Sh. Chandra Shekhar Aggarwal, New Delhi V. ACIT,

ITA 6185/DEL/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7328 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 13-10-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 19-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HEMANT GUPTA SENIOR
• Assessee Lawyers: SHAILESH GUPTA S
• Section: 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B : NEW DELHI) BEFORE SHRI A.T. VARKEY, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO.6185/DEL./2013 (ASSESSMENT YEAR : 2011-12) SHRI CHANDER SHEKHAR AGGARWAL, VS. A CIT, CIRCLE 37 (1), R 519, NEW RAJINDER NAGAR, NEW DELHI. NEW DELHI. (PAN : AACPA6665M) (APPELLANT) (RESPONDENT) ASSESSEE BY : S/SHRI SALIL AGGARWAL & SHAILESH GUP TA, ADVOCATES REVENUE BY : SHRI HEMANT GUPTA, SENIOR DR DATE OF HEARING : 13.10.2015 DATE OF PRONOUNCEMENT : 11.01.2016 O R D E R PER A.T. VARKEY, JUDICIAL MEMBER : THIS APPEAL, AT THE INSTANCE OF THE ASSESSEE, IS DI RECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-X XVIII, NEW DELHI DATED 17.10.2013 FOR THE ASSESSMENT YEAR 2011-12. 2. THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE READ S AS UNDER: 1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS ERRED BOTH ON FACTS AND IN LAW IN HOLDING THAT WHILE PROC ESSING THE RETURN OF INCOME U/S 143(1) OF THE ACT, THE LEARNED ASSESSING OFFICER WAS CORRECT IN LAW IN RAISING A DEMAND OF RS. 11,37,710/- INCLU DING INTEREST OF RS. 2,74,677/- AS OUTSTANDING AND THAT TOO WITHOUT PROV IDING ANY OPPORTUNITY 2 ITA NO.6185/DEL./2013 AS ALSO WITHOUT BRINGING ANY MATERIAL WHATSOEVER IN HOLDING THAT SUCH A SUM WAS OUTSTANDING. 2 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) HAS GROSSLY ERRED BOTH IN LAW AND ON FACTS IN HOLDING T HAT THE TAX CREDIT GRANTED BY THE LEARNED ASSISTANT COMMISSIONER OF IN COME TAX OF TAX DEDUCTED AT SOURCE OF RS.71,20,267/- WAS IN ACCORDA NCE WITH LAW, DESPITE THE FACT THE TAX DEDUCTED AT SOURCE IN RESPECT OF W HICH ASSESSEE HAS FURNISHED TDS CERTIFICATES AND WERE IN RELATION TO THE ASSESSMENT YEAR 2011-12, AGGREGATED TO RS. 80,16,290/- WHICH WAS NO T DISPUTED AND WAS THUS ENTITLED TO CREDIT OF SUCH TDS U/S 199 OF THE ACT. 2.1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS FURTHER ERRED IN FAILING TO APPRECIATE THAT THE CRE DIT OF THE TAX GRANTED OF RS. 71,20,267/- INSTEAD OF RS. 80,16,290/- WAS WITH OUT ANY BASIS OR MATERIAL AND WAS THUS UNSUSTAINABLE. INFACT EVEN T HE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS GIVEN NO B ASIS FOR RESTRICTING THE CREDIT OF THE TAX DEDUCTED AT SOURCE TO RS. 71, 20,267/- AND THUS LEVY OF INTEREST U/S 234C OF RS. 2,74,677/- AND AGGREGAT E DEMAND OF RS. 11,37,710/- IS UNSUSTAINABLE. 