M/s. Vinod Sanjeev Bindal & Co., New Delhi v. ITO, New Delhi

ITA NO. 2372/DEL/2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H NEW DELHI BEFORE SHRI RAJPAL YADAV JUDICIAL MEMBER AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER I.T.A. NO. 2372/DEL/2010 A.Y. : 2007-08 M/S VINOD SANJEEV BINDAL & CO. D-219 VIVEK VIHAR-I NEW DELHI 110 095 (PAN/GIR: AAAFV0134V) VS. INCOME TAX OFFICER WARD 37(1) NEW DELHI (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : SH. VINOD KR. BINDAL CA DEPARTMENT BY : SH. AMRENDRA KUMAR SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE LD. COMMISSIONER OF INCOME TAX (APPEALS)S ORDER DATED 1 2.3.2010 PERTAINING TO ASSESSMENT YEAR 2007-08. 2. THE GROUNDS RAISED READ AS UNDER:- THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED I N LAW AND ON FACTS IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN NOT GRANTING CREDIT OF TAX DEDUCTED AT SOURCE (TDS) OF ` 57 452/- IN THE YEAR UNDER CONSIDERATION BY MISINTERPRETING TH E PROVISIONS OF SECTION 199 THOUGH THE APPELLANT HAS DECLARED TH E SAID AMOUNT OF TDS AS ITS INCOME IN THE YEAR CONSIDERATION FOLLOW ING THE CASH METHOD OF ACCOUNTING. THUS DUE CREDIT OF TDS OF ` 57 452/- SHOULD BE ALLOWED TO THE APPELLANT. ITA NO. 2372/DEL/2010 2 WITHOUT PREJUDICE TO GROUND NO.1 IF THE CREDIT OF THE TDS OF ` 57 452/- IS NOT ALLOWED IN THE YEAR UNDER CONSIDER ATION THEN NECESSARY DIRECTIONS SHOULD BE ISSUED TO GRANT CRED IT FOR THE SAME IN THE SUBSEQUENT YEARS WHEN THE PROFESSIONAL FEES CORRESPONDING TO THE SAID TDS WAS RECEIVED BY THE AP PELLANT. 3. IN THIS CASE THE ASSESSEE IS A CHARTERED ACCOUN TANT FIRM AND DERIVED INCOME FROM PROFESSION OF CHARTERED ACCOUN TANCY. THE ASSESSEE IS FOLLOWING CASH SYSTEM OF ACCOUNTING. DU RING THE COURSE OF ENQUIRY ASSESSING OFFICER AS ASKED AS TO WHETHER IT HAS GOT ALL THE RECEIPTS FOR WHICH THEY HAVE CLAIMED TDS. IN THE LIST SUBMITTED IT WAS SHOWN THAT AN AMOUNT OF 106906/- WAS CLAIMED A S TDS DURING THE YEAR. AS PER THE CHART THE ASSESSEE HAS NOT RECEIVED PROFESSIONAL FEE CORRESPONDING TO TDS AMOUNTING TO ` 60495/- BUT THIS AMOUNT WAS OFFERED AS INCOME AS PER SECTION 198. HENCE ASSESSING OFFICER HELD THAT CREDIT FOR TDS OUT OF TDS OF ` 604 95/- AGAINST WHICH PROFESSIONAL FEE WAS NOT RECEIVED DURING THE YEAR 2006-07 IS ALLOWED @ 5.03% I.E. ` 3043/- AND CREDIT FOR TDS AMOUNTING T O ` 57452/- IS NOT ALLOWED FOR THE CURRENT YEAR AS PER PROVISIONS OF SECTION 199. 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) REFERRED TO PROVISION OF SECTION 199(3) W HICH SAYS THAT THE BOARD MAY FOR THE PURPOSES OF GIVING CREDIT IN RES PECT OF TAX DEDUCTED OR TAX PAID IN TERMS OF THE PROVISIONS OF THIS CHAPT ER MAKE SUCH RULES AS MAY BE NECESSARY INCLUDING THE RULES FOR THE PUR POSES OF GIVING ITA NO. 2372/DEL/2010 3 CREDIT TO A PERSON OTHER THAN THOSE REFERRED TO IN SUB-SECTION (1) AND SUB-SECTION (2) AND ALSO THE ASSESSMENT YEAR FOR WH ICH SUCH CREDIT MAY BE GIVEN. 