COMMISSIONER OF INCOME TAX-15 Vs. RELCOM

JUDGEMENT

(1.) THE revenue has filed the present appeal against the impugned order dated 15.07.2014 passed by the Income Tax Appellate Tribunal (hereinafter referred to as, "ITAT") in ITA No. 5979/DEL/2012, relating to the Assessment Year 2009 -10. The question of law urged by the revenue in the instant appeal is:

(2.) THE assessee had claimed credit of all TDS certificates, including that related to M/s. REPL but the income of this certificate was not reflected in the Profit and Loss Account. The total TDS claim made by the assessee was Rs. 1,20,73,097/ - against a total of Rs. 19,08,20,903/ - received. The assessee stated that the benefit of the TDS certificate mistakenly issued in its PAN name has not been availed by M/s. REPL. The Assessing Officer (AO) rejected this claim relying on Section 199 of the Act and held that the TDS credit should be allowed to the person from whose income the deduction was made. Therefore, according to the AO, the assessee, instead of claiming the credit of the TDS which did not belong to it, should have approached the vendors for correction of their record. The AO held that since out of the total receipts of Rs. 19,08,20,903/ -, the assessee received only Rs. 6,20,99,368/ - (and the rest of the amount was received by M/s. REPL), the TDS could be claimed only against the said amount of Rs. 6,20,99,368/ -. The assessee appealed against the AO's order before the Commissioner of Income Tax (Appeals) (hereinafter referred to as, CIT(A)) who, by its order dated 20.09.2012, allowed the TDS claim. The CIT(A) noted that the assessee had categorically stated that the benefit of TDS claimed by it had not been availed by M/s. REPL. Thus, the CIT(A) allowed assessee's claim, on the ground that since the assessee had already paid the due taxes in M/s. REPL (both companies being a part of the same group), it would be a travesty of justice to not allow the benefit of TDS to the assessee. The observations of CIT(A) are reproduced below:

(3.) THE revenue in the present appeal has urged that the CIT(A) and the ITAT could not have allowed the entire TDS amount of Rs. 1,20,73,097/ -claimed by the assessee as the deduction was not made in respect of the assessee's income and it was, instead, made in respect of M/s. REPL's income. In support of this contention, the revenue relies on the provisions of Section 199 of the Act. The revenue also contended that in the absence of the assessee offering the corresponding income, i.e. total receipts of Rs. 19,08,20,903/ - for taxation by declaring total income, the assessee's TDS claim could not have been allowed. Thus, the revenue submits, the defective TDS amount of Rs. 93,72,097/ - should be disallowed and the only legitimate claim is that of Rs. 27,01,000/ - against the declared total receipts of Rs. 6,20,99,368/ -.