Income Tax Appellate Tribunal - Nagpur
Tatanlal Biharilal Atal,, Amaravati vs Ito, Ward- 1,, Amaravati on 26 October, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
NAGPUR BENCH, NAGPUR
BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND
SHRI G. MANJUNATHA, ACCOUNTANT MEMBER
ITA no.90/Nag./2017
(Assessment Year : 2013-14)
Ratanlal Biharilal Atal
Shraddhayan, Near Banarase Industries
............... Appellant
Badnera Road, Amravati 444 607
PAN - AAOPA7043B
v/s
Income Tax Officer
................... Respondent
Ward-1, Amravati
Assessee by : Shri K.P. Dewani
Revenue by : Shri U.U. Kasar
Date of Hearing - 25.10.2018 Date of Order - 26.10.2018
ORDER
PER G. MANJUNATHA, A.M.
This appeal filed by the assessee is directed against order dated 27th December 2016, passed by the learned Commissioner (Appeals)-I, Nagpur, for the assessment year 2013-14. The grounds raised by the assessee are extracted below:-
"That the land acquisition officer (S.D.O.) has compulsorily acquired agricultural land & made TDS thereon and issued TDS certificate to the assessee. The agricultural land in question belongs to HUF of the assessee whereof assessee is Karta and 2 Ratanlal Biharilal Atal partly of Trimurti Trust whereof assessee is trustee. In the 7/12 extract of the land assessee's name is mentioned without any adjunct as Karta.
The entire compensation amount of agricultural land is issued in the name of assessee and the same is exempt u/s 10(37) of I. T. Act and no TDS is required to be made on this amount. However as TDS is made, TDS certificate is issued in the name of assessee and the same reflects in Form 26AS of the assessee. The same is claimed by the assessee in the return & refund was also issued in the individuals hands of the assessee while processing the return.
However subsequently this refund was withdrawn in the regular assessment proceedings u/s 143(3) and AO raised demand of Rs. 3794300/- which includes tax of Rs. 3175112 and interest u/s 244A, u/s 234D. it was submitted in writing before the authorities that HUF has no objection even if the refund is issued in individual hands who is Karta of HUF. The CIT (Appeals) has directed AO to refer the matter to the concerned AO of HUF to give refund in HUF files. As the TDS certificate is no issued in HUF, the same was not claimed in HUF hands nor it reflects in 26AS of HUF. AO has also charged interest u/s 244A at Rs. 273649 & u/s 234D at Rs. 349306/-. Hence this appeal."
2. Brief facts of the case are that the assessee filed his return of income declaring total income of ` 9,96,900. The return of income filed was processed under section 143(1) of the Income Tax Act, 1961 (for short "the Act") and refund has been issued. Subsequently, the case has been selected for scrutiny and the assessment has been completed under section 143(3) of the Act on 23rd March 2016, determining the total income of ` 9,96,900, and tax payable of ` 31,75,110 by rejecting TDS credit claimed by the assessee of ` 31,75,112. The assessee carried the matter in appeal before the first appellate authority.
3
Ratanlal Biharilal Atal
3. Before the learned Commissioner (Appeals), the assessee submitted that it has claimed credit for TDS on the basis of TDS certificate issued by the SDO, Amravati, for TDS deducted on account of compensation paid for acquisition of agricultural land. The assessee further submitted that the Government of India has acquired agricultural land owned by Shri S.B. Atal (HUF), Shri J.B. Atal (HUF), Shri R.B. Atal (HUF) and Shri M.B. Atal (HUF) of the purpose of development of Airport and TDS has been deducted under section 194LA on compensation paid for compulsory acquisition of agricultural land. While deducting TDS, the SDO has remitted TDS by using the PAN of Shri Ratanlal Biharilal Atal, in his individual capacity. But the land is owned by HUF and compensation has been paid for HUF for compulsory acquisition of agricultural land. The HUFs have filed their income tax return disclosing compensation received from SDO and claimed exemption under section 10(37) of the Act, compensation received from the Government on account of compensation paid for acquisition of agricultural land is exempt under section 10(37) of the Act. The learned Commissioner (Appeals) after considering the submissions of the assessee and also on analysis of provisions of section 199 of the Act and rule 37BA of the Income Tax Rules, 1962, held that the credit for DS can be given to a person in whose hand the income is assessable and/or assessed. Accordingly, he directed the 4 Ratanlal Biharilal Atal Assessing Officer to give credit for TDS to a person in whose hands the amount is assessable. The relevant observations of the learned Commissioner (Appeals) are extracted below:-
"5.1 After perusal of entire material on records, it would be in the interest of justice that credit of IDS of Rs.31,75,112/- is allowed to the HUF involved as mentioned above by the concerned AO in view of Rules-37BA of the IT. Rules, since the income embedded in these certificates is assessable in its hands only. This Rule casts an obligation on the AO to give credit for TDS to the person in whose hands the income is assessable and/or assessed, in case it is a person other than the deductee i.e. appellant in the instant case, then the AO is required to, nay bound, to give them credit. AO cannot refuse to give credit to the other person in whose hands the amount is assessable, merely because TDS has been made and certificate issued in the name of the deductee i.e. the appellant. The present AO is accordingly directed to refer the matter to concerned AO of HUF in this regard."
