Case Law Details
Adroit Structural Engineers Pvt. Ltd. Vs. DCIT (ITAT Ahmedabad)
Introduction: In a recent case before the Income Tax Appellate Tribunal (ITAT) Ahmedabad, Adroit Structural Engineers Pvt. Ltd. contested the disallowance of TDS credit by the Commissioner of Income Tax (Appeals) (CIT(A)) for the Assessment Year 2020-21. Despite the delay in filing the appeal, the ITAT considered the matter and ruled in favor of the assessee. This article provides a detailed analysis of the ITAT’s decision and its implications.
Detailed Analysis: Adroit Structural Engineers Pvt. Ltd. filed an appeal against the order of the CIT(A) disallowing the credit of TDS amounting to Rs. 14,38,505/- for the Assessment Year 2020-21. The appeal was time-barred by 189 days, but the ITAT, considering the bona fide mistake on the part of the assessee, condoned the delay and proceeded to examine the case on merits.
The assessee argued that the TDS credit should be allowed as the corresponding income had been offered to tax in the relevant assessment year. Despite the TDS not reflecting in Form 26AS, the ITAT acknowledged judicial precedents stating that TDS credit should be allowed in the year in which the corresponding income is assessable, provided there is no double deduction claimed.
The ITAT found merit in the assessee’s argument, noting that the services and invoices were raised in the impugned assessment year. As the assessee had not claimed TDS in any prior assessment year, the ITAT ruled in favor of the assessee, directing the Assessing Officer to verify and grant relief accordingly.
Conclusion: The ITAT’s decision in the case of Adroit Structural Engineers Pvt. Ltd. clarifies that an assessee is entitled to claim TDS deduction in the year in which the corresponding income is offered to tax, even if the TDS does not reflect in Form 26AS. By considering the substance of the transaction and the absence of double deduction claims, the ITAT ensures fairness and upholds the principles of tax law. This ruling provides valuable guidance to taxpayers and reinforces the importance of judicial precedents in tax matters.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals) (in short “Ld. CIT(A)”), National Faceless Appeal Centre, (in short “”NFAC”), Delhi in DIN & Order No. ITBA/NFAC/S/250/2022-23/1045945499(1) vide order dated 26.09.2022 passed for the Assessment Year 2020-21.
2. The assessee has raised the following grounds of appeal:-
“1. The Learned CIT(A) has erred in law and on facts of the appellant’s case in disallowing credit of TDS amounting to 14,38,505/-, on erroneous plea that TDS credit is not reflected in Form 26AS.
Both the lower authorities have erred in law and on the facts of the appellant’s case in not appreciating the fact that the credit claimed is allowable U/s 199 of the Act.
2. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before hearing of the appeal.”
3. We observe that the present appeal is time barred by 189 days. The assessee has filed affidavit and submitted that CPC in intimation under Section 143(1) of the Act has made adjustments and also denied TDS credit, against which appeal was preferred before Ld. CIT(A). It was submitted that the office accountants of the assessee company was not aware of technicalities of Income Tax Act and were under the belief that there is no legal remedy available against denial of TDS credit. Thereafter, the assessee obtained legal opinion and was advised to file appeal against denial of TDS credit. Before Income Tax Appellate Tribunal, the assessee submitted that the appeal in filing was due to lack of understanding of technicalities of Income Tax and a prayer was made that in the interest of justice since the assessee has a good case on merits, the delay in filing of appeal may kindly be condoned.
3.1 In our view, looking into the instant facts, we are of the considered view that there was a bona fide mistake on the part of the assessee, wherein the assessee was under a mistaken belief that no appeal lies against denial of grant of TDS credit, we are of the considered view that this is a fit case for granting condonation of delay in filing of the present appeal in the interest of justice. On merits, the assessee has made out a good case and in the result, the appeal in filing of the present appeal is hereby condoned in the interest of justice.
On merits:-
5. The brief facts of the case are that the assessee filed return of income for A.Y. 2020-21 on 01.01.2021 declaring total income at Rs. 5,72,97,190/-. The return was processed under Section 143(1) of the Act in which the CPC, apart from certain other adjustments, disallowed the credit of TDS amounting to Rs. 14,38,505/- on the ground that the TDS credit was not reflecting in Form 26AS.