4.1 RULE 37BA(3) SAYS THAT(I) CREDIT FOR TAX DEDU CTED AT SOURCE AND PAID TO 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 GOVERNME NT AND THE INCOME IS ASSESSABLE OVER A NUMBER OF YEARS CREDIT FOR TAX DEDUCTED AT SOURCE SHALL BE ALLOWED ACROSS THOSE YEARS IN TH E SAME PROPORTION IN WHICH THE INCOME IS ASSESSABLE TO TAX. 5. FROM THE ABOVE LD. COMMISSIONER OF INCOME TAX (APPE ALS) FOUND THAT IT WAS CLEAR THAT CREDIT FOR TDS CAN BE GIVEN O NLY IF THE CORRESPONDING INCOME IS ASSESSABLE FOR THAT YEAR. IN THE PRESENT CASE THE ASSESSEE HAS CLAIMED CREDIT FOR TDS AMOUNTIN G TO ` 60 495/- BUT HAS NOT OFFERED THE CORRESPONDING INCOME TO TA X ON THE GROUND THAT IT HAS BEEN FOLLOWING THE CASH SYSTEM OF ACCOUN TING. LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT SINCE THE CORRESPONDING INCOME IS NOT ASSESSABLE DURING THE Y EAR UNDER CONSIDERATION CREDIT FOR TDS RELATING TO THIS INCOME CANNOT BE ALLOWED THIS YEAR. IN THIS REGARD LD. COMMISSIONER OF INCOME TAX (APPEALS) REFERRED TO SEVERAL CASE LAWS NAMELY (I) PRADEEP KUMA R DHIR V. ACIT 107 ITD 118 (CHD.); (II) SMT. VARSHA G. SALUNKE VS. DCIT (2006) 98 ITD 147 (MUM) (TM); AND (III) TEJRAM V ITO (2005) 93 ITD 1 ( CHD.). ACCORDINGLY LD. COMMISSIONER OF INCOME TAX (APPEALS ) UPHELD THE ASSESSING OFFICER S DECISION TO NOT ALLOW CREDIT T O TDS OF ` 57452/-. 6. AGAINST THIS ABOVE ORDER THE ASSESSEE IS IN APPE AL BEFORE US. ITA NO. 2372/DEL/2010 4 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT ASSESSE E IS FOLLOWING CASH SYSTEM OF ACCOUNTING. HENCE THE FEES WHICH HAVE NOT BEEN RECEIVED HAVE NOT BEEN OFFERED FOR TAXATION. HOWEVER THE TDS RELATING TO THAT HAS BEEN OFFERED FOR TAXATION AS INCOME AND RELEVAN T TDS AMOUNT CLAIMED. FOR THIS PURPOSE HE CONTENDED THAT HE DER IVES SUPPORT FROM SECTION 198 OF THE IT ACT. HOWEVER THE LD. COU NSEL OF THE ASSESSEE FAIRLY CONTENDED THAT THE CASE LAWS CITED BY THE LD . COMMISSIONER OF INCOME TAX (APPEALS) IN THIS REGARD ARE AGAINST THE ASSESSEE. 7.1 WE HAVE CAREFULLY CONSIDERED THE ISSUE. WE FIND THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) IS QUITE CORREC T IN REFERRING TO SECTION 199(3) OF THE IT ACT AND THE RULE 37BA(3). IN THIS REGARD ASSESSEE CANNOT BE GIVEN CREDIT FOR TDS INCOME WHICH HAS NOT BEEN OFFERED FOR TAXATION DURING THE CONCERNED YEAR. THE CASE LAW REFERRED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IN TH IS REGARD ARE ALSO RELEVANT AND AGAINST THE ASSESSEE. IN VIE W OF THE ABOVE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. COMMIS SIONER OF INCOME TAX (APPEALS). ACCORDINGLY WE UPHOLD THE SAME. A S REGARDS THE ALTERNATIVE CONTENTION OF THE ASSESSEE THAT THE TDS OF ` 57452/- BE ALLOWED WHEN CORRESPONDING PROFESSIONAL FEE WAS RE CEIVED. THE SAME ITA NO. 2372/DEL/2010 5 IS A CONSEQUENTIAL MATTER AND THE ASSESSING OFFICER SHALL DEAL IT AS PER LAW. 8. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25/2/2011. SD/ SD/ SD/ SD/- -- - SD/ SD/ SD/ SD/- -- - [ [[ [RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 25/2/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR ITAT TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT DELHI BENCHES