Neelkanth Developers-POCM and TDS Credit

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THE INCOME TAX APPELLATE TRIBUNAL

AHMEDABAD “A” BENCH

Before: Shri Waseem Ahmed, Accountant Member


And Shri Siddhartha Nautiyal, Judicial Member

ITA Nos. 349 & 350/Ahd/2021


Assessment Year 2018-19 & 2019-20

Neelkanth Developers Assit. Director of


Radhe Homes, B/H Radhe- Income Tax, CPC,
III, Kudasan, Gandhinagar Vs Bangolare
PAN: AAKFN6777F (Respondent)
(Appellant)

Assessee by: Shri Hardik Vora, A.R.


Revenue by: Shri N.J. Vyas, Sr. D.R.

Date of hearing : 22-12-2022


Date of pronouncement : 27-12-2022

आदे श/ORDER
PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:-

These two appeals filed by the assessee are against the order of
National Faceless Appeal Centre (NFAC), Delhi in DIN & Order Nos.
ITBA/NFAC/S/250/2021-22/1036974805(1) & ITBA/NFAC/S/250/2021-
22/1036974826(1), in proceeding u/s. 143(1) vide order dated 16/11/2021
passed for the assessment year 2018-19 & 2019-20. Since common issues
are involved in both the appeals and the consideration, the same are being
taken up for consideration together.
I.T.A Nos. 349 & 350/Ahd/2021 A.Y. 2018-19 & 2019-20 Page No. 2
Neelkanth Developers vs. Asst. Director of Income Tax

2. The assessee has taken the following grounds of appeals:

Assessment year 2018-19


Grounds of Appeal Tax effect relating each
Ground of appeal
1 On the facts and circumstances of the 8,37,421/-
case as well as law on the subject, the
learned commissioner of Income-Tax
(Appeals) has erred in confirming
disallowed TDS credit.

2 On the facts and circumstances of the


case as well as law on the subject, the
learned commissioner of Income-Tax
(Appeals) has erred in confirming
order u/s 143(1), disallowing TDS
credit on contentious ground.

3 On the facts and circumstances of the


case as well as law on the subject, the
learned commissioner of Income-Tax
(Appeals) has erred in not dealing with
appellant's contention that in case of
percentage completion method, exact
correlation between amount offered
for the tax for the year and TDS for
the year cannot be correlated.

4 On the facts and circumstances of the 81,351/-


case as well as law on the subject, the
learned Commissioner of Income-Tax
(Appeals) has erred in confirming
interest charged by assessing officer
u/s. 234B of the Act.

5 On the facts and circumstances of the 20,753/-


case as well as law on the subject,
the learned Commissioner of
I.T.A Nos. 349 & 350/Ahd/2021 A.Y. 2018-19 & 2019-20 Page No. 3
Neelkanth Developers vs. Asst. Director of Income Tax

Income-Tax (Appeals) has erred in


confirming interest on account of
deferment of advance tax u/s 234C of
the Act.

6 on the fact and circumstances of the N.A.


case as well as law on the subject, the
learned assessing officer has erred in
not giving credit of IDS in order
passed u/s 143(1)

7 It is therefore prayed that the above N.A.


demand raised by the assessing officer
may please be deleted

8 Appellant craves leave to add, alter or N.A.


delete any ground(s) either before or
in the course of hearing of the appeal.

Total tax effect 9,39,516/-

Assessment year 2019-20

Grounds of Appeal Tax effect relating


each Ground of
appeal)
1 On the facts and circumstances of the case as 3,62,414/-
well as law on the subject, the learned
commissioner of Income-Tax (Appeals) has
erred in confirming disallowed TDS credit.

2 On the facts and circumstances of the case as


well as law on the subject, the learned
commissioner of Income-Tax (Appeals) has
erred in confirming order u/s 143(1),
disallowing TDS credit on contentious ground.

