SECTION 64, SECTION93 OR SECTION 94; (B) THE INCOME OF A DEDUCTEE BEING AN ASSOCIATION OF PERSONS OR A TRUST IS ASSESSABLE IN THE HANDS OF MEMBERS OF THE ASSOCIATION OF PERSONS, OR IN THE HANDS OF TRUSTEES, AS THE CASE MAY BE; (C) THE INCOME FROM AN ASSET HELD IN THE NAME OF A DEDUCTEE, BEIN G A PARTNER OF A FIRM OR A KARTA OF A HINDU UNDIVIDED FAMILY, IS ASSESSABLE AS THE INCOME OF THE FIRM, OR HINDU UNDIVIDED FAMILY, AS THE CASE MAY BE; (D) THE INCOME FROM A PROPERTY, DEPOSIT, SECURITY, UNIT OR SHARE HELD IN THE NAME OF A DEDUCTEE IS OWNED JOINTLY BY THE DEDUCTEE AND OTHER PERSONS AND THE INCOME IS ASSESSABLE IN THEIR HANDS IN THE SAME PROPORTION AS THEIR OWNERSHIP OF THE ASSET: PROVIDED THAT THE DEDUCTEE FILES A DECLARATION WITH THE DEDUCTOR AND THE DEDUCTOR REPORTS THE TAX DEDUCTION IN THE NAME OF THE OTHER PERSON IN THE INFORMATION RELATING TO DEDUCTION OF TAX REFERRED TO IN SUB - RULE (1). (II) THE DECLARATION FILED BY THE DEDUCTEE UND ER CLAUSE (I) SHALL CONTAIN THE NAME, ADDRESS, PERMANENT ACCOUNT NUMBER OF THE PERSON TO WHOM CREDIT IS TO BE GIVEN, PAYMENT OR CREDIT IN RELATION TO WHICH CREDIT IS TO BE GIVEN AND REASONS FOR GIVING CREDIT TO SUCH PERSON. ITA NO.373/CTK/2019 ASSESSMENT YEAR : 2014 - 15 P A G E 7 | 10 ( II I) THE DEDUCTOR SHALL ISSUE THE CERTIFICATE FOR DEDUCTION OF TAX AT SOURCE IN THE NAME OF THE PERSON IN WHOSE NAME CREDIT IS SHOWN IN THE INFORMATION RELATING TO DEDUCTION OF TAX REFERRED TO IN SUB - RULE (1) AND SHALL KEEP THE DECLARATION IN HIS SAFE CUSTODY. (3) (I) CREDIT FOR TAX DEDUCTED AT SOURCE AND PAID TO THE CENTRAL GOVERNMENT, SHALL BE GIVEN FOR THE ASSESSMENT YEAR FOR WHICH SUCH INCOME IS ASSESSABLE. (II) WHERE TAX HAS BEEN DEDUCTED AT SOURCE AND PAID TO THE CENTRAL GOVERNMENT AND THE INCOME IS ASSESSABLE OVER A NUMBER OF YEARS, CREDIT FOR TAX DEDUCTED AT SOURCE SHALL BE ALLOWED ACROSS THOSE YEARS IN THE SAME PROPORTION IN WHICH THE INCOME IS ASSESSABLE TO TAX. (4) CREDIT FOR TAX DEDUCTED AT SOURCE AND PAID TO THE ACCOUNT OF THE CENTRAL GOVERNMENT SHALL BE GRANTED ON THE BASIS OF (I) THE INFORMATION RELATING TO DEDUCTION OF TAX FURNISHED BY THE DEDUCTOR TO THE INCOME - TAX AUTHORITY OR THE PERSON AUTHORIZED BY S UCH AUTHORITY; AND (II) THE INFORMATION IN THE RETURN OF INCOME IN RESPECT OF THE CLAIM FOR THE CREDIT, SUBJECT TO VERIFICATION IN ACCORDANCE WITH THE RISK MANAGEMENT STRATEGY FORMULATED