SAFFRON ART PRIVATE LIMITED,MUMBAI V. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE -8(1)(2), MUMBAI, MUMBAI

ITA 526/MUM/2025

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Saffron Art Private Ltd. appealed against the order of the Commissioner of Income Tax (Appeals)-2, Coimbatore, which denied them the credit for TDS amounting to Rs. 9,63,673 for the Assessment Year 2017-18. The assessee argued that the income on which the TDS was deducted had already been offered to tax in the preceding year (AY 2016-17), but the TDS was only deposited into the Government account after the time limit for filing a revised return for AY 2016-17 had expired. The CIT(A) rejected the claim, stating there was no provision under the Act to carry forward the TDS credit to another AY. The Tribunal, however, found merit in the assessee's contention and directed the AO to verify the facts and allow the TDS credit if the income had indeed been offered to tax in the earlier AY.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 361293 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH SAKHARDANDE
• Assessee Lawyers: RITESH JAIN
• Keywords: Revised return; Tax effect; TDS

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI ANIKESH BANERJEE, JM & MS PADMAVATHY S, AM I.T.A. No. 526/Mum/2025 (Assessment Year: 2017-18) Saffron Art Private Ltd., Ground Floor, Industry Manor, Prabhadevi, Mumbai-400025. PAN: AAHCS0308R Vs. DCIT, Circle-8(1)(2), Aayakar Bhavan, M.K. Road, Mumbai-400020. Appellant) : Respondent) Appellant /Assessee by : Shri Ritesh Jain, CA Revenue / Respondent by : Shri Rajesh Sakhardande, Sr. DR Date of Hearing : 08.05.2025 Date of Pronouncement : 22.05.2025 O R D E R Per Padmavathy S, AM: This appeal by the assessee is against the order of the Commissioner of Income Tax (Appeals)-2, Coimbatore [In short 'CIT(A)'] passed under section 250 of the Income Tax Act, 1961 (the Act) dated 06.12.2024 for AY 2017-18. The assessee raised the following grounds of appeal: Grounds of Appeal Tax effect relating to each Ground of appeal (Rs.) 1. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not allowing the TDS credit amounting 9,63,673/- 2. On the facts and circumstances of the case and in 9,63,673/- 2 ITA No. 526/Mum/2025 Saffron Art Private Ltd. law, the Ld. CIT(A) has failed to appreciate the facts that the corresponding income as regards the said TDS claim had already been offered to tax by the appellant in A.Y.2016-17 i.e. in the immediately preceding year. 3. On the facts and circumstances of the case and in law, the CIT(A) has erred in not appreciating that the said TDS credit could not be claimed in the year in which the income was offered to tax since the deductor had deposited the said amount much after the return of income had been filed for said year viz. A.Y. 2016-17. 9,63,673/- 4. On the facts and circumstances of the case and in law, the CIT(A) has erred in not appreciating that there is no loss to revenue in case the credit for the TDS is offered in a year subsequent to the year in which the income has already been offered for tax. 9,63,673/- 5. On the facts and circumstances of the case and in law, the CIT(A) has erred in not appreciating that not giving the credit in the given circumstances would amount to unjust enrichment to which the Government cannot by law, be a party. 9,63,673/- 6. The appellant craves leave to add, amend, alter or delete the said ground of appeal. NIL/- Total Tax Effect 9,63,673/- 2. The assessee is a domestic company engaged in the business of facilitating online transaction in India Artworks, Jewellery, Collectables, Real Estate, etc. The assessee filed the return of income for AY 2017-18 on 30.11.2017 declaring a loss of Rs. 7,90,79,472/-. The assessee's case was selected for scrutiny and the statutory notices were duly served on the assessee. The Assessing Officer (AO) completed the assessment accepting income returned by the assessee. However, the AO did not allow the credit for TDS amounting to Rs. 9,63,673/-. Aggrieved the assessee filed further appeal before the CIT(A). Before the CIT(A) the assessee submitted that the income on which the TDS is deducted was already offered to tax in AY 2016-17 and that the assessee could not claim the TDS in the said AY since the payer has not 3 ITA No. 526/Mum/2025 Saffron Art Private Ltd. deposited the tax deducted into the Government A/c. The assessee further submitted that accordingly the credit for the TDS is claimed in the subsequent AY i.e. the year under consideration once the payer deposited the tax into the Government A/c. The assessee further submitted that since the income is already offered to tax denying the benefit of TDS in the current year will amount to double taxation and accordingly prayed that the credit for TDS be allowed. However, the CIT(A) rejected the claim of the assessee stating that there is no provision under the Act to carry forward the tax deducted from one AY to another AY. The assessee is in appeal before the Tribunal against the order of the CIT(A). 3. We heard the parties and perused the material on record. The assessee for the year under consideration filed a revised return of income on 09.01.2019 claiming TDS refund to the tune of Rs. 52,73,610/-. The AO while completing the assessment determined the refund at Rs. 43,22,870/- and the reason for denial for TDS credit by the AO is that the tax deducted does not pertain to AY 2017-18. It is noticed that the impugned TDS is out of the income earned from Shri Hemant Surana and the invoices raised by the assessee are listed in page 24 to 26 of PB. It is the submission of the assessee that Shri Hemnat Surana filed the TDS return for AY 2016-17 only on 27.10.2018 by which the time limit for filing the revised return for AY 2016-17 has already expired. Therefore, the assessee claimed the credit for TDS in AY 2017-18. The relevant extract of Form-26AS are available in page 28 to 31 of PB. The lower authorities have denied the TDS credit to the assessee for the year under consideration for the reason that there is no provision under the Act to give credit for the tax deducted in one AY to another AY. The argument of the ld. AR is that since the income on which tax is deducted is already offered to tax in AY 2016-17 denying the TDS credit in AY 2017-18 would amount to double taxation. The ld. AR further argued that there is no loss to the revenue by allowing the credit towards 4 ITA No. 526/Mum/2025 Saffron Art Private Ltd. tax deducted since the same is already deposited into the Government A/c. Considering the facts peculiar in assessee's case there is merit in the contention that the complete denial of credit towards tax deducted will cause undue hardship to the assessee since the income has already offered to tax on which the assessee has paid the tax. Having said so we are also inclined to agree with the contention of the revenue that as per the provisions of section 199 r.w.r. 37BA that the credit for TDS can be given only in the year in which the income is offered to tax. In view of the discussion, we are setting aside the appeal back to the AO to examine the facts in assessee's case based on evidences to confirm the claim of the assessee that the income has already been offered to tax in AY 2016-17 and give credit towards the TDS in the year in which the income is offered to tax in accordance with law. The assessee is directed to submit the relevant documents in support of the claim before the AO. It is ordered accordingly. 4. In result, appeal of the assessee is allowed for statistical purpose. Order pronounced in the open court on 22-05-2025. Sd/- Sd/- (ANIKESH BANERJEE) (PADMAVATHY S) Judicial Member Accountant Member *SK, Sr. PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. Guard File 5. CIT BY ORDER, (Dy./Asstt. Registrar) ITAT, Mumbai "