Power Grid Mithilanchal Transmission Ltd, New Delhi V. ITO, Ward 19(4), New Delhi

ITA 68/DEL/2023

• Counselvise Citation: [2023] 101 COUNSELVISE.COM (IT) 9735 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 22-11-2023
• Assessment Year: 2019-2020
• Appeal Filed On: 09-01-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARPREET KAUR
• Keywords: Depreciation; Wholly owned subsidiary; Capital receipt; TDS; Set aside; FORM 26AS
• Section: 143(1); 250; 194A

Judgement Text

ITA No.-68/Del/2023 Power Grid Mithilanchal Transmission Ltd. Page 1 of 8 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: ‘F’: NEW DELHI) BEFORE: SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND MS. ASTHA CHANDRA, JUDICIAL MEMBER ITA No:- 68/Del/2023 ( Assessment Year: 2019-20) Power Grid Mithilanchal Transmission Limited, B-9, Qutub Institutional Area, Katwaria Sarai, New Delhi- 110016. Vs. CPC, Bengaluru, ITO, Ward 19(4), Delhi. PAN No: AAECE4900E APPELLANT RESPONDENT Assessee by : Shri Ved Jain, Adv. Shri Aman Garg, CA Revenue by : Ms Harpreet Kaur, Sr. DR Date of Hearing : 23.11.2023 Date of Pronouncement : 30.11.2023 ORDER PER M. BALAGANESH, AM This appeal of the Assessee arises out of the order of the National Faceless Appeal Centre, Delhi, [hereinafter referred to as [NFAC] in Appeal No. NFAC/2018-19/10030066, dated 29/11/2022 against the order passed by ADIT, CPC, (hereinafter referred to as the ‘Ld. AO’) under section 143(1) of the ITA No.-68/Del/2023 Power Grid Mithilanchal Transmission Ltd. Page 2 of 8 Income Tax Act (hereinafter referred to as ‘the Act’) on 24.06.2020 for the Assessment Year 2019-20. 2. The Assessee has raised the following grounds of appeal:- “1. On the facts and circumstances of the case, the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) is bad both in the eyes of law and on facts. 2. (i) On the facts and circumstances of the case, the learned CIT(A), NFAC has erred both on facts and in law in confirming the action of the AO (CPC) disallowing the credit of Rs 10,80,720/- on account of Tax deducted at source (TDS) claimed by the assessee. (ii) That the above disallowance of credit has been confirmed ignoring the contention of the assessee that the amount claimed by the assessee is appearing in Form 26A5 uploaded in the Income Tax e-filing portal. 3. On the facts and circumstances of the case, the learned CIT(A). NFAC has erred both on facts and in law in ignoring the contention of the assessee that the claim of TDS has been denied without specifying any reason by the AO(CPC) in the intimation order passed under section 143(1) of the Income Tax Act. 4. On the facts and circumstances of the case, the learned CIT(A), NFAC has erred both on facts and in law in confirming the action of the AO(CPC) on the assumption that claim of TDS is not corroborated with the corresponding income. 5. On the facts and circumstances of the case, the learned CIT(A), NFAC has erred both on facts and in law in confirming the disallowance of credit of TDS despite the fact that the assumption/reasoning given by the CIT(A), NFAC is beyond the scope of adjustments permissible under section 143(1) of the Income Tax Act. 6. The appellant craves leave to add, amend or alter any of the grounds of appeal.” 3. The only issue to be decided in this appeal is as to whether the Ld. CIT(NFAC) was justified in confirming the denial of TDS credit of Rs. 10,80,720/- in the facts and circumstances of the instant case. ITA No.-68/Del/2023 Power Grid Mithilanchal Transmission Ltd. Page 3 of 8 4. We have heard the rival submissions and perused the materials available on record. The assessee is a wholly owned subsidiary of Power Grid Corporation of India Ltd., a Govt. of India Enterprise. During the year under consideration, the assessee filed its return of income for Assessment Year 2019-20 on 26.08.2019 claiming refund of Rs. 10,80,720/- on account of TDS u/s 194A of the Act deducted by Tata Projects Ltd. This return was duly processed u/s 143(1) of the Act, wherein the income returned was accepted but TDS credit of Rs. 10,80,720/- was not granted by the Ld. CPC u/s 143(1) of the Act, on the ground that the same is not reflected in Form No. 26AS of the assessee. This action of the Ld. CPC was upheld by the Ld. CIT(A) / (NFAC) by observing as under: 6. During appellate proceedings, in response to the hearing notice u/s 250 dated 18.10.2022 fixed for hearing on 27.10.2022 the appellant stated in his reply dated 27.10.2022 that the reason stated is mismatch in TDS credit whereas there is no mismatch. It appears to be a technical glitch in processing and rectification application was