The Income Tax Appellate Tribunal ( ITAT ) Bangalore bench presided by Mr N. V. Vasudevan, Vice President has directed Assessing Officer to examine the outcome of an application for transfer of licence since the assessee is not a licence holder to claim Tax Collection at Source (TCS) in Income Tax
The appellate, Mr Jayaprakasha Rai, is the proprietor of M/s. Prashanth Wines, engaged in the retail business of Indian Made Foreign Liquor (IMFL) using the excise licence in the name of Mrs Pramila P Rai, daughter-in-law of the assessee’s brother. All the purchases of IMFL were made from Karnataka State Beverages Corporation Ltd., (KSBCL) by the assessee using the excise licence of Mrs Pramila P. Rai.
During the course of purchase, KSBCL made Tax Collection at Source (TCS) of Rs.1,39,296/- under section 206C of the Income Tax Act, 1961. Thereafter, the assessee claimed credit for TCS in the return of income and the claim was rejected by the AO as well as the CIT(A) for the reason that the credit can be given only to Mrs Pramila Rai and not the Assessee. The aggrieved assessee filed an appeal before ITAT.
The counsel for the assessee submitted that the request for transfer of the licence from Mrs Pramila P. Rai to the assessee, has already been made to the Central Excise Authorities and the said request is pending consideration. The purpose of the provisions of section 206 C (4) as well as Rule 37-I of the Income Tax Rules, 1962 are meant to ensure that credit for TCS of the same sum is not claimed by two persons and Mrs Pramila P. Rai as well as the assessee are assessed by the same AO and if the licence is ultimately transferred in the name of the assessee, the assessee would be lawfully entitled to claim credit for TCS.
The Tribunal has held that “the issue requires to be set aside to the AO for examination afresh in the light of the outcome before the Central Excise authorities for the transfer of excise licence from Mrs Pramila P. Rai to the assessee. I am also of the view that the AO can take necessary safeguards to ensure that the interest of the Revenue is not affected or prejudiced in any manner”.
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