3 THAT THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS NOT ONLY ARBITRARY AND IS WITHOUT APPL ICATION OF MIND BUT IS CONTRARY TO LAW. 3.1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) IN HER ZEAL TO DISPOSE OFF THE APPEAL ARBITRARILY EVEN IG NORED THAT THE ASSESSEE HAD FILED APPLICATIONS UNDER SECTION 154 OF THE ACT ON 17.7.2012 AND 4.2.2013 WHICH HAS NOT BEEN DISPOSED OFF BY THE LEA RNED ASSESSING OFFICER AND THAT ON SIMILAR BASIS HER PREDECESSOR H AD DIRECTED THE LEARNED ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2009-10 A ND 2010-11 TO ALLOW THE CLAIM OF CREDIT OF TAX DEDUCTED AT SOURCE AS PER DEDUCTION CERTIFICATES FILED BY THE ASSESSEE AND OTHERWISE MA NDATED BY LAW. 3.2 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS ABSOLUTELY GIVEN NO BASIS OR BROUGHT ANY MATERIAL O N RECORD AND IGNORED THE RATIO OF THE JUDGMENT OF THE DELHI HIGH COURT I N THE CASE OF ALL INDIA FEDERATION OF TAX PRACTITIONERS VS. UOI REPORTED IN 352 ITR 273 WHICH DIRECTED THE REVENUE TO ALLOW THE CREDIT OF TAX DED UCTED AT SOURCE, WHICH IN THE INSTANT CASE AGGREGATED TO RS. 80,16,290/-. 3.3 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS ERRED IN FAILING TO APPRECIATE EVEN THE WRITTEN SUBMISSIO NS OF THE ASSESSEE DATED 30.08.2013 AND 21.10.2013. 3 ITA NO.6185/DEL./2013 4 THAT FURTHERMORE THE INTERPRETATION PLACED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OF SECTION 199 OF THE ACT READ WITH RULE 37BA(3) OF THE INCOME TAX RULES IS ENTIRE LY ERRONEOUS AND WHOLLY UNSUSTAINABLE IN LAW AND OVERLOOKS THE FACTS OF THE INSTANT CASE AND HAS ARBITRARILY IGNORED THAT IT IS NOT A CASE W HERE THE ASSESSEE HAS NOT INCLUDED ANY INCOME ON WHICH TAX HAS BEEN DEDUCTED AT SOURCE. 4.1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS FAILED TO COMPREHEND THAT THE ORDER OF ITAT IN THE CASE OF LLOYD INSULATION (INDIA) LTD. HAS NO APPLICATION. THE FINDING THAT THE ASSESSEE HAD CLAIMED CREDIT IN RESPECT OF THE TAX DEDUCTED AT SOURCE WIT HOUT INCLUDING THE SAME IN THE INCOME IS BASED ON FACTUAL MISCONCEPTION OF FACTS AND WITHOUT LOOKING THAT NO CREDIT HAS BEEN CLAIMED IN RESPECT OF INCOME WHICH HAS NOT BEEN INCLUDED IN THE TOTAL INCOME. 4.2 THAT EVEN ON THE THEORY PROPOUNDED BY THE LEARN ED COMMISSIONER OF INCOME TAX (APPEALS), THE ASSESSEE COULD HAVE AT THE BEST BE HELD TO BE NOT ELIGIBLE FOR THE CREDIT TO BE GIVEN OF RS. 4 ,40,249/- I.E. OF RS. 4,89,168/- LESS RS. 48,917/- AND THUS THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IS NOT ONLY ARBITRARY BUT IS W ITHOUT APPLICATION OF MIND. 5 THAT EVEN OTHERWISE THE LEARNED COMMISSIONER OF I NCOME TAX (APPEALS) HAS OVERLOOKED THAT THE ASSESSEE HAD FURN ISHED A COMPLETE RECONCILIATION TO ESTABLISH THAT EACH OF CREDIT IS DULY REFLECTED IN 26AS STATEMENT AND THAT ONLY A SUM OF RS. 4,10,870 ALON E HAD NOT BEEN REFLECTED IN 26AS STATEMENT IN RESPECT OF WHICH TOO THE ASSESSEE FURNISHED CONFIRMATION AS WELL AS TDS CERTIFICATES AND THE LEARNED ASSESSING OFFICER COULD NOT BE JUSTIFIED IN NOT GRA NTING THE CREDIT THEREOF. 