BY THE BOARD FROM TIME TO TIME.' 10. ON PLAIN READING OF SECTION 13 8 OF THE ACT AND RULES MADE THEREUNDER, IT IS APPARENT THAT SUB SECTION 2 AND 3 OF THE SECTION ARE NOT APPLICABLE TO THE FACTS OF THE CASE IN HAND. FURTHER, SUB RULE (2) AND (3) OF RULE 37BA OF THE INCOME - TAX RULES ARE ALSO NOT APPLICABLE TO THE FACTS OF T HE CASE IN HAND, AS THE INCOME OF THE ASSESSEE IS NOT FALLING UNDER ANY OF THE CLAUSES OF SUB RULE (2) AND ISSUE OF CREDIT IN MULTIPLE YEARS IS ALSO NOT INVOLVED IN THE CASE IN HAND. SO, ONLY SUB SECTION (1) OF SECTION 199 OF THE ACT, AND SUB RULE (1) AND (4) OF THE RULE 37BA OF THE RULES ARE RELATED TO THE CASE OF THE ASSESSEE. THE FIRST LIMB OF THE SAID SUBSECTION REFERS TO THE TAX DEDUCTED AND PAID TO THE CENTRAL GOVERNMENT. THE SECOND LIMB OF THE SUB SECTION REFERS TO ALLOWING OF CREDIT OF THE TAX SO DE DUCTED AND PAID TO CENTRAL GOVERNMENT, IN THE HANDS THE PERSON FROM WHOSE INCOME, THE TAX HAS BEEN DEDUCTED. SO, A PLAIN AND LITERAL INTERPRETATION OF SUB SECTION (1) OF SECTION 199 LEADS TO RESULT THAT THE CREDIT OF THE TAX DEDUCTED HAS TO BE GIVEN IN THE HANDS OF THE DEDUCTEE I.E THE PERSON FROM WHOSE INCOME THE DEDUCTION WAS MADE. THUS, SAID SUB SECTION NOWHERE SAYS THAT CREDIT OF TDS SHOULD BE RESTRICTED ONLY TO THE AMOUNT OF INCOME OR RECEIPT OFFERED IN THE RETURN OF INCOME OR IN THE PROFIT AND LOSS AC COUNT. FURTHER, SUB RULE (1) OF RULE 37BA OF THE RULES ALSO EMPHASIZE TO ALLOW THE CREDIT IN THE HANDS OF DEDUCTOR ON THE BASIS OF THE INFORMATION RELATED TO DEDUCTION OF TAX FURNISHED BY THE DEDUCTOR. WITH EFFECT FROM 1.4.2008, THE SECTION 199 OF THE ACT HAS UNDERGONE A CHANGE AND THE REQUIREMENT OF TDS CERTIFICATE FOR TAX CREDIT HAS BEEN DISPENSED WITH AND NOW THE CREDIT IS BEING ALLOWED AS PER RULE 37BA(4) OF THE RULES ON THE BASIS OF INFORMATION AVAILABLE IN THE INCOME TAX STATEMENT (ITS) OF THE ASSESSE E ON THE DATA BASE OF INCOME TAX DEPARTMENT OR ON THE BASIS OF FORM NO. 26AS OF INCOME TAX FORMS. IN ITA NO.373/CTK/2019 ASSESSMENT YEAR : 2014 - 15 P A G E 8 | 10 THE CASE OF THE ASSESSEE THE INFORMATION AS TO THE INCOME AND THE TAX DEDUCTED WAS AVAILABLE IN THE ITS. THE ASSESSING OFFICER, HAS ACCEPTED THE DIVERSION OF INCOME IN THE HAND OF SHRI KAPIL AHLUWALIA BUT DENIED THE CREDIT OF THE TOTAL TAX DEDUCTED BY THE DEDUCTOR. WE FIND THAT THE ACTION OF THE ASSESSING OFFICER WAS ON THE BASIS OF THE INCORRECT