The individual whose hand the matching income is assessed for taxation will receive a TCS credit
Fact and issue of the case
These two appeals by the assessee are directed against two separate orders dated Commissioner of Income Tax(Appeal), National Faceless Appeal Centre, Delhi both dated 13.02.2023 for A.Y.2017-18 & 2018-19 respectively. The assesse has raised common grounds in these appeals the grounds raised for A.Y.2017-18 are as under:
That on the facts and in the circumstances of the case and in law, the denial of credit of TCS of Rs. 8226254 in intimation u/s 143(1) is unjustified and unlawful and therefore the credit of TCS of Rs. 8226254 be kindly allowed.
That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred and not justified in his findings that the denial of credit of TCS of Rs. 8226254 is lawful, such findings be held as unlawful and injudicious and therefore be quashed and the credit of TCS of Rs. 8226254 be kindly allowed.
That on the facts and in the circumstances of the case and in law the assessee submits that having regard to the nature of business and the explanation furnished before the lower authorities it be held that the assessee is lawfully eligible and entitled to claim the credit of TCS of Rs. 8226254 and the denial of such credit is injudicious and unlawful and hence the credit of TCS of Rs. 8226254 be kindly allowed.
That on the facts and in the circumstances of the case and in law, the levy of interest under section 234B and 234C is unlawful and without jurisdiction therefore, the same be kindly deleted.”
The solitary grievance of the assessee for both the assessment year 2017-18 & 2018-19 is regarding non allowance of the credit of TCS collected by the Excise Department of State of M.P. in respect of the purchase of liquor due to nonappearance in the PAN account of the assessee company but reflected in the accounts of the individual license holders who are directors and associates of the assessee company. Ld. Sr. Counsel for the assessee submitted that the assessee company is engaged in the business retail sale of liquor. The directors/associates of assessee company are license holders and they have formed the company to carry on the business of liquor. Due to typical nature of assessee’s line of business, the entire business of shops though allotted in the names of Directors/Associates is accounted for in the books of assessee. The shops are obtained in the name of the directors/associates as per the regulations of State Excise Department. However the purchases and sales are accounted as the transactions of the assesse company and income of all the shops are offered as income of the assessee company and same is also assessed to tax. Thus, Ld. Sr. counsel has submitted that the individual license holders in whose name the TCS was collected by the Excise department and deposited to the Government account have not claimed the credit of the said TCS as the income from the transactions of purchase and sale is offered to tax by the assessee. The directors/associates of the assesse company who are holders of the license of the Excise department and has no objection for the claim of credit of the said advance the (TCS) by the assessee.
Observation of the court
Thus the logic and proposition as emerged from the various case laws sited above is that the credit of the tax deducted at source/tax collected at source be given to the de-facto prayer/recipient of the amount which is subjected to the collection/deduction of tax as in whose hands the corresponding income is going to be assessed. The only rider to this principle is that there should not be any double claim of credit. Accordingly if the assessee produces the record as well as undertaking/indemnity bond from the license holders that they have not claimed or not going to claim the credit of the said amount of TCS then the credit of the TCS on the transactions of purchase of liquor actually carried out by the assessee by using the license issued in name of the individuals shall be allowed to the assessee. Since the relevant facts regarding the purchase, sales of liquor by the assessee and consequential income offered to tax by the assessee as well as the undertaking/indemnity from the individual license holders are required to be produced and verified/examined therefore, the matter is set aside to the record of the AO for limited purpose of examining the factual aspect of carrying out the transactions of purchase and sales and corresponding income offered to tax by the assesse as well as production of the undertaking/indemnity on behalf of the individual license holders for not claiming the credit of the said amount of TCS. The AO shall allow the claim of credit of TCS subject to verification of the above record and facts.
In the result, the appeal of assessee is allowed for statistical purposes.
Order pronounced in the open court on 12.10.2023
Read the full order from hereMillion-Traders-Bhopal-Pvt.-Ltd-Vs-ADIT-ITAT-Indore2