6 THAT FURTHER THE LEARNED COMMISSIONER OF INCOME T AX (APPEALS) HAS COMPLETELY OVERLOOKED THAT NO INTEREST UNDER SE CTION 234C WAS CHARGEABLE AND AS SUCH INTEREST LEVIED AND CHARGED OF RS. 2,74,677/- WAS ERRONEOUS. 3. BRIEF FACTS OF THE CASE ARE THAT DURING THE YEAR , THE ASSESSEE HAD FILED A RETURN ON 27.9.2011 DECLARING AN INCOME OF RS.8,83, 87,370/-, WHICH WAS REVISED ON 2.2.2013 TO AN INCOME OF RS.8,84,12,370/ - ENHANCING THE TOTAL INCOME BY SUM OF RS.25,000/-. THE AO IN AN INTIMAT ION DATED 27.9.2011 U/S 143(1) ALLOWED CREDIT OF TDS OF RS.71,20,267/- AS A GAINST CLAIM OF TDS OF 4 ITA NO.6185/DEL./2013 RS.79,91,290/- AND AS SUCH WITH HELD GRANT OF CREDI T BY RS.8,71,023/- AND RAISED A DEMAND OF RS.11,37,710/- INCLUDING INTERES T U/S 234C OF RS.2,74,677/-. AGAINST THE AFORESAID ORDER ASSESSE E APPEALED BEFORE CIT(A) WHO VIDE THE IMPUGNED ORDER DATED 17.10.2013 DISMIS SED THE APPEAL OF THE ASSESSEE AND AS SUCH THE INSTANT APPEAL. 4. THE BASIC ISSUE RAISED IN THIS APPEAL ARISING FR OM GROUND NOS.4 TO 4.2 OF GROUNDS OF APPEAL CHALLENGES THE CONCLUSION OF T HE CIT(A) VIZ-A-VIZ SECTION 199 READ WITH RULE 37BA(3) OF THE INCOME TA X RULES 1962 (RULES). 5. THE CIT(A) HAS OBSERVED THAT AS PER THE PROVISIO NS OF SECTION 199 READ WITH 37BA(3), TDS CREDIT IS TO BE GIVEN IN THE MANNER AS UNDER: I) CREDIT FOR TAX DEDUCTED AT SOURCE AND PAID TO TH E CENTRAL GOVERNMENT, SHALL BE GIVEN FOR THE ASSESSMENT YEAR FOR WHICH SUCH INCOME IS ASSESSABLE; AND II) WHERE TAX HAS BEEN DEDUCTED AT SOURCE AND PAID TO THE CENTRAL GOVERNMENT AND THE INCOME IS ASSESSABLE OVER A NUMB ER OF YEARS, CREDIT FOR TAX DEDUCTED AT SOURCE SHALL BE A LLOWED ACROSS THOSE YEARS IN THE SAME PROPORTION IN WHICH THE INC OME IS ASSESSABLE TO TAX. 5 ITA NO.6185/DEL./2013 IT HAS BEEN FURTHER OBSERVED THAT THE ABOVE RULE HA S BEEN INSERTED W.E.F. 1.4.2009 AND IS THEREFORE APPLICABLE FROM ASSESSMEN T YEAR 2009-10. REFERENCE HAS BEEN MADE TO CASES OF LLOYD INSULATIO N (INDIA) LTD. ITA NO. 2400 & CO 201/D/2011 AND SMT. VARSHA G. SAL UNKE VS. DCIT 98 ITD 147 (MUM) HAVING REGARD TO THE ABOVE SHE CONCL UDED THAT BEFORE GETTING BENEFIT OF TDS FOLLOWING TWIN CONDITIONS NE EDS TO BE SATISFIED AS PER SECTION 199 OF THE ACT ARE:; A) THE ASSESSEE SHOULD PRODUCE THE CERTIFICATE FOR THE AMOUNT OF TAX DEDUCTED AT SOURCES; B) SHOW THAT INCOME SUBJECTED TO TDS IS DISCLOSED I N THE RETURN OF THE ASSESSMENT YEAR AS ASSESSABLE. 6. THE CIT(A) HAS THEREFORE CONCLUDED THE ASSESSEE WILL NOT BE ENTITLED TO HAVE BENEFIT OR CREDIT FOR THE AMOUNT THOUGH MEN TIONED IN THE CERTIFICATE FOR THE ASSESSMENT YEAR IF INCOME RELATABLE TO THE AMOUNT IS NOT SHOWS AND IS NOT ASSESSABLE IN THAT ASSESSMENT YEAR. SHE HAS HEL D THAT IF INSTEAD OF ENTIRE INCOME REFERABLE TO AMOUNT OF TAX DEDUCTED, ONLY A PORTION OF INCOME IS FOUND ASSESSABLE THE BENEFIT HAS TO BE ALLOWED ONLY ON THE PORTION SHOWN AND IF BALANCE INCOME, ON ACCOUNT OF SYSTEM OF ACCOUNTI NG FOLLOWED BY THE ASSESSEE OR FOR SOME OTHER REASONS IS FOUND TO BE A SSESSABLE IN FUTURE, THEN 6 ITA NO.6185/DEL./2013 THE CREDIT FOR THE BALANCE TDS CAN BE ALLOWED ONLY IN FUTURE WHEN INCOME IS ASSESSABLE. 