Abdul Rahman Asad Vs DCIT (ITAT Delhi)
Form 71 Overrides Buyer’s Wrong-Year TDS Filing—Capital Gain Taxable Only in Year of Transfer- ITAT Delhi Grants Full TDS Credit:
In this appeal, Assessee, a Non-Resident, sold an immovable property in September 2021 & declared the capital gain in AY 2022-23, claiming TDS credit of ₹20,99,240 deducted by the buyer. CPC granted only ₹60,872, as the buyer erroneously filed the TDS return in the following year (AY 2023-24), causing the TDS to appear in Form 26AS of AY 2023-24 instead of AY 2022-23.
CIT(A) acknowledged that TDS was indeed deducted at the time of sale but denied credit on the ground that it was deposited in the next year & suggested that income itself should have been offered in AY 2023-24.
Tribunal held that capital gains must be taxed in the year of transfer, i.e., AY 2022-23, irrespective of the year in which the buyer filed the TDS return. Tribunal further held that s.199 r.w. Rule 37BA mandates granting TDS credit in the year in which the related income is assessable, & s.155(20) read with Rule 134 provides a specific mechanism-Form 71-for claiming TDS deposited in a later year. Since Assessee had duly filed Form 71 within time & the sale deed proved TDS deduction at source, the denial of credit was unjustified. Tribunal directed AO to grant full TDS credit of ₹20,99,240 in AY 2022-23 based on Form 71 & match the income with the year of transfer, setting aside the contrary findings of CIT(A). Appeal was allowed in full.
