RANCHI EXPRESSWAYS LIMITED,HYDERABAD V. INCOME TAX OFFICER, WARD-3(2), HYDERABAD

ITA 1594/HYD/2019

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The case involves M/s. Ranchi Expressways Ltd., which appealed against the order of the Commissioner of Income Tax (Appeals) - 9, Hyderabad, concerning the assessment year 2014-15. The assessee had filed a return declaring nil income but claimed a refund of TDS. The Assessing Officer (A.O.) denied the TDS credit as the corresponding income was not offered to tax, leading to additions of Rs.69,49,930/-. The CIT(A) upheld the A.O.'s decision, referencing Section 199 of the Income Tax Act, 1961, read with Rule 37BA of the Income Tax Rules, 1962. The Tribunal, however, found merit in the assessee's argument that the TDS was deducted on reimbursement of expenses, which did not constitute income, and thus, the TDS credit should be allowed.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 783591 (ITAT-HYDERABAD)
• Duration Of Justice: 6 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Assessment Year: 2014-2015
• Appeal Filed On: 01-11-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; TDS
• Section: 244A

Judgement Text

"आयकर अपीलीय न्यायाधिकरण में, हैदराबाद ‘ए’ बेंच, हैदराबाद IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ A ‘ Bench, Hyderabad श्री मंजूनाथ जी, माननीय लेखा सदस्य एवं श्री रवीश सूद, माननीय न्याययक सदस्य SHRI G. MANJUNATHA, HON’BLE ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, HON’BLE JUDICIAL MEMBER आयकरअपीलसं./I.T.A.No.1594/Hyd/2019 (निर्धारण वर्ा/ Assessment Year: 2014-15) M/s. Ranchi Expressways Ltd., Hyderabad. PAN : AAFCR2297G Vs. The Income Tax Officer, Ward – 3(2) Hyderabad. (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) करदाता का प्रतततितित्व/ Assessee Represented by : None राजस्व का प्रतततितित्व/ Department Represented by : Shri Gurpreet Singh, Sr.A.R. सुिवाई समाप्त होिे की ततति/ Date of Conclusion of Hearing : 08.10.2025 घोर्णध की तधरीख/ Date of Pronouncement : 07.11.2025 O R D E R PER MANJUNATHA G., A.M : This appeal filed by the assessee is directed against the order of the learned Commissioner of Income Tax (Appeals) – 9, Printed from counselvise.com 2 ITA No.1594/Hyd/2025 Ranchi Expressways Limited Hyderabad, dated 25.01.2019 relating to the assessment year 2014-15. 2. The brief facts of the case are that the assessee company is engaged in the business of civil engineering works particularly building of constructions and parts thereof, filed its return of income for A.Y. 2014-15 on 29.11.2014 declaring total income of Rs. Nil and claimed refund of Rs.64,95,260/-. The case was selected for scrutiny and during the course of assessment proceedings, the A.O. noticed that, the assessee has offered nil income, however, claimed credit for TDS without offering matching income. Therefore, the A.O. after considering the relevant submissions of the assessee denied credit for TDS and made additions of Rs.69,49,930/- towards refund of tax along with interest u/s 244A of the Income Tax Act, 1961 was already issued to the assessee in the order passed u/s 143(1) of the Income Tax Act, 1961 dated 30.12.2016. 3. Aggrieved with the order of A.O., assessee carried the matter in appeal before the Ld. CIT(A), but could not succeed. The Ld. CIT(A) for the reasons stated in their appellate order dated Printed from counselvise.com 3 ITA No.1594/Hyd/2025 Ranchi Expressways Limited 25.01.2019 rejected the explanation of the assessee and sustained additions made by the A.O. towards refund of TDS along with interest by holding that, as per the provisions of Section 199 of the Act read with Rule 37BA of the Income Tax Rules, 1962, which is applicable w.e.f. A.Y. 2018-19, unless corresponding income is offered to tax, TDS related to the said income cannot be allowed. Therefore, the Ld. CIT(A) rejected the arguments of the assessee and sustained the additions made by the A.O. 4. Aggrieved by the order of Ld. CIT(A), the assessee is now in appeal before the Tribunal. 5. None appeared on behalf of the assessee. 