7. THE COUNSEL FOR THE ASSESSEE SUBMITTED THAT PROV ISIONS OF SECTION 198 MANDATES THAT ALL SUMS DEDUCTED UNDER CHAPTER XVII WOULD BE DEEMED TO BE INCOME RECEIVED AS SUCH, ONCE THE TDS HAS BEEN DEDU CTED. HE FURTHER SUBMITTED THAT THAT AS PER PROVISIONS OF SECTION 19 9 OF THE ACT ANY DEDUCTION OF TAX UNDER CHAPTER XVII AND PAID TO THE CENTRAL G OVERNMENT SHALL BE TREATED AS PAYMENT OF TAX ON BEHALF OF THE PERSON FROM WHOS E INCOME DEDUCTION OF TAX WAS MADE. HE ALSO SUBMITTED THAT PROVISION OF RULE 37BA IS INAPPLICABLE WHERE ASSESSEE IS FOLLOWING CASH SYSTE M OF ACCOUNTING SINCE IF TDS IS DEDUCTED HOWEVER PAYMENT IS NOT RECEIVED IN THE SUBSEQUENT ASSESSMENT YEARS, THE TDS DEDUCTED WOULD NEVER BE A LLOWED TO SUCH AN ASSESSEE THOUGH THE ASSESSEE IS ENTITLED FOR SUCH T DS AS PER SECTION 198/199 OF THE ACT. IN SUPPORT HE PLACED RELIANCE ON THE D ECISION OF AHMEDABAD BENCH IN THE CASE OF M/S SADBHAV ENGINEERING LTD. V S. DCIT ITA NO(S). 610/AHD/2008, 1834/AHD/2009, 2054/AHD/2009, 1835/AH D/2009, 2055/AHD/2009 AND 2053/AHD/209 A.Y(S) 2005-06 TO 20 07-08 DATED 19.12.2015 AND VISAKHAPATNAM BENCH IN THE CASE OF A CIT VS. PEDDU SRINIVASA RAO VIJAYAWADA ITA NO. 324/VIZAG/2009 A.Y . 2006-07 DATED 3.3.2011. THE LD. DR SUPPORTED THE CONCLUSION OF T HE CIT(A). 7 ITA NO.6185/DEL./2013 8. WE HAVE CAREFULLY CONSIDERED THE ORIGINAL SUBMIS SION AND PERUSED THE MATERIAL ON RECORD. IT IS NOTICED THAT IN THE INSTA NT CASE ASSESSEE AS ADOPTED CASH METHOD OF ACCOUNTING. HE FURNISHED HIS RETURN OF INCOME CLAIMING CREDIT OF TDS OF RS.79,91,290/- WHICH WAS FURTHER R EVISED TO RS.80,16,290/-. THE AO RESTRICTED THE CREDIT OF RS.71,20,267/- IN T HE INTIMATION U/S 143(1) OF THE ACT. THE CIT(A) HAS UPHELD THE RESTRICTION INT ER-ALIA ON THE GROUND THAT CREDIT OF TDS IS TO BE ALLOWED IN TERMS OF RULE 37B A(2) OF THE RULES AND AS SUCH THE CREDIT WOULD BE ALLOWABLE ON PRO RATA BASI S IN THE YEAR IN WHICH THE CERTIFICATE IS ISSUED AND ALSO IN FUTURE WHERE BALA NCE OF SUCH INCOME IS FOUND TO BE ASSESSABLE AS PER THE MANDATE OF SECTION 199 OF THE ACT. SHE HAS HELD THAT ANY AMOUNT WHICH HAS NOT BEEN ASSESSED IN ANY YEAR BUT REFERRED IN THE TDS CERTIFICATE CANNOT BE CLAIMED UNDER SECTION 199 OF THE ACT. 9. SUB-SECTION (1) OF SECTION 199 OF THE ACT PROVID ES THAT ANY DEDUCTION MADE IN ACCORDANCE WITH THE FOREGOING PROVISIONS OF THIS CHAPTER AND PAID TO THE CENTRAL GOVERNMENT SHALL BE TREATED AS A PAYMEN T OF TAX ON BEHALF OF THE PERSON FROM WHOSE INCOME THE DEDUCTION WAS MADE. I N VIEW THEREOF, SINCE THE TAX WAS DEDUCTED AT SOURCE BY THE DEDUCTOR AND THE AMOUNT WAS DEPOSITED BY THE DEDUCTOR ON BEHALF OF THE ASSESSEE , THE SAID SUM IS DEEMED TO BE THE PAYMENT OF TAX MADE ON BEHALF OF THE ASSE SSEE. ALSO, SECTION 198 OF THE ACT PROVIDES THAT ALL SUMS DEDUCTED IN ACCOR DANCE WITH CHAPTER XVII- 8 ITA NO.6185/DEL./2013 