INTERPRETATION OF THE SUB SECTION (1) OF SECTION 199 OF THE AC T. THE INCOME - TAX APPELLATE TRIBUNAL, MUMBAI BENCH A IN THE CASE OF ARVIND MURJANI BRANDS (P) LTD. VS. ITO, WARD 5 (1), MUMBAI REPORTED (SUPRA) HAS HELD AS UNDER : - 'THAT THIS SECTION RECOGNIZES A VERY IMPORTANT POSITION OF LAW, THAT THE TAX DEDUCTED AT S OURCE IS 'TREATED AS A PAYMENT OF TAX ON BEHALF OF THE PERSON FROM WHOSE INCOME THE DEDUCTION WAS MADE' AND CONSEQUENTLY 'CREDIT SHALL BE GIVEN TO HIM FOR THE AMOUNT SO DEDUCTED. 'SO THE ROLE OF SECTION 199 IS CONFINED TO ALLOWING THE CREDIT FOR THE TAX DE DUCTED AT SOURCE TO THE PAYEE OF THE AMOUNT AND NONE ELSE.' 11. FURTHER IN THE CASE OF ESCORTS LTD. VS. DCIT (SUPRA) THE TRIBUNAL HAS HELD AS UNDER : - 'AS PER OUR CONSIDERED VIEW, CREDIT FOR TDS MUST IN EVERY CASE BE GIVEN TO THE ASSESSEE FROM WHOSE INCOM E TAX WAS DEDUCTED AT SOURCE AND PAID TO THE CREDIT OF THE CENTRAL GOVERNMENT. IF THE RECIPIENT OF THE INCOME CONSIDERS THAT HE IS NOT LIABLE TO TAX IN RESPECT OF THE INCOME, WHOLLY OR PARTLY, THEREFORE, DOES NOT DISCLOSE THE AMOUNT OF SUCH INCOME IN HIS R ETURN, THE INCOME - TAX DEPARTMENT CANNOT REFUSE TO GIVE CREDIT MERELY BY CONTENDING THAT THE INCOME HAD NOT BEEN DISCLOSED IN THE RETURN FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR.' 12. FURTHER, THE DECISIONS OF THE TRIBUNAL IN CASES OF RENOVATION TEC HNOLOGIES (SUPRA) AND SUPREME RENEWABLE ENERGY LTD. (SUPRA) ALSO SUPPORT THE STAND OF THE ASSESSEE. FURTHER, THE FACT THAT THE DEPARTMENT HAS NEITHER GIVEN CREDIT FOR THE TAX OF RS. 12,23,608 TO THE ASSESSEE OR TO SHRI KAPIL AHLUWALIA NOR REFUNDED THE SAID SUM TO THE DEDUCTCR. THE CONSTITUTION HAS NOT MANDATED THE DEPARTMENT TO SWALLOW THE RIGHTFUL MONEY OF THE TAX PAYER WITHOUT ANY RULE OF LAW. FURTHER, THE DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THERE IS POSSIBILITY THAT SHRI KAPIL AHLUWALIA MIGHT HAVE TAKEN CREDIT OF THE BALANCE ? 12, 23,608/ - AND THEREFORE IF CREDIT OF THIS AMOUNT IS ALLOWED TO THE ASSESSEE, IT WILL AMOUNT TO ALLOWING OF DOUBLE CREDIT OF THE SAME ACCOUNT AND IT WILL BE UNJUST ENRICHMENT IN THE HANDS OF ASSESSEE. THE ID. AR HOWEVER, COUNTERED THE ARGUMENT OF THE DR AND STATED THAT THE TDS CERTIFICATE HAS BEEN ISSUED TO THE ASSESSEE ONLY AND AS PER DATA BASE OF INCOME - TAX DEPARTMENT, THE TDS IS REFLECTING AGAINST THE ASSESSEE ONLY, THEREFORE ALLOWING CREDIT IN