4. The learned Authorised Representative for the assessee submitted that the learned Commissioner (Appeals) having accepted the fact that the credit for TDS has not been claimed in the hands of the HUF failed to give direction to the Assessing Officer to give credit for TDS in the hands of the assessee when the TDS certificates are in the name of the assessee. The learned Authorised Representative further submitted that the learned Commissioner (Appeals) never disputed the fact that the HUFs have disclosed compensation received on account of compulsory acquisition of agricultural land in their return of income and claimed exemption under section 10(37) of the Act. It is also not in dispute that the HUFs have not claimed credit for TDS in 5 Ratanlal Biharilal Atal their return of income. Having accepted these facts, the learned Commissioner (Appeals) failed to give credit for TDS in the hands of the assessee when the particular income is not taxable either in the hands of the assessee or in the hands of the HUF in view of specific provisions of section 10(37) of the Act. In this regard, he relied upon the decision of the Hon'ble Delhi High Court in CIT v/s Relcom, [2016] 286 CTR 102 (Del.).
5. On the other hand, the learned Departmental Representative strongly supported the order of the learned Commissioner (Appeals).
6. We have heard rival contentions and perused the material available on record. The Assessing Officer denied credit of TDS in the hands of the assessee on the ground that corresponding income has not been offered to tax. According to the Assessing Officer as per the provisions of section 199 of the Act and rule 37BA of I.T. Rules, credit for TDS can be given to the person form whose hands the income is assessed or assessable. Since the income on which TDS has been deducted has not been assessed on the hands of the assessee, the assessee cannot claim credit for TDS and accordingly rejected TDS claimed. It is the contention of the assessee that once TDS certificates are in the name of the assessee and credit for such TDS is appeared in the name of the assessee in AIR data base and also the fact that the 6 Ratanlal Biharilal Atal particular income is not taxable either in the hands of the assessee or in the hands of the HUF credit for TDS cannot be rejected merely on the ground that the corresponding income has not been offered to tax.
7. Having considered the arguments of both the parties, we find merit in the arguments of the assessee for the reason that when a particular income is exempt from tax in view of specific provisions provided under section 10(37) of the Act and also the fact that the HUFs have declared the compensation received on account of compulsory acquisition of agricultural land in their return of income and claimed exemption under section 10(37) of the Act there is no reason for the Assessing Officer to deny credit for TDS merely on the ground that no income has been offered to tax in the hands of the assessee. We further noticed that compensation received on account of compulsory acquisition of agricultural land is exempt from tax under section 10(37) of the Act. We further noticed that HUFs have declared the said compensation in the return of income. It is also undisputed that the HUFs have not claimed credit for TDS in their return of income. Therefore, when the facts are clear in respect of exemption of particular receipt in the hands of the assessee as well as HUFs, the question of offering such income for tax in the hands of the assessee does not arise. Further, the Assessing Officer has not disputed the fact that credit for TDS on account of compensation is appearing in the 7 Ratanlal Biharilal Atal name of the assessee under his PAN is in AIR data base is not disputed. When the credit for such TDS is appearing in the name of the assessee in AIR data base and the assessee has furnished necessary TDS certificate in his name, the Assessing Officer erred in rejecting the claim of credit for TDS by citing the provisions of section 199 of the Act r/w rule 37BA of the I.T. Rules. This legal position is supported by the findings of the Hon'ble Delhi High Court in Relcom (supra), wherein the Court held that this Court relies upon the well settled dictum for procedure is the hand made of justice and it cannot be used to hamper the cause of justice. Therefore, the Revenue's contention that the assessee instead of claiming the entire TDS amount ought to have sought a correction of vendor's mistake would unnecessarily prolonged the entire process of seeking refund based on TDS credit. Therefore, we are of the considered view that the Assessing Officer erred in denying credit of TDS to the assessee. The learned Commissioner (Appeals) although accepted the fact that no other person has claimed credit in respect of such TDS failed to direct the Assessing Officer to give credit for TDS to the assessee and on the basis of TDS certificate. Hence, we set aside the order of the learned Commissioner (Appeals) and direct the Assessing Officer to allow credit for TDS to the assessee on the basis of TDS certificate. 8
Ratanlal Biharilal Atal In the result, assessee's appeal is allowed.
Order pronounced in the open Court on 26.10.2018 Sd/- Sd/-
SANDEEP GOSAIN G. MANJUNATHA
JUDICIAL MEMBER ACCOUNTANT MEMBER
NAGPUR, DATED: 26.10.2018
Copy of the order forwarded to:
(1) The Assessee;
(2) The Revenue;
(3) The CIT(A);
(4) The CIT, Nagpur City concerned;
(5) The DR, ITAT, Nagpur;
(6) Guard file.
True Copy
By Order
Pradeep J. Chowdhury
Sr. Private Secretary
(A.R./Sr. P.S./P.S.)
ITAT, Nagpur