B OF THE ACT SHALL FOR THE PURPOSES OF COMPUTING TH E INCOME OF AN ASSESSEE BE DEEMED TO BE INCOME RECEIVED. THUS, SECTION 198 OF THE ACT SPECIFICALLY PROVIDES THAT TAX DEDUCTED AT SOURCE SHALL FOR THE PURPOSE OF COMPUTING INCOME OF AN ASSESSEE WILL BE DEEMED TO BE INCOME R ECEIVED BY THE ASSESSEE. THUS, THERE IS NO JUSTIFICATION NOT TO GRANT CREDIT OF TAX DEDUCTED AND DEPOSITED TO THE ACCOUNT OF CENTRAL GOVERNMENT BY T HE DEDUCTOR TO THE ASSESSEE FROM WHOSE INCOME, SUCH TAX HAS BEEN DEDUC TED BY THE DEDUCTOR, MORE PARTICULARLY WHEN SUCH TDS STANDS DULY DECLARE D AS INCOME BY THE ASSESSEE. THE CONCLUSION OF THE CIT(A) TO GRANT PRO PORTIONATE CREDIT IS ALSO NOT IN ACCORDANCE WITH THE CASH SYSTEM OF ACCOUNTIN G FOLLOWED BY THE ASSESSEE. THE CIT(A) IN HER ORDER HAS LAID MUCH EMP HASIS ON RULE 37BA OF THE RULES. RULE 37BA AS INSERTED W.E.F. 1.4.2009 RE ADS AS UNDER:- CREDIT FOR TAX DEDUCTED AT SOURCE FOR THE PURPOSES OF SECTION 199: 37BA.(1) CREDIT FOR TAX DEDUCTED AT SOURCE AND PAID TO THE CENTRAL GOVERNMENT IN ACCORDANCE WITH THE PROVISIONS OF CHA PTER XVII, SHALL BE GIVEN TO THE PERSON TO WHOM PAYMENT HAS BEEN MADE O R CREDIT HAS BEEN GIVEN (HEREINAFTER REFERRED TO AS DEDUCTEE) ON THE BASIS OF INFORMATION RELATING TO DEDUCTION OF TAX FURNISHED BY THE DEDUC TOR TO THE INCOME-TAX AUTHORITY OR THE PERSON AUTHORIZED BY SUCH AUTHORIT Y. (2) [(I) WHERE UNDER ANY PROVISIONS OF THE ACT, THE WHOLE OR ANY PART OF THE INCOME ON WHICH TAX HAS BEEN DEDUCTED AT SOURCE IS ASSESSABLE IN THE HANDS OF A PERSON OTHER THAN THE DEDUCTEE, CREDIT F OR THE WHOLE OR ANY PART OF THE TAX DEDUCTED AT SOURCE, AS THE CASE MAY BE, SHALL BE GIVEN TO THE OTHER PERSON AND NOT TO THE DEDUCTEE: PROVIDED THAT THE DEDUCTEE FILES A DECLARATION WITH THE DEDUCTOR AND THE DEDUCTOR REPORTS THE TAX DEDUCTION IN THE NAME OF T HE OTHER PERSON IN THE INFORMATION RELATING TO DEDUCTION OF TAX REFERRED T O IN SUB-RULE (1).] 9 ITA NO.6185/DEL./2013 (II) THE DECLARATION FILED BY THE DEDUCTEE UNDER CL AUSE (I) SHALL CONTAIN THE NAME, ADDRESS, PERMANENT ACCOUNT NUMBER OF THE PERS ON 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. (III) THE DEDUCTOR SHALL ISSUE THE CERTIFICATE FOR DEDUCTION OF TAX AT SOURCE IN THE NAME OF THE PERSON IN WHOSE NAME CRED IT IS SHOWN IN THE INFORMATION RELATING TO DEDUCTION OF TAX REFERRED T O IN SUB-RULE (1) AND SHALL KEEP THE DECLARATION IN HIS SAFE CUSTODY. (3)(I) CREDIT FOR TAX DEDUCTED AT SOURCE AND PAID T O 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 NUMB ER 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 T HE ACCOUNT OF THE CENTRAL GOVERNMENT SHALL BE GRANTED ON THE BASIS OF - (I) THE INFORMATION RELATING TO DEDUCTION OF TAX FURNIS HED BY THE DEDUCTOR TO THE INCOME-TAX AUTHORITY OR THE PERSON AUTHORIZED BY SUCH 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. A READING OF THE AFORESAID WILL MAKE IT APPAREN T THAT RULE 37BA(1) OF THE ACT PROVIDES RULES