Mahesh Software Systems Pvt. Ltd. v. ACIT, Circle-11(2), Pune
[Citation -2019-LL-0920-52]

Citation 2019-LL-0920-52
Appellant Name Mahesh Software Systems Pvt. Ltd.
Respondent Name ACIT, Circle-11(2), Pune
Court ITAT-Pune
Relevant Act Income-tax
Date of Order 20/09/2019
Assessment Year 2011-12
Judgment View Judgment
Keyword Tags deduction of tax at source • corresponding income • denial of claim • credit for tax deducted at source
Bot Summary: Section 199(3) of the Act, which is relevant for our purpose, reads as under: 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 and sub-section and also the assessment year for which such credit may be given. 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 payment has been made or credit has been given on the basis of information relating to deduction of tax furnished by the 4 ITA No.1288/PUN/2017 M/s. Mahesh Software Systems Pvt. Ltd., deductor to the income-tax authority or the person authorised by such authority. 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 for 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 the other person in the information relating to deduction of tax referred to in sub-rule. The declaration filed by the deductee under clause shall contain the name, address, permanent account number of the person 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. The deductor shall issue the certificate for deduction of tax at source in the name of the person in whose name credit is shown in the information relating to deduction of tax referred to in sub-rule and shall keep the declaration in his safe custody. Where tax has been deducted at source and paid to the Central Government and the income is assessable over a number 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. Credit for tax deducted at source and paid to the account of the Central Government shall be granted on the basis of the information relating to deduction of tax furnished by the deductor to the income-tax authority or the person authorized by such authority: and the information in the return of income in respect of the claim for the credit, 5 ITA No.1288/PUN/2017 M/s. Mahesh Software Systems Pvt. Ltd., subject to verification in accordance with the risk management strategy formulated by the Board from time to time.


IN INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER ITA No.1288/PUN/2017 Assessment Year 2011-12 M/s. Mahesh Software Systems Vs. ACIT, Circle-11(2), Pvt. Ltd., Pune First Floor, Kumar Pooja, 104, Karvenagar, Pune 411 052 PAN AABCM2679P Appellant Respondent Appellant by Shri Nikhil Pathak Respondent by Ms. Brindha Date of hearing 19-09-2019 Date of pronouncement 20-09-2019 ORDER PER R.S.SYAL, VP This appeal by assessee arises out of order passed by Commissioner of Income-tax (Appeals)-7, Pune on 12.01.2017 in relation to assessment year 2011-12. 2. only issue raised in this appeal is against denial of credit for tax deducted at source amounting to Rs.8,41,050/-. 2 ITA No.1288/PUN/2017 M/s. Mahesh Software Systems Pvt. Ltd., 3. Briefly stated, facts of case are that assessee is engaged in business of providing software services. It claimed credit for TDS amounting to Rs.8,41,050/- which was not appearing in Form No.26AS. On being called upon to explain as to how benefit of this TDS was claimed, assessee submitted that it raised invoice on Ashoka Leyland, Chennai, for Rs.84,10,500/- in March, 2011. Since tax of Rs.8,41,010/- on invoice amount was deposited by Ashoka Leyland in April, 2011, they showed it in succeeding year. Assessing Officer (AO) did not accept contention of assessee by relying on Rule 37BA(1) of Income-tax Rules, 1962. ld. CIT(A) also affirmed assessment order on this point. 4. We have heard both sides and gone through relevant material on record. copy of Sale register of assessee has been placed at pages 46 and 47 of paper book depicting total sales for year under consideration at Rs.3,69,53,687.33. This amount of turnover of Rs.3.69 crore includes invoice dated 28-03-2011 amounting to Rs.80,10,000/- raised on Ashoka Leyland. It is in respect of this amount of invoice Rs.80,10,000 plus other taxes etc. totalling to Rs.84,10,000/-, that Ashoka Leyland deducted 3 ITA No.1288/PUN/2017 M/s. Mahesh Software Systems Pvt. Ltd., tax at source amounting to Rs.8,41,050/-. Thus, it is established that assessee recorded invoice of Rs.84.10 lakh in its accounts for year under consideration. It is also equally true that Ashoka Leyland deducted tax at source on such amount to tune of Rs.8,41,050/- but deposited it with exchequer in month of April, 2011. dispute has arisen because of this only. Whereas claim of assessee is that benefit of TDS should be allowed in year in which assessee has recorded corresponding income and Revenue is contending that such benefit can be given only in year of deposit of TDS. 5. Section 199(3) of Act, which is relevant for our purpose, reads as under: Board may, for purposes of giving credit in respect of tax deducted or tax paid in terms of provisions of this Chapter, make such rules as may be necessary, including rules for purposes of giving credit to person other than those referred to in sub-section (1) and sub-section (2) and also assessment year for which such credit may be given . 