rejected without proper application of mind. TDS credit is fully available in 26AS, but effect not given in the refund processing. The TDS claimed by the appellant as per table is reproduced as under- TDS as per Form 16A Name of the Deductor TAN TDS claimed as per 26AS Tata projects ltd. MRTT01271E 1080720/- Total Amount of mismatch 1080720/- From the facts of the case it transpires that the appellant assessee had sought to get the mistake rectified u/ 154, but failed. The copy of order has not been submitted. It is the duty of the appellant to substantiate the claim sought as relief. It is not obvious from the reply submitted whether the corresponding income to the relevant deduction ITA No.-68/Del/2023 Power Grid Mithilanchal Transmission Ltd. Page 4 of 8 has been subjected to case in the return filed. Since the appellant has failed to corroborate the claim, the ground fails on merit and the appeal stands dismissed. ) 5. It was submitted that the assessee company had verified the tax credit details on the Income Tax E-portal and the status is shown in respect of Tax Credit, claim is fully matched with the tax credit available in 26AS. The main grievance of the Revenue is that the assessee had not disclosed any income corresponding to TDS claim. It was submitted that the interest earned by the assessee on said advances given to the contractors which is inextricably linked with the business activity of the assessee i.e. “construction activity” was credited to other income and the same was reduced from the “Expenditure during the construction period” in the balance sheet. This was done on the ground that project of the assessee had not yet commenced and the entire expenditure incurred towards project had been routed under ‘Expenditure during the construction period’ and since the interest income earned on advances given to the contractors was inextricably linked with the business activity of the assessee, the same was duly reduced from the said project expenditure reflected in ‘Expenditure during the construction period’ in Balance Sheet. We find that there is absolutely no dispute that the interest earned on advances of the contractors were part of business receipts and since the assessee had not commenced its business, the said interest income was duly reduced by the assessee from expenditure during the construction period in this balance sheet. ITA No.-68/Del/2023 Power Grid Mithilanchal Transmission Ltd. Page 5 of 8 It is not the case of the Revenue that the said interest income would be liable to be taxed under the head income from other sources. Hence, when there is no obligation on the part of the assessee to offer the said interest income to tax as per the provisions of the Act, and the same have been duly reflected in the books of accounts and audited balance sheet of the assessee, the TDS claimed relatable to such interest receipts cannot be denied to the assessee. We find that the CPC had denied the TDS figure only on the ground that the said TDS figure was not reflected in the Form 26AS of the assessee. We find from Page 52 of the Paper book containing the updated Form 26AS of the assessee, the very same TDS figure of Rs. 10,80,720/- is duly reflected and hence grievance of the CPC has been duly met. Hence, as per rule 37BA for the Income Tax Rules, the assessee shall be entitled for TDS credit of Rs. 10,80,720/-. We further find that the similar issue came up for adjudication before the Co-ordinate Bench of Mumbai Tribunal in the case of Trikaal Mediinfotech Pvt. Ltd. vs. DCIT in ITA No.- 5989/Mum/2019 dated 21.03.2023 reported in 2023 (4) TMI 88-ITAT Mumbai. The relevant operative part of the said judgment is reproduced herein below:- 7. In the instant case it is not in dispute that TDS has been deducted in respect of sale of software patches. The credit of TDS deducted on aforesaid sale has not been to the relevant assessment year as the assessee had not disclosed the income from sale of software patches and modules and the same was instead reduced from the cost of software development. The assesses following Project Completion Method to recognize its revenue. The assesses is now claiming credit of TUS which has been earlier denied to the assessee. As per provisions of section ITA No.-68/Del/2023 Power Grid Mithilanchal Transmission Ltd. Page 6 of 8 159 of the Act, tax deducties at source and paid to government exchequer is treated as payment of tax on behalf of the person for whom TDS was made. Rule 37BA(3) further clarifies that credit for TDS shall be given for assessment year for which such income is assessable. 