RELATING TO HAVE CREDIT FOR THE PURPOSE OF SECTION 199 OF THE ACT AS IS PROVIDED IN SECTION 199(3) OF THE ACT. RULE 37BA(3)(I) OF THE ACT PROVIDES THAT CREDIT FOR TAX DEDUCTED AT SOURCE AND CREDITED TO THE ACCOUNT OF CENTRAL GOVERNMENT SHALL BE GIVEN FOR TH E ASSESSMENT YEAR FOR 10 ITA NO.6185/DEL./2013 WHICH, SUCH INCOME IS ASSESSABLE. THUS, IF THE SAID RULE IS READ, IT IS CLEAR THAT THE ASSESSEE IS ENTITLED TO GET CREDIT OF THE TAX D EDUCTED AT SOURCE ONCE SUCH INCOME IS INCLUDED IN HIS INCOME. THE ADMITTED FACT S OF THE CASE OF THE APPELLANT IS THAT THE TAX DEDUCTED AT SOURCE HAS BE EN OFFERED AS INCOME BY THE APPELLANT IN HIS RETURN OF INCOME AND THEREFORE, HA VING REGARD TO EVEN THE RULES, THE ASSESSEE IS ENTITLED TO CREDIT OF THE TA X DEDUCTED AT SOURCE. THE ASSESSEE BEFORE THE CIT(A) HAD PROVIDED AN ILLUSTRA TION WHEREBY IT WAS SUBMITTED THAT ASSUMING AN ASSESSEE FOLLOWS CASH SY STEM OF ACCOUNTING AND RAISES AN INVOICE OF RS. 100/- FOR THE SERVICES REN DERED IN FINANCIAL YEAR 2010-11 ON HIS CLIENT AND THE SAID CLIENT DEPOSITS TDS OF RS. 10/- TO THE CREDIT OF THE ACCOUNT OF THE ASSESSEE AND ISSUED A CERTIFICATE OF TDS TO THE ASSESSEE AND THUS, IT WAS SUBMITTED THAT AN AMOUNT OF RS. 10/- WAS SINCE DEDUCTED IN RESPECT OF THE ASSESSEE, THE SAID SUM I S INCOME OF THE ASSESSEE WHICH IS ASSESSABLE TO TAX. IT WAS SUBMITTED THAT O NCE AN INCOME IS ASSESSABLE TO TAX, THE ASSESSEE IS ELIGIBLE FOR CRE DIT DESPITE THE FACT THAT REMAINING AMOUNT WOULD BE TAXABLE IN THE SUCCEEDING YEARS. WE ARE IN AN AGREEMENT WITH THE ABOVE SUBMISSION THAT THE TDS DE DUCTED BY THE DEDUCTOR ON BEHALF OF THE ASSESSEE AND OFFERED AS INCOME IS TO BE ALLOWED AS CREDIT IN THE YEAR OF DEDUCTION OF TAX DEDUCTED AT SOURCE. RU LE 37BA OF THE ACT PROVIDES THAT CREDIT FOR TDS SHOULD BE ALLOWED IN T HE YEAR IN WHICH INCOME 11 ITA NO.6185/DEL./2013 IS ASSESSABLE. FURTHER CLAUSE (II) OF RULE 37BA(3) OF THE ACT PROVIDES THAT WHERE TAX HAS BEEN DEDUCTED AT SOURCE PAID TO THE C ENTRAL GOVERNMENT AND THE INCOME IS ASSESSABLE OVER A NUMBER OF YEARS, CR EDIT FOR TAX DEDUCTED AT SOURCE SHALL BE ALLOWED ACROSS THOSE YEARS IN THE S AME PROPORTION IN WHICH THE INCOME IS ASSESSABLE TO TAX. IN OUR CONSIDERED OPINION, THIS RULE IS ONLY APPLICABLE WHERE ENTIRE COMPENSATION IS RECEIVED IN ADVANCE BUT THE SAME IS NOT ASSESSABLE TO TAX IN THAT YEAR BUT IS ASSESSABL E IN A NUMBER OF YEARS. HOWEVER, SUCH RULE HAS NO APPLICABILITY, WHERE ASSE SSEE FOLLOWS CASH SYSTEM OF ACCOUNTING. THIS CAN BE SUPPORTED FROM THE ILLUS TRATION THAT SUPPOSE AS ASSESSEE WHO IS FOLLOWING CASH SYSTEM OF ACCOUNTING RAISES AN INVOICE OF RS. 100/- IN RESPECT OF WHICH DEDUCTOR DEDUCTS TDS OF R S. 10/- AND DEPOSITS TO THE ACCOUNT OF THE CENTRAL GOVERNMENT. ACCORDINGLY, THE ASSESSEE WOULD OFFER AN INCOME OF RS. 10/- AND CLAIM TDS OF RS. 10 /-. HOWEVER IN THE OPINION OF THE REVENUE, THE ASSESSEE WOULD NOT BE E NTITLED TO CREDIT OF THE ENTIRE TDS OF RS. 