ACIT, Ludhiana V. Sh. Vinay Singal, Ludhiana

ITA 506/CHANDI/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68428 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 12-08-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 03-05-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Gift

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 506/CHD/2010 ASSESSMENT YEAR: 2005-06 THE ACIT, VS. SH. VINAY SINGAL, CIRCLE-V DHANDARI KALAN LUDHIANA LUDHIANA PAN NO.ADVPS8356H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AKHILESH GUPTA RESPONDENT BY : SHRI SUDHIR SEHGAL DATE OF HEARING : 12/08/2013 DATE OF PRONOUNCEMENT : 23/08/2013 ORDER PER T.R.SOOD, A.M. THIS APPEAL WAS ORIGINALLY ADJUDICATED VIDE ORDER D T. 09/03/2012. LATER ON REVENUE MOVED A MISC. APPLICATION THROUGH WHICH IT WAS POINTED OUT THAT SECOND GROUND HAS NOT BEEN ADJUDICATED. 2. THE MISC. APPLICATION NO. 106/CHD/2012 WAS ADJUD ICATED ON 02/08/2013 THROUGH WHICH ORDER OF THE TRIBUNAL WAS RECALLED FOR THE PU RPOSE OF ADJUDICATION OF SECOND GROUND. THE GROUND NO. 2 READS AS UNDER:- THAT THE LD. CIT(A)-II HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE CREDIT OF TDS OF RS. 1,94,387/- WHICH WAS IN RESPECT OF THE ASSESSMENT YEAR 2005-06. 2 3. AFTER HEARING BOTH THE PARTIES, WE FIND THAT DUR ING THE ASSESSMENT PROCEEDINGS CREDIT FOR TDS AMOUNTING TO RS. 1,94,987/- WAS NOT ALLOWED BECAUSE FORM 16(A) ISSUED BY CITI BANK NA DEPICTED THAT THIS TDS PERTAINING T O RENT AMOUNTING TO RS. 11,55,000/- PERTAINS TO ASSESSMENT YEAR 2005-06. 4. ON APPEAL BEFORE CIT(A) IT WAS SUBMITTED THAT A SSESSEE RECEIVED RENT OF RS. 11,55,000/- ON 30.03.2005. THE CITI BANK HAD DEDUCT ED TDS ON ADVANCE RENT AND THIS FACT WAS CLEARLY MENTIONED IN THE RETURN OF INCOME. DURING THE RELEVANT ASSESSMENT YEAR THE RENT AGREEMENT WAS CANCELLED AND EXCESS RENT OF RS. 8,05,000/- LACS WAS REFUNDED TO THE CITI BANK AND THE BALANCE AMOUNT OF RENT OF RS. 3,50,000 HAS BEEN DULY SHOWN IN THE RETURN OF INCOME. THEREFORE THE CLAIM OF ASSESSEE F OR TDS WAS CORRECT AND IN THIS REGARD RELIANCE WAS ALSO PLACED ON CIRCULAR NO. 5/2001 DT. 02/03/2001. LEARNED CIT(A) FOUND FORCE IN THE SUBMISSION AND ALLOWED THE CLAIM OF AS SESSEE VIDE PARA-7 WHICH IS AS UNDER:- I HAVE CAREFULLY CONSIDERED THE CONTENTION OF THE LD. COUNSEL FOR THE APPELLANT AND PERUSED THE RELEVANT RECORD. AS BROUG HT OUT IN THE WRITTEN SUBMISSIONS OF THE LD. COUNSEL DURING THE PERIOD RE LEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION THE RENT AGREEMENT OF THE APPELLANT WITH CITI BANK WAS CANCELLED. M/S. CITI BANK HAD DEDUCTED TDS ON THE ENTIRE AMOUNT WHEREAS THE APPELLANT REFUNDED THE EXCESS RE NT TO CITI BANK AT RS. 8,05,000/-. IT WAS ON THIS ACCOUNT THAT THE APPELLA NT DECLARED RENTAL INCOME OF RS. 3,50,000/- IN THE RETURN AND TDS CLAI M OF THE ENTIRE TDS DEPOSITED BY CITI BANK WAS MADE. I AGREE WITH THE L D. COUNSEL THAT AS PER THE CBDT CIRCULAR NO. 5/2001 DATED. 02/03/2001 IN S UCH A CASE CREDIT FOR THE ENTIRE TDS IS TO BE GIVEN TO AN ASSESSEE IN THE FINANCIAL YEAR IN WHICH THE RENT AGREEMENT GETS TERMINATED. THE A.O. IS ACC ORDINGLY DIRECTED TO ALLOW THE TDS CREDIT TO THE APPELLANT ACCORDINGLY. 5. BEFORE US, LD. DR STRONGLY RELIED ON THE ORDER O F A.O. 6. ON THE OTHER HAND LD. COUNSEL FOR THE ASSESSEE R EITERATED THE SUBMISSIONS MADE BEFORE LD.CIT(A) AND HE ALSO RELIED ON THE CIRCULAR NO. 5/2001 DT. 02.03.2001. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY AND FIND FORCE IN THE SAME. THE RELEVANT PORTION OF THE CIRCULAR READS AS UNDER : 3 SECTION 199 A NUMBER OF REPRESENTATIONS HAS BEEN RECEIVED BY TH E BOARD POINTING OUT THE PROBLEMS BEING FACED BY THE ASSESSES IN GETTING DUE CREDIT FOR TAX DEDUCTED AT SOURCE UNDER THE PROVISIONS OF SECTION 199 OF THE INCOME-TAX ACT, 1961, IN RESPECT OF TAX DEDUCTED IN TERMS OF S ECTION 194-I OF THE ACT. SUCH PROBLEMS IN GETTING DUE CREDIT FOR TAX DEDUCTE D AT SOURCE MAINLY RELATE TO THE FOLLOWING SITUATIONS: (A) TAX IS DEDUCTED AT SOURCE UNDER THE PROVISIONS OF SECTION 194-I OF THE ACT ON ADVANCE RENT PERTAINING TO MORE THAN ONE FIN ANCIAL YEAR TO BE ADJUSTED AGAINST FUTURE RENT. (B) SUBSEQUENT TO THE DEDUCTION OF TAX AT SOURCE ON ADVANCE RENT PERTAINING TO ONE OR MORE FINANCIAL YEARS: (I) RENT AGREEMENT GETS TERMINATED / CANCELLED RESU LTING INTO REFUND OF BALANCE AMOUNT OF ADVANCE RENT TO THE TENANT, (II) RENTED PROPERTY IS TRANSFERRED BY WAY OF SALE, LEASE, GIFT, ETC. WITH TENANT IN OCCUPATION OR OTHERWISE RESULTING INTO RE FUND OF BALANCE AMOUNT OF ADVANCE RENT TO THE TRANSFEREE OR THE TENANT, AS THE CASE MAY BE. 2.1 ---------- 2.2 IN THE SITUATION AS AT (B) MENTIONED AT PARA1, DIFFICULTY IN GETTING DUE CREDIT FOR TAX DEDUCTED AT SOURCE ARISES BECAUSE RE NTAL INCOME CEASES TO ACCRUE TO THE ASSESSES ON ACCOUNT OF TERMINATION/CA NCELLATION OF RENT AGREEMENT OR TRANSFER OF THE RENTED PROPERTY SUBSEQ UENT TO THE DEDUCTION OF TAX AT SOURCE ON ADVANCE RENT PERTAINING TO ONE OR MORE FINANCIAL YEARS. THE CREDIT IS NOT GIVEN IN THE HANDS OF THE ASSESSE S IN WHOSE NAMES CERTIFICATE FOR TAX DEDUCTION AT SOURCE STANDS BECA USE THERE IS NO RELATABLE RENTAL INCOME AND, FURTHER CREDIT FOR TAX IS NOT AL LOWED TO ANY PERSON OTHER THAN THE PERSON IN WHOSE NAME CERTIFICATE FOR TAX D EDUCTED AT SOURCE HAS BEEN ISSUED. THUS, IN SUCH CASES, EVEN THOUGH TAX H AS BEEN DEDUCTED AT SOURCE AND PAID TO THE GOVERNMENT, DUE CREDIT FOR S UCH TAX DEDUCTED IS NOT ALLOWED. 3. THE MATTER HAS BEEN CONSIDERED BY THE BOARD AND IT HAS BEEN DECIDED THAT CREDIT FOR TAX DEDUCTED AT SOURCE SHALL BE ALL OWED TO THE ASSESSES ON WHOSE BEHALF SUCH TAX HAS BEEN DEDUCTED AND TO WHOM CERTIFICATE FOR TAX DEDUCTED AT SOURCE HAS BEEN FURNISHED UNDER SECTION 203 OF THE ACT AS UNDER: I) ------------ 4 II) IN RESPECT OF THE SITUATION AS AT (B), CREDIT F OR THE ENTIRE BALANCE OF TAX DEDUCTED AT SOURCE, WHICH HAS NOT BEEN GIVEN CREDIT SO FAR, SHALL BE ALLOWED IN THE ASSESSMENT YEAR RELEVANT TO THE FINA NCIAL YEAR DURING WHICH THE RENT AGREEMENT GETS TERMINATED / CANCELLED OR R ENTED PROPERTY IS TRANSFERRED AND BALANCE OF ADVANCE RENT IS REFUNDED TO THE TRANSFEREE OR THE TENANT, AS THE CASE MAY BE. 8. ABOVE CLEARLY SHOWS THAT IN CASE WHERE A RENT A GREEMENT HAS BEEN TERMINATED THEN CREDIT OF TDS HAS TO BE ALLOWED IN THE YEAR IN WHICH SUCH RENT AGREEMENT HAS BEEN TERMINATED. THEREFORE WE FIND NOTHING WRONG PRINCIP ALLY WITH THE ORDER OF LD. CIT(A). HOWEVER, THE SAME DOES NOT SHOW WHETHER YEAR OF TER MINATION ETC. WAS VERIFIED BY LD. CIT(A). 10. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD. CIT( A) AND REMIT THE MATTER TO A.O WITH A DIRECTION TO VERIFY THE DATE ON WHICH AGREEM ENT HAS BEEN TERMINATED WITH CITI BANK AND TO ALLOW CREDIT IN THE YEAR OF TERMINATION . 11. IN THE RESULT, REVENUE APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 23 /08/2 013 . SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMER DATED : 23 RD AUGUST 2013 AG COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR BY ORDER ASSISTANT REGISTRAR ITAT, CHANDIGARH