Theo Desh Consultants Vs ACIT (ITAT Ahmedabad)
The ITAT Ahmedabad addressed the appeal by Theo Desh Consultants regarding the disallowance of TDS credit in the assessment year 2011-12. The assessee, engaged in land survey contracting, filed its return, which was scrutinized, leading to an assessment that included additional income and disallowed TDS credit of ₹12,07,747. The TDS was disallowed because the corresponding income had not been offered for taxation in that year. Theo Desh Consultants argued that, following the cash system of accounting, the income and the corresponding TDS had been duly accounted for, but in a different year. The CIT(A) upheld the original disallowance, citing the need for the income to be assessable in the same year as the TDS claim, per Rule 37BA(3). However, the ITAT found that under the cash system of accounting, TDS credit should be allowed in the year the income is actually received and offered for taxation. The tribunal ruled that disallowing the TDS credit when the income was properly declared contradicts sections 198 and 199 of the Income Tax Act. This judgment emphasizes the importance of aligning TDS credit with the cash-based accounting method. Also read: Is addition made on the basis of Form 26AS, Justified?