10/- BUT WOULD BE ENTITLED TO PRO PORTIONATE CREDIT ONLY. NOW LET US ASSUME THAT RS. 90/- IS NEVER PAID TO TH E ASSESSEE BY THE DEDUCTOR. IN SUCH CIRCUMSTANCES, RS. 9/- WHICH WAS DEDUCTED A S TDS BY THE DEDUCTOR WOULD NEVER BE AVAILABLE FOR CREDIT TO THE ASSESSEE THOUGH THE SAID SUMS STAND DULY DEPOSITED TO THE ACCOUNT OF THE CENTRAL GOVERNMENT. RULE. 37BA(3) OF THE ACT CANNOT BE INTERPRETED SO AS TO S AY THAT TDS DEDUCTED AT 12 ITA NO.6185/DEL./2013 SOURCE AND DEPOSITED TO THE ACCOUNT OF THE CENTRAL GOVERNMENT IS THOUGH INCOME OF THE ASSESSEE BUT IS NOT ELIGIBLE FOR CRED IT OF TAX IN THE YEAR WHEN SUCH TDS WAS OFFERED AS INCOME. THIS VIEW IS OTHER WISE ALSO NOT IN ACCORDANCE WITH THE PROVISIONS CONTAINED IN SECTION 198 AND 199 OF THE ACT. THE PROPOSITION AS LAID OUT BY THE CIT(A) AND LEARN ED DR BEFORE US THEREFORE CANNOT BE COUNTENANCED. IN ARRIVING AT T HE ABOVE CONCLUSION, WE ALSO DERIVE SUPPORT FROM THE DECISION OF VISAKHAPAT NAM BENCH IN THE CASE OF PEDDU SRINIVASA RAO (SUPRA) HAS HELD AS UNDER: 8. WE HAVE CAREFULLY PERUSED THE PROVISIONS OF SEC TION 199 OF THE ACT AND ACCORDING TO THE PRE-AMENDED PROVISIONS OF SECT ION 199, THE CREDIT OF DEDUCTION MADE IN ACCORDANCE WITH THE RELEVANT PROV ISIONS OF THIS CHAPTER AND PAID TO THE CENTRAL GOVERNMENT, SHALL BE GIVEN FOR THE AMOUNT SO DEDUCTED ON THE PRODUCTION OF THE CERTIFICATE FURNI SHED U/S 203 FOR THE ASSESSMENT MADE UNDER THIS ACT FOR THE ASSESSMENT Y EAR FOR WHICH SUCH INCOME IS ASSESSABLE. BUT IN THE AMENDED PROVISIONS THE WORDS 'FOR THE ASSESSMENT YEAR FOR WHICH SUCH INCOME IS ASSESSABLE ' HAS BEEN OMITTED. MEANING THEREBY, THAT THE LEGISLATURE WAS QUITE CON SCIOUS ABOUT THE FACTS AND HARDSHIPS FACED BY SOME ASSESSEES, WHILE MAKING THE AMENDMENTS IN SECTION 199 AND IN AMENDED PROVISIONS NOTHING HAS B EEN STATED ABOUT THE YEAR IN WHICH THE CREDIT OF TDS IS TO BE CLAIMED. A S PER AMENDED PROVISIONS OF SECTION 199, IN SUB-SECTION 1, IT HAS BEEN STATED THAT ANY DEDUCTIONS MADE IN ACCORDANCE WITH THE FOREGOING PR OVISIONS 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 TH E DEDUCTION WAS MADE. THEREFORE, AS PER THE AMENDED PROVISIONS, ONC E THE TDS WAS DEDUCTED, A CREDIT OF THE SAME TO BE GIVEN TO THE A SSESSEES, IRRESPECTIVE OF THE YEAR TO WHICH IT RELATES . THE PRE-AMENDED AND THE AMENDED PROVISIONS OF SECTION 199 ARE EXTRACTED HEREUNDER: 'SECTION 19 9: CREDIT FOR TAX DEDUCTED - (1) ANY DEDUCTION MADE IN ACCORDANCE WIT H 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 DEPOSITOR OR OWNER OF PROPERTY OR OF UNITHOLDER OR OF THE SHAREHOLDER, AS THE CASE MAY BE, AND CREDIT SHALL BE GIVEN TO HIM FOR THE AMOUNT SO DEDU CTED ON THE PRODUCTION OF THE CERTIFICATE FURNISHED UNDER SECTION 203 IN T HE ASSESSMENT MADE UNDER THIS ACT FOR THE ASSESSMENT YEAR FOR WHICH SUCH INC OME IS ASSESSABLE: (3) 13 ITA NO.6185/DEL./2013 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 RULES AS MAY BE NECESSARY, INCLUDING