The Bangalore Bench of Income Tax Appellate Tribunal ( ITAT ) allowed Tax collected at source ( TCS ) credits to the assessee despite the license was not in his name but the third party, there was no contradictory evidence that proved otherwise.
The assessee, Dolphin Bar & Restaurant, is engaged in the commercial activity of trading Indian Made Foreign Liquor (IMFL). The liquor license used by the assessee was not in its name but in the name of another person named Prashanth Shetty. The assessee was using the license based on a mutual understanding between the license holder and the assessee.
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The assessee filed an income tax return from the business of selling IMFL under its own name although the license was not in its name. However, the TCS was credited to Shetty’s account (the license holder) rather than the assessee’s account. It was submitted the details before the assessing officer that the license holder had not declared the profit from sales in his income tax return and the license holder did not claim TCS in his excise license.
Further asserted that when the income from the sale is declared by him, the TCS made on his behalf should also be credited to him alone. The assessee cited various apex court rulings in support of his claim. However, the submission was rejected, and AO adjusted the prepaid taxes as TDS against the demand due for the assessment year 2016-17. The assessee appealed before the Commissioner of Income Tax (Appeals) against the AO order. The appeal was dismissed on the ground that the credit could not be allowed.
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The assessee appealed the CIT(A) order before the ITAT, Bangalore where the assessee’s counsel relied on decisions from the Madras High Court and Andhra Pradesh High Court, which supported the claim that TCS credit should be given to the person who declared the income. The counsel relied on the decision in the assessee’s own case passed by the CIT(A) for the A.Y 2016-17 to 2020-21. The Counsel submitted the declaration statement of the license holder to support their claim.
The two-member bench comprising Chandra Poojari (Accountant Member) and Beena Pillai (Judicial Member) noted that every year this issue was considered and allowed in favor of the assessee based on the declaration given by the license holder. On the other hand, the revenue could not produce any contrary evidence.
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Thus, the tribunal directed AO to allow the assessee’s claim after due verification of the declaration statement by the license holder. The assessee’s appeal was allowed.
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