3 On the facts and circumstances of the case as


well as law on the subject, the learned
commissioner of Income-Tax (Appeals) has
I.T.A Nos. 349 & 350/Ahd/2021 A.Y. 2018-19 & 2019-20 Page No. 4
Neelkanth Developers vs. Asst. Director of Income Tax

erred in not dealing with appellant's contention


that in case of percentage completion method,
exact correlation between amount offered for the
tax for the year and TDS for the year cannot be
correlated.

4 On the facts and circumstances of the case as


well as law on the subject, the learned
Commissioner of Income-Tax (Appeals) has
erred in confirming interest charged by
assessing officer u/s. 234B of the Act.

5 On the facts and circumstances of the case as 1,572/-


well as law on the subject, the learned
Commissioner of Income-Tax (Appeals) has
erred in confirming interest on account of
deferment of advance tax u/s 234C of the Ac
6 It is therefore prayed that the above demand N.A.
raised by the assessing officer may please be
deleted

7 Appellant craves leave to add, alter or delete N.A.


any ground(s) either before or in the course of
hearing of the appeal.

Total tax effect 3,68,965/-

3. The brief facts in relation to the case before us are that the assessee is
builder and developer and has offered income on the basis of percentage
completion method, whereas the TDS has been deducted by the purchaser of
the property under section 194-IA of the Act at the time of execution of sale
deeds. Therefore, the case of the assessee is that that it is not possible at all
times to correlate a specific amount of TDS with the specific amount of
income earned by the assessee in a particular year. In the present case, the
counsel for the assessee submitted that the assessable income relating to
TDS credit claimed in this year has already been offered to tax in the current
I.T.A Nos. 349 & 350/Ahd/2021 A.Y. 2018-19 & 2019-20 Page No. 5
Neelkanth Developers vs. Asst. Director of Income Tax

year as well as earlier years, therefore there is no discrepancy in the TDS


credit claimed while filing the return of income. The counsel for the assessee
further submitted that when a particular income is received by the assessee
after deduction of TDS and the said TDS has been duly deposited with the
Government and the assessee has received the requisite certificate to this
effect, then on production of such certificate, assessee becomes entitled to
credit of TDS, even if the assessee has not directly offered the said income
to tax. In support of the contention, the counsel for the assessee placed
reliance on certain judicial precedents in support. In response, DR placed
reliance upon the orders passed by the AO and Ld. CIT(Appeals)
respectively.

4. We have heard the rival contentions and perused the material on


record. In this case, we observe that the AO issued notice under section
139(2) of the Act for the reason that credit of TDS has been claimed, but the
corresponding receipts/income has been omitted to be offered for taxation.
In response, the assessee submitted that it has offered sales/income on the
basis of percentage completion method, while TDS was deducted by the
purchaser of residential unit under section 194-IA of the Act at the time of
execution of sale deed. The case of the assessee is that the assessee also
collects money on behalf of the landowners. Accordingly, assessee receives
full consideration including the part belonging to the land owner and hence
TDS is deducted and reflected in Form 26AS of the assessee. However,
while processing the return of income at CPC, Bengaluru, AO has given
credit of only part of TDS and raised the tax demand for the balance amount,
along with interest under section 234 A and 234C of the act, respectively. In
I.T.A Nos. 349 & 350/Ahd/2021 A.Y. 2018-19 & 2019-20 Page No. 6
Neelkanth Developers vs. Asst. Director of Income Tax

