The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) has held that the lack of identical income tax rule is not a valid ground for denial of legitimate Tax collection at source (TCS) claim.
The assessee is a partnership firm named M/s. Hotel Ashok Garden. It is engaged in the business of liquor bars and restaurants. The liquor license stands in the name of Shri. Raju S. Shetty, one of the partners of the firm. The firm utilized the said license in the business of selling liquor.
The purchase of liquor for sale was made from the Karnataka State Beverages Corporation Ltd., (KSBCL). In terms of section 206C of the Income Tax Act, 1961,KSBCL collected tax at source (TCS) at the time of purchase in respect of purchases made in all the Assessment Years 2016- 17 to 2019-20.
The TCS certificate of collected tax at source was issued at the time of purchase, in respect of purchases made in all the Assessment Years 2016- 17 to 2019-20. The TCS certificate was in the name of Shri. Raju S. Shetty as he was the licensee.
The assessee filed an application under section 154 of the Income Tax Act 1961, claiming that credit for TCS should be given to the Assessee firm and pointing out the facts with regard to license.
Counsel for the assessee, Preethi S. Patel contended that the decision of the ITAT, Jaipur Bench, in the case of Jai Ambey Wines Vs. ACIT, deals with an identical issue with regard to the claim of TCS in the hands of the partnership firm when the license stands in the name of the partners came up for consideration and held that the assessee firm should be given benefit of credit for TCS made in the hands of the partner.
Ganesh R. Ghale, Standing Counsel, represented revenue raised the contention that the issue of this case is similar to the case of Shri. JayaprakashaRai vs. DCIT. Credit should be given to TCS on the basis of the ultimate outcome before the Central Excise authorities regarding transfer of excise license.
The tribunal also held that the assessing officer can take necessary safeguards to ensure that the interest of the Revenue is not affected or prejudiced in any manner.
The single bench of N. V. Vasudevan (vice president) held that the facts of the present case applicable for TDS should also be applicable for TCS and merely because there is no rule identical to rule 37BA (2) (i) of the rules with reference to TCS provisions.
The tribunal observed that, it cannot be the basis for the revenue to deny the legitimate claim for credit of TCS made by an assessee and the assessee should be given the benefit of credit for TCS. The assessing officer was directed to give credit to TCS, thereby allowing the appeal of the assessee.
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