6. relevant rule is 37BA which is reproduced as under: Credit for tax deducted at source for purposes of section 199. (1) Credit for tax deducted at source and paid to Central Government in accordance with provisions of Chapter XVII, shall be given to person to whom payment has been made or credit has been given (hereinafter referred to as deductee) on basis of information relating to deduction of tax furnished by 4 ITA No.1288/PUN/2017 M/s. Mahesh Software Systems Pvt. Ltd., deductor to income-tax authority or person authorised by such authority. (2) (i) where under any provisions of Act, whole or any part of income on which tax has been deducted at source is assessable in hands of person other than deductee, credit for whole or any part of tax deducted at source, as case may be, shall be given to other person and not to deductee: Provided that deductee files declaration with deductor and deductor reports tax deduction in name of other person in information relating to deduction of tax referred to in sub-rule (1). (ii) declaration filed by deductee under clause (i) shall contain name, address, permanent account number of person 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) deductor shall issue certificate for deduction of tax at source in name of person in whose name credit is shown in information relating to deduction of tax referred to in sub-rule (1) and shall keep declaration in his safe custody. (3) (i) Credit for tax deducted at source and paid to Central Government, shall be given for assessment year for which such income is assessable. (ii) Where tax has been deducted at source and paid to Central Government and income is assessable over number of years, credit for tax deducted at source shall be allowed across those years in same proportion in which income is assessable to tax. (4) Credit for tax deducted at source and paid to account of Central Government shall be granted on basis of (i) information relating to deduction of tax furnished by deductor to income-tax authority or person authorized by such authority: and (ii) information in return of income in respect of claim for credit, 5 ITA No.1288/PUN/2017 M/s. Mahesh Software Systems Pvt. Ltd., subject to verification in accordance with risk management strategy formulated by Board from time to time. 7. AO has relied on sub-rule (1) of section 37BA for denying benefit of TDS during year under consideration. This part of Rule provides that credit for TDS shall be given to person to whom payment has been made or credit has been given on basis of information relating to TDS furnished by deductor. What is material for sub-rule (1) is beneficiary of credit for TDS, being person to whom payment has been made, which in instant case is assessee. ld. CIT(A) has, in addition, relied on sub-rule (4) of Rule 37BA, which again provides that credit for TDS shall be granted on basis of information relating to deduction of tax at source furnished by deductor. How, this rule prejudices claim of assessee is anybody s guess. Obviously, information about TDS by Ashok Leyland is not denied. Both sub-rules simply provide for granting of benefit of TDS. point of time at which benefit of TDS is to be given, is governed by sub-rule (3) of Rule 37BA, which unequivocally provides through clause (i) that credit for tax deducted at source and paid to Central 6 ITA No.1288/PUN/2017 M/s. Mahesh Software Systems Pvt. Ltd., Government, shall be given for assessment year for which such income is assessable . It is, ergo, abundantly clear from mandate of Rule 37BA(3)(i) that benefit of TDS is to be given for assessment year for which corresponding income is assessable. Since income of Rs.84.10 lakh, on which tax of Rs.8,41,050/- was deducted at source, is patently assessable in year under consideration, we hold that benefit of TDS should also be allowed in same year, namely, year under consideration. We, therefore, overturn impugned order and direct accordingly. 8. In result, appeal is allowed. Order pronounced in Open Court on 20th September, 2019. Sd/- Sd/- (S.S. VISWANETHRA RAVI) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT Pune Dated 20th September, 2019 7 ITA No.1288/PUN/2017 M/s. Mahesh Software Systems Pvt. Ltd., Copy of Order is forwarded to: 1. Appellant; 2. Respondent; 3. CIT(A)-7, Pune 4. Pr. CIT-6, Pune 5. DR B , ITAT, Pune; 6. Guard file. BY ORDER, Senior Private Secretary , ITAT, Pune Date 1. Draft dictated on 19-09-2019 Sr.PS 2. Draft placed before author 19-09-2019 Sr.PS 3. Draft proposed & placed JM before second member 4. Draft discussed/approved JM by Second Member. 5. Approved Draft comes to Sr.PS Sr.PS/PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to Bench Clerk Sr.PS 9. Date on which file goes to Head Clerk 10. Date on which file goes to A.R. 11. Date of dispatch of Order. Mahesh Software Systems Pvt. Ltd. v. ACIT, Circle-11(2), Pune
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