8. In the case of Supreme Renewable Energy Vs. ITO (supra) the Tribunal following the decision in the Case of CIT vs. Karnal Co-Op Sugar Mills Ltd., 243 ITR 2(SC) held that when the interest inn in the nodental to the acquisition and installation of an asset and not directly liable for tax, assessee is entitled for the credit of the TDS from the interest income which has been duly received by the Government. For the sake of completeness relevant extracts from the order is reproduced herein below. “6. ....................... Thus, it is clear from the judgment of Hon'ble Supreme Court that when `the deposit is directly linked with the purchase of machinery then the income earned on such deposit is incidental to the acquisition and installation of the said asset. Accordingly, the interest is a capital receipt and would go to reduce the asset. We are of the view that when the interest income is in the nature of capital then the assessee has rightly deducted the same from the cost of the assets and while doing so the assessee has offered the said income though capitalized for assessment. When the interest income is not directly liable for tax as the same is incidental in the acquisition and installation of the asset then the tax deducted at source from the interest income which was duly received by the Government shall be refunded to the assessee or the assessee is entitled for the credit of the same. The Government cannot benefit itself by taking advantage of legal technicalities. Even otherwise, once the income receipt has been deducted from the cost of machinery to be installed the assessee has indirectly offered the same for assessment and taxation because due to the reduction of cost of the machinery the depreciation on the said machinery would be lesser and the net result of this would be offering the same income otherwise. 7. xxxxxxxxxxxxx 8. xxxxxxxxxxx 9. From the above it is clear that when a particular income is received by the assessee after deduction of tax at source and the said TDS has been duly deposited with the Government and the assessee has received the requisite certificate to this effect, then on production of the said certificate the assessee becomes entitled for the credit of TDS even if the assessee has not directly offered the said income for tax, no the assessee considered the same was liable to tax. 10. In view of the above mentioned decisions of the Supreme Court and order of this Tribunal, clear position of law that when TDS is made on a particular income which is otherwise not liable for tax, the assessee is entitled for the said credit of the TOS. In the case in hand when the assessee has earned interest on deposit mandatory for acquisition on installation of ITA No.-68/Del/2023 Power Grid Mithilanchal Transmission Ltd. Page 7 of 8 machinery then the interest was earned by the assessee and is directly incidental to the acquisition in respect of machinery and therefore the same has been rightly reduced from the cost of the machinery, In this way the assessee has indirectly disclosed income and has offered for assessment. We are of the considered view that even if the income earned by the assessee has not been offered for tax being not liable for tax, the assessee is entitled for credit of TDS made in respect of that income. Accordingly, we set aside the orders of the lower authorities and hold that the assessee is entitled for credit of TDS relating to interest income of Rs. 51,21,287.” 9. Thus, in light of facts of the case and the decision discussed above, we are of the considered view that the assessee is eligible for TDS credit earlier not allowed to the assessee. The assessee succeeds on ground No. 1 of the appeal. 10 In the result, appeal by the assessee is allowed.” 6. In view of the aforesaid observations and respectfully following the judicial precedents relied herein above, we direct the Ld. AO to grant TDS credit of Rs. 10,80,720/- to the assessee. Accordingly, the grounds raised by the assessee are allowed. 7. In the result, appeal of the assessee is allowed. Order pronounced in the open court on 30.11.2023. Sd/- Sd/- (ASTHA CHANDRA) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 30/11/2023 Pooja, Sr. P.S. Copy forwarded to: 1. Appellant 2. Respondent ITA No.-68/Del/2023 Power Grid Mithilanchal Transmission Ltd. Page 8 of 8 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI Draft dictated Draft placed before author Approved Draft comes to the Sr.PS/PS Order signed and pronounced on File sent to the Bench Clerk Date on which file goes to the AR Date on which file goes to the Head Clerk. Date of dispatch of Order. Date of uploading on the website