THE HANDS OF SHRI KAPIL AHLUWALIA WAS NOT POSSIBLE. HE FURTHER SUBMITTED THAT SH. KAPIL AHLUWALIA IS LIABLE TO PAY TAX ON THE INCOME TRANSFERRED TO HIM, AND THEREFORE, NOT ALLOWING CREDIT OF RS. 12,23,608/ - TO THE ASSESSEE AND RETAINING THE AMOUNT BY THE INCOME - TAX DEPARTMENT WITHOUT GIVING ADJUSTMENT TO EITHER ASSESSEE OR SH. KAPIL AHLUWALIA AMOUNTS T O UNJUST ENRICHMENT IN THE HANDS OF THE DEPARTMENT. WE AGREE WITH THE ABOVE ITA NO.373/CTK/2019 ASSESSMENT YEAR : 2014 - 15 P A G E 9 | 10 CONTENTION OF THE ID. AUTHORISED REPRESENTATIVE. WE ARE OF THE VIEW THAT NEITHER PARTY SHOULD BE MADE UNJUST ENRICHED AT THE COST OF THE OTHER. WE HOLD THAT THE CREDIT OF THE RS. 1 2,23,608/ - IS ALLOWABLE IN THE HANDS OF THE ASSESSEE, IN VIEW OF THE CLEAR PROVISIONS OF SUB SECTION(1) OF SECTION 199 OF THE ACT AND RULES MADE THEREUNDER. HOWEVER, WE DIRECT THE ASSESSING OFFICER TO VERIFY WHETHER ANY CREDIT OF THE TDS OF RS. 12,23,608/ - HAS BEEN ALLOWED BY THE INCOME - TAX DEPARTMENT IN THE HANDS OF SHRI KAPIL AHLUWALIA OR NOT. IF IT HAS BEEN NOT ALLOWED, THEN THE CREDIT OF THIS AMOUNT SHOULD BE GIVEN IN THE HANDS OF THE ASSESSEE. ACCORDINGLY GROUND NO. 1 OF THE ASSESSEE IS ALLOWED. 9. THEREFORE, FOLLOWING THE DECISION OF ITAT DELHI IN THE CASE OF SUNITA DEVI (SUPRA) AND ALSO WITH THE CONSENT OF THE LD REPRESENTATIVES OF BOTH PARTIES, I SET ASIDE THE ORDERS OF LOWER AUTHORITIES AND RESTORE THE ISSUE BACK TO THE FILE OF THE ASSESSING OFF ICER WITH THE DIRECTION TO VERIFY WHETHER THE RECIPIENTS (RETAILERS) HAVE CLAIMED TDS IN THEIR RESPECTIVE RETURNS OR NOT, AND IF THE AO FINDS THAT THEY HAVE NOT CLAIMED TDS, THEN THE CLAIM OF THE ASSESSEE SHOULD BE ALLOWED . WITH THESE DIRECTIONS, THE ISSUE IS RESTORED TO THE FILE OF THE AO FOR FRESH VERIFICATION AND ADJUDICATION AS PER LAW. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES ORDER PRONOUNCED ON 08 / 10 /20 20 . S D/ - ( CHANDRA MOHAN GARG) JUDICIAL MEMBER CUTTACK; DATED 08 / 10 /20 20 B.K.PARIDA, SPS (OS) ITA NO.373/CTK/2019 ASSESSMENT YEAR : 2014 - 15 P A G E 10 | 10 COPY OF THE ORDER FORWARDED TO : BY ORDER SR . PVT. S ECRETARY ITAT, CUTTACK 1. THE APPELLANT : KKM ASSOCIATES, C/O RAJASHREE BHUYAN, N - 382, IRC VILLAGE, BHUBANESWAR 2. THE RESPONDENT. ITO, WARD 5(1), BHUBANESWAR 3. THE CIT(A) - 2 , BHUBANESWAR 4. PR.CIT - 2 , BHUBANESWAR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//