By Ajay R. Singh, Advocate and CA Rohit Shah
1. Allowability of TCS Credit in the hands of a firm where TCS has been filed in the name of the partner – merely because there is no Rule identical to Rule 37BA(2)(i) of the Rules with reference to TCS provisions, it cannot be the basis for the Revenue to deny the legitimate claim for credit of TCS made by an assessee.
Facts:
The assessee is a partnership firm. It is engaged in the business of liquor bar and restaurant. The liquor license stands in the name of one of the partners of the firm. The firm utilized the said license in the business of selling liquor. KSBCL collected tax at source at the time of purchase in respect of purchases made. The TCS certificate was in the name of the partner as he was the licensee. The assessee filed return of income and claimed credit for TCS made by KSBCL. In an intimation issued under section 143(1) of the Act, the claim for credit of TCS was not granted because the TCS certificate was in the name of the partner. The assessee filed application under section 154 of the Act claiming that credit for TCS should be given to the Assessee firm and pointing out the facts that the assessee is entitled to credit for TCS along with the application under section 154 of the Act. The request for rectification was however rejected by the AO. The Assessee filed appeal against orders under section 154 of the Act claiming that the assessee should be given credit for TCS. The First Appellate Authority (FAA) was of the view that a decision on a debatable point of law cannot be said to be a mistake apparent on record. According to the FAA, the question whether TCS deducted in the name of some party can be given credit in the assessment of some other party cannot be subject matter of an application under section 154 of the Act. Alternatively, the FAA referred to the provisions of section 206C (4) and (5) of the Act and came to the conclusion that credits can be given only to such persons on whose behalf tax has been collected at source and whose name is mentioned in the TCS certificate. The claim of the assessee was accordingly rejected by the FAA.
Held:
Hon’ble ITAT followed the decision of the ITAT, Jaipur Bench, in the case of Jai Ambey Wines Vs. ACIT order dated 11.01.2017. on identical issue wherein all the relevant statutory provisions viz., sections 190, 199, 206C of the Act and Rule 37BA(2)(i) of the Income Tax Rules, 1962 were referred to and it was held that the assessee firm should be given benefit of credit for TCS made in the hands of the partner.
The essence of the above stated provisions and corresponding rules is that the tax deducted at source (TDS) is nothing but tax, and credit for TDS should go to the person in whose hands the income is rightfully and finally assessed to tax in accordance with law irrespective of the person in whose hands the TDS has been deducted and TDS certificate has been issued at first place. If we look at the provisions of section 206C read with section 190 of the Act, the nature of tax collection at source (TCS) is exactly identical to TDS and it is in the nature of tax on income which has been collected at source in respect of specified business and the nature of goods as specified in section 206C of the Act. In light of above, the credit for TCS should be given to the assessee which is finally and lawfully assessed to tax in respect of the corresponding income on which TCS has been collected. The fact that there are no specific rules which have been provided in the Income tax Rules in respect of credit of TCS in such situations on the lines of Rule 37BA, doesn’t disentitle the assessee to claim credit of TCS in whose hands the income is finally assessed to tax. The reason for the same is that the nature of TCS is nothing but tax which has been statutorily recognized in the Income tax Act, and the Rules are enabling and procedural in nature and absence thereof cannot result in denial of credit of TCS.
2. Search and seizure-Assessment under section 153A-Addition of gross amount of on-money receipt
Facts:
Assessee was engaged in real estate development during the course of survey at the Head Office of assessee at Narayan Chambers, various incriminating documents were found and impounded proving that the firm was involved in the practice of receiving a part of the sales consideration of such apartments and shops in cash, which was not recorded in the books of account. AO did not find the explanation rendered by assessee as acceptable and ultimately AO made addition of Rs. 3,67,95,791 as undisclosed income from Narayan Shrushti Project for the year under consideration. The addition of gross amount of on-money receipt was challenged before CIT(A) who ultimately estimated profit @ 30% of the gross amount of on-money receipt. AO challenged this.
Held:
It is a practice of the real estate market that cash over and above the consideration in cheques are collected from the customers but the developers have to incur various unaccounted expenses in regard to the procurement of land and approval of the projects by various authorities too and therefore, the estimated profit of on-money/premium amount collected from customers is to be brought to tax, instead of adding the gross amount of on-money/premium to the total income. CIT(A) carefully took into consideration this particular aspect of the matter and profit at 30% of the gross amount of on-money receipt was treated as unaccounted income by him and the same was rightly added in the computation of total income of assessee which just and proper. The appeal filed by revenue was, therefore, dismissed.
JCIT v. Narayan Land Estate [ITA No. 1836/Ahd/2019; dated 10/6/2022] [A.Y.: 2009-10, 2011-12, 2012-2013, 2014-15]