Arvind Murjani Brands (P.) Ltd. v. ITO

SUBSCRIBE FOR FULL CONTENT


The Tax Publishers2012 TaxPub(DT) 2466 (Mum-Trib) : (2012) 047 (II) ITCL 0573 : (2012) 137 ITD 0173 : (2012) 149 TTJ 0221 : (2012) 076 DTR 0252 INCOME TAX ACT, 1961 --Tax deduction at source--Creduit for TDS under section 199Corresponding income not offered to tax--Needed to take some property on rent. Kanwal Sibal and Jatinder Kumar Sibal. Since the landlords did not know the franchisee very well, they did not prefer to enter into a direct agreement with Franchisee directly. As such, a rent agreement for franchisee is landlord between 'A' a sister concern of the assessee and Franchisee paid the rent to the assessee after deduction of tax at source. The assessee paid over the gross amount of rent to 'A' on gross basis. 'A' paid the rent to the landlords after deduction of tax at source at the rate applicable. Assessing officer agreed with the assessee's explanation that it did not receive any rental income but however, assessing officer was of the view that the amount of TDS could not be refunded to the assessee as assessee had not shown any income from rent. Held: The Revenue will never be in position to allow credit for such tax because the amount is not chargeable to tax in the hands of the assessee and it cannot retain such amount with it in contravention of Article 265 of the Constitution of India. To circumvent such a situation, the only possible solution is to allow credit for the tax deducted at source to the payee of the amount in the year for which such tax was deducted and the amount was paid after deduction of tax at source. As in the present case the assessee received the amount after deduction of tax at source from Franchisee and such amount was not admittedly chargeable to tax in its hands, therefore, the credit for the tax deducted at source should be allowed in the instant year. Income Tax Act, 1961 Section 199 IN THE ITAT MUMBAI BENCH 'A' R.S. SYAL, A.M. & S.S. GODARA, J.M. Arvind Murjani Brands (P.) Ltd. v. ITO IT No. 6708 (Mum) of 2010 A.Y. 2007-08 2 May, 2012 ORDER *R.S. Syal, A.M.* This appeal by the assessee arises out of the order passed by the Commissioner of Income Tax (Appeals) on 8-7-2010 in relation to the assessment year 2007-2008. 2. The only issue pressed in this appeal emanates from ground no.1 which states that : 'On the facts and in the circumstances of the case, the learned Commissioner (Appeals) erred in confirming disallowance of credit of TDS amounting to Rs. 8,77,881'. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2012 TaxPub(DT) 2466 (Mum-Trib) : (2012) 047 (II) ITCL 0573 : (2012) 137 ITD 0173 : (2012) 149 TTJ 0221 : (2012) 076 DTR 0252

INCOME TAX ACT, 1961

--Tax deduction at source--Creduit for TDS under section 199Corresponding income not offered to tax--Needed to take some property on rent. Kanwal Sibal and Jatinder Kumar Sibal. Since the landlords did not know the franchisee very well, they did not prefer to enter into a direct agreement with Franchisee directly. As such, a rent agreement for franchisee is landlord between 'A' a sister concern of the assessee and Franchisee paid the rent to the assessee after deduction of tax at source. The assessee paid over the gross amount of rent to 'A' on gross basis. 'A' paid the rent to the landlords after deduction of tax at source at the rate applicable. Assessing officer agreed with the assessee's explanation that it did not receive any rental income but however, assessing officer was of the view that the amount of TDS could not be refunded to the assessee as assessee had not shown any income from rent. Held: The Revenue will never be in position to allow credit for such tax because the amount is not chargeable to tax in the hands of the assessee and it cannot retain such amount with it in contravention of Article 265 of the Constitution of India. To circumvent such a situation, the only possible solution is to allow credit for the tax deducted at source to the payee of the amount in the year for which such tax was deducted and the amount was paid after deduction of tax at source. As in the present case the assessee received the amount after deduction of tax at source from Franchisee and such amount was not admittedly chargeable to tax in its hands, therefore, the credit for the tax deducted at source should be allowed in the instant year.

Income Tax Act, 1961 Section 199

IN THE ITAT MUMBAI BENCH 'A'

R.S. SYAL, A.M. & S.S. GODARA, J.M.

Arvind Murjani Brands (P.) Ltd. v. ITO

IT No. 6708 (Mum) of 2010

A.Y. 2007-08

2 May, 2012

ORDER

R.S. Syal, A.M.

This appeal by the assessee arises out of the order passed by the Commissioner of Income Tax (Appeals) on 8-7-2010 in relation to the assessment year 2007-2008.

2. The only issue pressed in this appeal emanates from ground no.1 which states that : 'On the facts and in the circumstances of the case, the learned Commissioner (Appeals) erred in confirming disallowance of credit of TDS amounting to Rs. 8,77,881'.