Income to be assessed as per MOU for Sharing Profit and Loss of Business and not on TDS deducted in Name of Assessee under PAN Number: ITAT [Read Order]

Income to be assessed as per MOU for sharing profit and loss of business and not on TDS deducted in name of assessee under PAN Number, so was held by Income Tax Appellate Tribunal (ITAT), Kolkata.

The assessee, Mithoo Saraf through his proprietary concern M/S Bansal Road Carriers is engaged in the business of transportation and logistics. During the year the assessee entered into a MOU with M/S DKS Logistics Pvt. Ltd. for carrying on the business of transportation and sharing profits and losses arising out of said business in the ratio of 60:40. The assessee has to use his PAN while doing the business of logistics and transportation and logistics under the MOU as stated above and TDS was deducted under the said PAN of the assessee. The assessee shared and paid to M/s DKS Logistics Pvt. Ltd. the profits falling to its share in accordance with MOU however, the entire amount of TDS was shown in form 26AS under assessee’sPAN and was claimed by the assessee accordingly.

Pertinent to state that M/s DKS Logistics Pvt. Ltd. has also shown the income received from the assessee under the MOU as business receipts and paid taxes accordingly. The AO/CPC assessed the entire income in the hands of assessee on the basis of TDS as appearing in Form 26AS whereas the assessee has parted with income under the MOU with M/s DKS Logistics Pvt. Ltd. which was taxed accordingly in the hand of another partner.In the appellate proceedings also, theCIT(A) dismissed the appeal of the assessee by upholding the order of AO on the ground that entire income was shown in the Form 26AS on the web portal in the name of assessee and therefore assessed correctly by the AO.

The bench consisting of Sanjay Garg, Judicial Member and Rajesh Kumar, Accountant Member held that “We restore the matter to the file of AO for verifying the MOU and deciding the issue in accordance with the facts and our observation given hereinabove. Needless to say, that income has to be assessed as per terms and conditions of MOU and not based on the TDS deducted in the name of assessee under her PAN no whereas the TDS credit in full has to be given to the assessee.”

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