our considered view, in the instant case, if the income has been offered by
the assessee by following the percentage completion method, in the current
year or in any of the earlier years, while TDS has been deducted
subsequently by the buyer/purchase at the time of execution of sale deed and
the assessee is able to produce the requisite certificates to substantiate that
TDS has been deducted on the income which has been offered to tax by the
assessee either in the current/earlier years (since income is being offered to
tax following the percent completion method while TDS was deducted at the
time of education of sale deed, the income presumably would be offered to
tax either in the same year or in any of the earlier years) and the assessee is
able to correlate the income offered to tax with the TDS deducted, the
assessee is eligible for credit of TDS. In the case of Supreme Renewable
Energy Ltd.[2010] 124 ITD 394 (Chennai), ITAT held that when a
particular income is received by assessee after deduction of tax at source and
said TDS has been duly deposited with Government and assessee has
received requisite certificate to this effect, then on production of said
certificate assessee becomes entitled to credit of TDS, even if assessee has
not directly offered said income for tax as assessee considers that same is not
liable for tax. In the case of Zelan Projects (P.) Ltd.[2015] 63
taxmann.com 334 (Hyderabad - Trib.), the ITAT held that where TDS
was deducted from mobilisation advance paid to assessee-erection
contractor, credit of same was to be allowed, even if no income was
assessable to tax as contract was not fully executed in relevant year. In the
case of Abbott Agency, Ludhiana, [2014] 41 taxmann.com 404 (Punjab
& Haryana), the High Court held that where relevant income had been
accounted in earlier assessment year but TDS certificate was issued late in
I.T.A Nos. 349 & 350/Ahd/2021 A.Y. 2018-19 & 2019-20 Page No. 7
Neelkanth Developers vs. Asst. Director of Income Tax

subsequent year, credit for TDS would be allowed in subsequent year. In the
case of NCC Maytas JV v. ACIT [A.Y. 2006-07, ITA No. 812 (Hyd.) of
2013, dated 13-9-2013, the ITAT held that a part of TDS cannot be denied
on the ground that the corresponding turnover has not been shown in the
A.Y. in which credit is being claimed, if income relating to such TDS has
already been offered for taxation in an earlier assessment year. In the instant
facts, in view of the aforesaid rulings, if the assessee has offered income to
tax in either in the current year or any earlier year and TDS has been
deducted on the same in the current year at the time of execution of sale
deed, credit for the TDS so deducted should be allowed to the assessee in the
current year, subject to the assessee producing the necessary supportingto
show that corresponding income has been offered in tax either during the
current year or any of the earlier previous years. In the instant facts, the
buyer/purchase of property deducted tax only at the time of execution of sale
deed, while the corresponding income has been offered to tax by the
assessee either during the current year or in any of the prior years by the
assessee following the percentage completion method. Accordingly, in the
above facts, the matter is being restored to the file of AO to carry out the
necessary verification in respect of income offered to tax and the
corresponding TDS for which credit is being claimed and TDS credit may be
allowed after carrying out the necessary verification in the year when TDS
has been deducted- subject to the assessee producing the correlation that
such income has been offered to tax either during the current year or any of
the earlier previous years.
I.T.A Nos. 349 & 350/Ahd/2021 A.Y. 2018-19 & 2019-20 Page No. 8
Neelkanth Developers vs. Asst. Director of Income Tax

5. In the result, the appeal of the assessee is allowed for statistical


purposes.

6. Since the issue for consideration for both the years under
consideration i.e. assessment year 2018-19 and 2019-20 are the same, the
observations for assessment year 2018-19 would apply to assessment year
2019-20 as well.

7. In the result, appeal of the assessee for assessment year 2019-20 is


allowed for statistical purposes.

8. In the combined result, both the appeals of the assessee are allowed
for statistical purposes.

Order pronounced in the open court on 27-12-2022

Sd/- Sd/-
(WASEEM AHMED) (SIDDHARTHA NAUTIYAL)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad : Dated 27/12/2022
आदे श क त ल प अ े षत / Copy of Order Forwarded to:-
1. Assessee
2. Revenue
3. Concerned CIT
4. CIT (A)
5. DR, ITAT, Ahmedabad
6. Guard file.
I.T.A Nos. 349 & 350/Ahd/2021 A.Y. 2018-19 & 2019-20 Page No. 9
Neelkanth Developers vs. Asst. Director of Income Tax

By order/आदे श से,

उप/सहायक पंजीकार
आयकर अपील य अ धकरण,
अहमदाबाद

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