THE RULES FOR THE PURPOSES OF GIVING 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. SECTION 199. (1) ANY DEDUCTION MADE IN ACCOR DANCE WITH THE FOREGOING PROVISIONS OF THIS CHAPTER AND PAID TO TH E CENTRAL GOVERNMENT SHALL BE TREATED AS A PAYMENT OF TAX ON BEHALF OF T HE PERSON FROM WHOSE INCOME THE DEDUCTION WAS MADE, OR OF THE OWNER OF T HE SECURITY, OR OF THE DEPOSITOR OR OF THE OWNER OF PROPERTY OR OF THE UNI T-HOLDER, OR OF THE SHAREHOLDER, AS THE CASE MAY BE. (2) ANY SUM REFERR ED TO IN SUB-SECTION (1A) OF SECTION 192 AND PAID TO THE CENTRAL GOVERNM ENT SHALL BE TREATED AS THE TAX PAID ON BEHALF OF THE PERSON IN RESPECT OF WHOSE INCOME SUCH PAYMENT OF TAX HAS BEEN MADE.' 11. INFACT THE ABOVE VIEW HAS ALSO BEEN FOLLOWED BY AHMEDABAD BENCH IN THE CASE OF SADHBAV ENGINEERING LTD. (SUPRA) WHEREI N IT WAS HELD AS UNDER: 26. WE FIND THAT THE VISAKHAPATNAM BENCH IN THE CA SE OF PEDDU SRINIVASA RAO (SUPRA) HAS HELD AS UNDER: . THE LD. DR COULD NOT CITE ANY CONTRARY DECISION OR ANY OTHER GOOD REASON FOR WHICH THE AFORESAID DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL SHOULD NOT BE FOLLOWED BY US. RESPECTFULLY FOLLOWIN G THE AFORESAID ORDER OF THE TRIBUNAL, WE SET ASIDE THE ORDERS OF THE LOW ER AUTHORITIES AND DIRECT THE AO TO ALLOW CREDIT FOR THE TDS TO THE ASSESSEE. THUS, THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 12. FOR THE REASONS STATED ABOVE, THE CLAIM OF THE ASSESSEE IS ALLOWED IN AS MUCH AS IT IS HELD THAT THE ASSESSEE WOULD BE ENTIT LED TO CREDIT OF THE ENTIRE TDS OFFERED AS INCOME BY THE ASSESSEE IN HIS RETURN OF INCOME. THE GROUNDS RAISED ARE THEREFORE, ALLOWED. 13. GROUND NOS.2, 3 AND 5 OF THE GROUNDS OF APPEAL ESSENTIALLY ARE REGARDING RESTRICTION OF CREDIT OF TDS. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AUTHORITIES BELOW HAS RESTRICTED CREDIT OF TDS DESPITE THE 14 ITA NO.6185/DEL./2013 FACT THAT TDS CERTIFICATES WERE FURNISHED BY THE AS SESSEE AND SUCH CREDIT WAS ALSO REFLECTED IN 26AS STATEMENT PREPARED BY THE RE VENUE EXCEPT TO THE SUM OF RS.4,10,870/- FOR WHICH, CONFIRMATIONS HAVE BEEN FURNISHED BY THE ASSESSEE. HAVING REGARD TO THE ABOVE SUBMISSION, WE FEEL IT APPROPRIATE THAT THE ISSUE BE RESTORED TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION THAT THE CREDIT BE ALLOWED TO THE ASSESSEE OF THE ENTIRE TDS IN RESPECT OF WHICH, TDS CERTIFICATE HAS BEEN FURNISHED BY THE ASSESSEE IN ACCORDANCE WITH SECTION 198 READ WITH SECTION 199 OF THE ACT. THUS THE GROUNDS ARE THEREFORE, ALLOWED FOR STATISTICAL PURPOSES. 14. GROUND NO.1 IS GENERAL IN NATURE AND THE GROUND 6 IS CONSEQUENTIAL IN NATURE. 15. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS DAY OF 11 TH JANUARY, 2016. SD/- SD/- (PRASHANT MAHARISHI) (A.T.VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 11 TH DAY OF JANUARY, 2016 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XVIII, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.