PAREKH PLASTICS, MUMBAI V. ITO WD 19(2)-4, MUMBAI

ITA 4317/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1589 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 07-06-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 17-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D SONGATE

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SMC BENCH, MUMBAI. BEFORE SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER I.T.A NOS. 4317 & 4318/ MUM/2009 ASSESSMENT YEARS: 2005-06 & 2006-07 PAREKH PLASTICS, V. THE I.T.O. WARD 19(2)-4, 7, MILAN SARASWATI ROAD, SANTACRUZ(W), PIRAMAL CHA MBERS, MUMBAI-54. MUMBAI. PA NO.AAAFD 1491 Q (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI HARESH SHAH RESPONDENT BY : SHRI D.SONGATE O R D E R BOTH THE APPEALS FILED BY THE ASSESSEE ARE DIRECTE D AGAINST SEPARATE ORDERS BOTH DATED 13.5.2009 OF LD CIT (A)-XIX, MUMBAI FOR T HE ASSESSMENT YEARS 2005-06 AND 2006-07, RESPECTIVELY. THE DISPUTE RAISED IN BOTH T HE APPEALS IS IDENTICAL AND, THEREFORE, THESE APPEALS ARE BEING DISPOSED OF BY A SINGLE CON SOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. THE COMMON ISSUED RAISED IS REGARDING NON ALLOWA NCE OF CREDIT OF TDS IN ASSESSMENT. 3. BRIEFLY STATED THE FACTS ARE THAT THE AO ON PERU SAL OF TDS CERTIFICATE FILED IN CASE OF M/S. SHETH BROTHERS NOTED THAT PAYMENT RECEIVED BY THE ASSESSEE FROM THE PARTY DURING ASSESSMENT YEAR 2005-06 WAS RS.1,12,04,352/- FOR WHICH TAX OF RS.2,33,075/- WAS DEDUCTED. SIMILARLY, FOR THE ASSESSMENT YEAR 2 006-07, TAX DEDUCTED IN CASE OF M/S. SHETH BROTHERS WAS RS.2,12,886/- ON GROSS RECEIPTS OF RS.1,07,99,471/-. THE AO, HOWEVER, NOTED THAT THE CREDIT IN THE P&L ACCOUNT W AS ONLY RS.98,38,118/- FOR A.Y. 2005-06 AND RS.93,49,602/- FOR A.Y. 2006-07. THE A SSESSEE WAS ASKED TO RECONCILE THE DISCREPANCY. THE ASSESSEE HAD CLAIMED THAT SALES A ND PURCHASE SHOWN IN THE PROFIT AND ITA NO.4317 & 4318/M/09 M/S. PAREKH PLASTICS 2 LOSS ACCOUNT WERE NET OF EXCISE DUTY AND SALES TAX WHICH WAS THE REASON FOR DIFFERENCE. THE AO, HOWEVER, DID NOT ACCEPT THE EXPLANATION. I T WAS OBSERVED THAT IN TERMS OF SECTION 199 OF THE I.T.ACT, THE CREDIT FOR TAX DEDU CTED AT SOURCE HAS TO BE GIVEN ONLY IN RESPECT OF SUCH INCOME WHICH WAS OFFERED FOR TAXATI ON. THEREFORE, THE ASSESSEE WOULD BE ENTITLED FOR CREDIT OF TAX DEDUCTED ONLY ON THE INCOME OF RS.98,17,093/- AND RS.93,49,602/-, RESPECTIVELY FOR BOTH THE ASSESSMEN T YEARS. THE AO, THEREFORE, ALLOWED CREDIT OF TDS IN RELATION TO THE INCOME SHOWN IN TH E P&L ACCOUNT AT THE RATE AT WHICH THE TAX HAD BEEN DEDUCTED AND, THUS GAVE CREDIT OF ONLY RS.2,05.177/- IN A.Y. 2005-06 AND RS.1,77,067/- IN A.Y. 2006-07. IN OTHER WORDS, THE AO DENIED THE TDS CREDIT OF RS.27,898/- FOR AY 2005-06 AND RS.35,819/- FOR A.Y. 2006-07. 5. IN APPEAL, CIT (A) AGREED WITH THE AO THAT IF A PARTICULAR INCOME WAS NOT OFFERED FOR TAXATION, THE CORRESPONDING CREDIT FOR TDS COUL D NOT BE GIVEN. IT WAS OBSERVED BY HIM THAT THE GROSS RECEIPT ON WHICH TDS HAD BEEN MA DE SHOULD BE REFLECTED IN THE PROFIT AND LOSS ACCOUNT, WHICH WAS NOT SO IN THIS CASE. A CCORDINGLY, HE CONFIRMED THE ORDER OF THE AO. AGGRIEVED BY SUCH DECISION, THE ASSESSEE I S IN APPEAL IN BOTH THE ASSESSMENT YEARS BEFORE THE TRIBUNAL. 