Bangalore ITAT Grants TCS Credit To IMFL Dealer Even Though License Was In Name Of Another Person

Referring to the case of Million Traders Bhopal Pvt. Ltd. vs. ADIT [ITA Nos. 124 & 125/Ind/2023], the Bangalore ITAT allowed TCS credit to the entity conducting the business of IMFL, irrespective of the fact that the license was in the name of another person.

The ITAT maintained the status quo observing that identical issue was decided in similar fashion in all previous assessment years.

The Division Bench of Beena Pillai (Judicial Member) and Chandra Poojari (Accountant Member) observed that “this issue was considered and allowed in favour of assessee based on the declaration given by Prashanth Shetty. The declaration given by Prashanth Shetty is verifiable by the authorities. The DR also could not establish any contrary to what has been stated in the declaration by Prashanth Shetty”. (Para 5)

Facts of the case:

The assessee indulged in managing the trading business in IMFL (Indian made foreign liquor), filed its return declaring the net profit from sale business in the hands of assessee only. The License issued by the Dept of Central Excise was in another person’s name which was not transferred to assessee’s name based on mutual understanding. The assessee informed the AO that the license holder did not claim TCS in his return of income relating to the sale based on the excise license, neither reflected the purchases and sales in the return of income. The AO however made addition and adjusted the prepaid taxes as TDS against the demand for the relevant assessment year.

Observations of the Tribunal:

The Bench noted that the AO had adjusted the resultant refund against the dues and withheld the TCS on the purchases declared by assessee in its return, even after accepting the purchases.

The Bench also noted that the AO has denied TCS credit on the ground that the TCS was collected and was reflecting in the account of one Prashanth Shetty from Mangalore, as he was the original owner of the excise license.

Further, the Bench noted that the Prashanth Shetty provided a declaration stating that, though the excise license is in his name, he has not declared the income as declared by the assessee and has also not claimed the credit of TCS amounting to Rs.1,69,337/-.

The Bench observed that identical issue was considered and allowed in favour of assessee for all assessment years based on the declaration given by Prashanth Shetty.

Hence, the ITAT allowed the appeal of assessee and directed the AO to allow assessee’s claim after due verification.

Counsel for Appellant/ Assessee: Salome Lobo

Counsel for Respondent/ Revenue: Subramanian. S

Case Title: M/s Dolphin Bar and Restaurant verses DCIT

Case Number: ITA No. 1099/Bang/2024

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