Assessment Year: 2014-15
Appellant: Additional CIT, Special Range-03, New Delhi
Respondent: Engineering Projects India Ltd., New Delhi
Case Filed On: 24th May 2019
Date of Order: 11th January 2023
Order Type: Final Tribunal Order
Pronounced On: 11th January 2023
The appeal in ITA No. 4738/DEL/2019 was filed by the Additional CIT, Special Range-03, New Delhi, against the order dated 12th March 2019 of the learned Commissioner of Income-Tax (Appeals)-3, New Delhi, concerning the disallowance of TDS credit under Section 199 of the Income-Tax Act, 1961, for the assessment year 2014-15. The respondent, Engineering Projects India Ltd., challenged the disallowance.
The primary issue in this appeal was the disallowance of TDS credit amounting to Rs. 99,32,850/- under Section 199 read with Rule 37BA(3) of the Income-Tax Act, 1961.
The appeal was heard on 9th January 2023. The appellant was represented by Shri Gurpreet Shah, Senior Departmental Representative (Sr. DR), and the respondent was represented by Shri Tarandeep Singh, Advocate.
During the scrutiny assessment proceedings, the Assessing Officer observed that the assessee had received advances from customers amounting to Rs. 436.91 crores and TDS had been deducted on these advances. The Assessing Officer asked the assessee to reconcile the receipts shown in the Profit & Loss account and those reflected in the TDS certificates/Form 26AS. The Assessing Officer also asked why TDS on advances received from customers should not be disallowed under Section 199 of the Act. The respondent submitted that the company engaged in multiple projects taking 4 to 5 years to complete, making it difficult to reconcile the figures for all the projects in a short time. The respondent further submitted that TDS on advances had been allowed in all the earlier years. However, the Assessing Officer was not satisfied and disallowed the TDS credit of Rs. 99,32,850/-.
Upon appeal, the learned CIT(A) elaborately noted the submissions of the respondent. The CIT(A) considered the facts and submissions made by the respondent, noting that the company followed the percentage of completion method (POCM) to recognize revenue. The company received mobilization advances from its customers, and bills or invoices were raised based on the terms & conditions of each project and the amount of work completed. Hence, it was not possible to correlate the advances with the invoices raised and the revenue recognized in each year. The CIT(A) observed that the respondent was consistently being allowed credit for TDS on mobilization advances in the subsequent years (i.e., AY 2015-16 and 2016-17).
The Income Tax Appellate Tribunal (ITAT) examined the submissions and the records. The Tribunal agreed with the CIT(A) and the respondent’s counsel that the respondent followed a consistent method of accounting. The Tribunal found no reason to disallow the TDS credit and upheld the order of the CIT(A), allowing the TDS credit as per the certificates issued.
The appeal by the Revenue was dismissed, and the TDS credit disallowance under Section 199 was set aside.
Members:
Shri Shamim Yahya, Accountant Member
Ms. Astha Chandra, Judicial Member
Dated: 11th January 2023
Copy forwarded to:
Assistant Registrar, ITAT Delhi Benches, Delhi
ITA 4738/DEL/2019 – Additional CIT vs. Engineering Projects India Ltd. – TDS Credit Disallowance
Manage the increasing number of hearings effortlessly by leveraging the legal AI revolution We are India's Leading revolutionary AI-powered legal platform where you can get enough insights into top cases and judgements.
Research Platform