6. I HAVE HEARD BOTH THE PARTIES, PERUSED THE RECO RDS AND CONSIDERED THE MATTER CAREFULLY. THE DISPUTE IS REGARDING CREDIT FOR TAX DEDUCTED AT SOURCE ON THE PAYMENTS RECEIVED BY THE ASSESSEE. IN RESPECT OF PAYMENT RE CEIVED FROM M/S. SHETH BROTHERS, THE GROSS RECEIPT SHOWN IN THE TDS CERTIFICATE WAS MORE THAN THE RECEIPTS SHOWN IN THE PROFIT AND LOSS ACCOUNT. THE ASSESSEE HAS BEEN ALL OWED CREDIT FOR TDS CORRESPONDING TO THE AMOUNT SHOWN IN THE PROFIT AND LOSS ACCOUNT. T HE CASE OF THE REVENUE IS THAT THE CREDIT FOR TDS UNDER THE PROVISIONS OF SECTION 199 HAS TO BE GIVEN IN THE YEAR IN WHICH THE INCOME IS ASSESSABLE. SINCE IN THESE YEARS, TH E GROSS RECEIPT SHOWN IN THE PROFIT AND LOSS ACCOUNT WAS LOWER, THE AO HAD PROPORTIONAT ELY REDUCED THE TDS CREDIT. THE CASE OF THE ASSESSEE IS THAT THE ASSESSEE HAD SHOWN THE ENTIRE RECEIPTS IN THE PROFIT AND LOSS ACCOUNT, ON WHICH, TAX HAD BEEN DEDUCTED AT SO URCE BUT SINCE THE EXCISE DUTY AND SALES TAX HAD BEEN NETTED AGAINST THE GROSS RECEIPT S, THE AMOUNTS APPEARING ON THE CREDIT SIDE OF THE P&L ACCOUNT WERE LOWER TO THE EX TENT OF SALES TAX AND EXCISE DUTY NETTED. HE AGREED THAT THE MATTER MAY BE VERIFIED BY THE AO. BOTH THE PARTIES HAD NO OBJECTION IF THE MATTER IS RESTORED TO THE AO FOR R ECONCILIATION. IN MY VIEW, IN CASE THE DIFFERENCE BETWEEN THE GROSS RECEIPTS SHOWN IN THE TDS CERTIFICATE AND THE RECEIPTS ITA NO.4317 & 4318/M/09 M/S. PAREKH PLASTICS 3 SHOWN IN THE P&L ACCOUNT IS ONLY ON ACCOUNT OF SALE S TAX AND EXCISE DUTY WHICH IS ALLOWABLE AS DEDUCTION THEN, IT CANNOT BE SAID THAT THE ASSESSEE HAD NOT OFFERED THE ENTIRE AMOUNT FOR TAXATION AND IN THAT CASE THE CLA IM OF TDS CANNOT BE DENIED. THE MATTER REQUIRES VERIFICATION FOR WHICH, BOTH THE PA RTIES WERE AGREEABLE. I, THEREFORE, SET ASIDE THE ORDERS OF CIT (A) AND RESTORE THE MATTER BACK TO THE FILE OF THE AO FOR PASSING FRESH ORDERS AFTER NECESSARY VERIFICATION AND RECON CILIATION AND AFTER ALLOWING OPPORTUNITY OF HEARING TO THE ASSESSEE. 7. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THE DATE OF HEARI NG ON 7 TH JUNE, 2010 SD/- (RAJENDRA SINGH (ACCOUNTANT MEMBER) MUMBAI, DATED 7 TH JUNE, 2010 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)-XIX, MUMBA I 4. COMMISSIONER OF INCOME TAX, CITY-19, MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH SMC, MUMBA I //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI ITA NO.4317 & 4318/M/09 M/S. PAREKH PLASTICS 4 DATE INITIALS 1. DRAFT DICTATED ON 7.6.2010 PS 2. DRAFT PLACED BEFORE AUTHOR 7.6.2010 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER AM/JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/J M 5. APPROVED DRAFT COMES TO THE SR. PS PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER ITA NO.4317 & 4318/M/09 M/S. PAREKH PLASTICS 5