6. We have heard the learned Sr.AR for the Revenue, Shri Gurpreet Singh, perused the material available on record and had gone through the orders of the authorities below. The A.O. made additions of Rs.69,49,930/- towards refund of tax along with interest claimed and issued notice u/s 143(1) of the Act on the ground that, corresponding income related to TDS claim of Rs.64,95,260/- was not offered to tax. It was the explanation of Printed from counselvise.com 4 ITA No.1594/Hyd/2025 Ranchi Expressways Limited the assessee before the A.O. that, the assessee is into the business of civil construction had entered into agreement with National Highway Authorities of India (for short “NHAI”) and NHAI has paid a sum of Rs.66,73,81,338/- towards shifting charges as reimbursement of expenses and the shifting charges received from NHAI is without any mark up of income and the assessee has not derived income from the said contract and consequently offered nil income. Since the NHAI has deducted TDS against the reimbursement expenses, the assessee has rightly claimed credit for TDS as per the provisions of Section 199 of the Income Tax Act, 1961. We find that, the provisions of Section 199 of the Act deal with the credit for TDS and as per the said provisions, 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 etc., as the case may be in accordance with the Rules framed by the Board as per the provisions of sub-section (3) of Section 199 of the Act. Rule 37BA of the Income Tax Rules, 1962 provides for credit for taxes deducted and paid to the Central Government account Printed from counselvise.com 5 ITA No.1594/Hyd/2025 Ranchi Expressways Limited and as per Rule 37BA, credit for tax deducted at source and paid to the Central Government in accordance with the provisions of Chapter XVII shall be given to the person to whom the payment has been made or credit has been given on the basis of information relating to the deduction of tax furnished by the deductor to the income tax authority. 7. As per Rule 37BA(2) of Income Tax Rules, 1962 where, under the provisions of the Act, the whole or any part of the income on which tax has been deducted is assessable in the hands of the person other than the deductee, credit for 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. Further sub-rule (3) of Rule 37BA provides that, the 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. From the plain reading of Section 199 read with Rule 37BA(3) of Income Tax Rules, 1962 make it very clear that, credit for tax should be allowed in the year in which income is assessable to tax. In other words, if any income is assessable to tax, then credit for taxes deducted at source on the said income should be allowed to the assessee on Printed from counselvise.com 6 ITA No.1594/Hyd/2025 Ranchi Expressways Limited the basis of certificates furnished by the deductee. In the present case, going by the facts available on the record, the assessee claims that, NHAI has deducted TDS on reimbursement of expenses and said reimbursement expenses received by the assessee is without any mark up and consequently, there is no income assessable for the assessment year under consideration. However, the transactions relating to TDS deducted on reimbursement of expenses has been considered in the books of accounts and given effect to the relevant expenditure account. Since there is no income assessable for the year under consideration in respect of TDS deducted by the NHAI, in our considered view, the credit for TDS as claimed by the assessee on the basis of certificate issued by the deductor should be allowed. The A.O. without appreciating relevant facts simply made additions towards refund issued to the assessee as per the order passed u/s 143(1) of the Act. The Ld. CIT(A) by misinterpreting the provisions of Section 199 of the Act read with Rule 37BA, has upheld the additions made by the A.O. Thus, we set aside the order of the Ld. CIT(A) and direct the A.O. to delete the additions towards refund issued to the assessee for Rs.69,49,930/-. Printed from counselvise.com 7 ITA No.1594/Hyd/2025 Ranchi Expressways Limited 8. In the result, the appeal filed by the assessee is allowed. Order pronounced in the Open Court on 7th November, 2025. Sd/- (श्री रवीश सूद) (RAVISH SOOD) न्यायिक सदस्य/JUDICIAL MEMBER Sd/- (मंजूिधथ जी) (MANJUNATHA G.) लेखा सदस्य/ACCOUNTANT MEMBER Hyderabad, dated 07.11.2025. TYNM/sps आदेशकी प्रनतनलनप अग्रेनर्त/ Copy of the order forwarded to:- 1. निर्धाररती/The Assessee : M/s. Ranchi Expressways Limited, C/o. P. Murali & Co., Chartered Accountants, 6-3-655/2/3, Somajiguda, Hyderabad – 500082. 2. रधजस्व/ The Revenue : The Income Tax Officer, Ward –3(2), Hyderabad. 3. The Principal Commissioner of Income Tax, Hyderabad. 4. नवभधगीयप्रनतनिनर्, आयकर अपीलीय अनर्करण, हैदरधबधद / DR, ITAT, Hyderabad 5. गधर्ाफ़धईल / Guard file आदेशधिुसधर / BY ORDER Sr. Private Secretary ITAT, Hyderabad Printed from counselvise.com "