6. The assessee filed appeal against the aforesaid intimation before Ld. CIT(A) and submitted that the assessee is engaged in the business of construction of factory and buildings, warehouses etc. on contract basis. The construction work sites are situated in various parts of India. The assessee filed return of income declaring total income of Rs. 5,72,97,190/-. The assessee submitted before Ld. CIT(A) that TDS amount of Rs. 14,38,505/- claimed by the assessee cannot be disallowed simply on the ground that TDS credit is not reflecting in Form No. 26AS. The assessee’s submissions were that the services were rendered in A.Y. 2020-21 and hence income is taxable in A.Y. 2020-21 and TDS credit is available in this year only in terms of Section 199 of the Act. The reason why the TDS amount is not reflecting in Form 26AS is that the payer deducted TDS in A.Y. 2019-20 as per their accounting policy, but the assessee did not claim TDS in A.Y. 2019-20 since services were rendered and invoices were raised by the assessee only in A.Y. 2020-21. However, Ld. CIT(A) dismissed the appeal of the assessee with the following observation:-
“Ground No. 4 : This ground is in respect of short TDS credit amounting to Rs. 14,38,505/-.
As the TDS is not reflected in Form 26AS, the CPC has rightly not given credit amounting to Rs. 14,38,505/- claimed by the appellant. Ground No. 4 is dismissed.
6. In the result, the appeal is partly allowed.”
7. The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(A). Before us, the Counsel for the assessee reiterated the submissions made before Ld. CIT(A). The contention of the assessee was that the services were rendered by the assessee in A.Y. 2020-2 1 and hence, the income has been offered to tax in A.Y. 2020-2 1 and therefore, the TDS credit should have been made available to the assessee in A.Y. 2020-2 1 in terms of Section 199 of the Act. The Counsel for the assessee drew our attention to Pages 21-23 of the Paper Book being invoices raised on the payer dated 04.06.20 19, 24.05.20 19 and 01.05.2019, in which the total TDS deducted by the payer was Rs. 14,38,505/-. Accordingly, the Counsel for the assessee submitted that clearly in the instant facts, the invoices had been raised by the assessee in the impugned assessment year i.e. A.Y. 2019-20. Consequently, the income against the aforesaid invoices have also been offered to tax by the assessee in A.Y. 20 19-20. Further, the assessee drew our attention to Page 38 of the Paper book (computation of income) and submitted that the assessee has not claimed TDS credit for the sum of Rs. 14,38,505/- in the return of income filed for A.Y. 2013-14. The Counsel for the assessee submitted that the total TDS credited by the payer as per Form 26AS was Rs. 1,26,19,719/- for A.Y. 2019- 20, while the assessee has claimed TDS of RS. 1,11,81,214/-. Accordingly, it was submitted that the difference between the TDS deducted by the payer for A.Y. 20 19-20 and the amount of TDS claimed by the assessee as per return of income is Rs. 14,38,505/-, which is the precise amount of TDS which has been deducted by the payer in respect of invoices dated 04.06.2019, 24.05.2019 and 01.05.2019 in the A.Y. 2020-21, i.e. the impugned year under consideration. It was submitted that the payer M/s. Jones Lang Lasalle Property Consultants (India) Pvt. Ltd. inadvertently deducted TDS in A.Y. 2019-20, for which the assessee cannot be penalized. It is not the allegation of the Department that TDS credit for the aforesaid amount has been claimed by the assessee in A.Y. 2019-20 and 2020-21 as well. Looking into the instant facts, it was submitted that the assessee was well within its legal rights to claim TDS of the aforesaid amount in terms of Section 199 of the Act during the impugned assessment year.
8. In response, the Ld. D.R. relied on the observations made by Ld. CIT(A) in the appellate order in which it has been observed that Form 26AS for the impugned assessment year does not reflect this amount of TDS. Accordingly, TDS credit for the aforesaid amount cannot be allowed to the assessee.
9. We have heard rival contentions and perused the material on record. In the case of Bhura Mal Raj Mal vs. CIT 220 ITR 636 (Rajasthan), the High Court held that the credit for tax deducted at source should not be denied on the ground that the assessment year of the payer in which the deduction is made is different from that of the recipient. In the case of Ignitive Digitech (P.) Ltd. 154 com 664 (Mumbai – Trib.), the ITAT held that in terms of Rule 37BA(3)(i) benefit of credit of TDS is to be given in assessment year for which corresponding income is assessable; therefore, where income, on which TDS was deducted was patently assessable in year under consideration, benefit of credit of TDS should also be allowed in same year i.e. year under consideration. In the case of Mahesh Software Systems (P.) Ltd. 154 taxmann.com 664 (Mumbai – Trib.), the ITAT held that in terms of Rule 37BA(3)(i) benefit of TDS is to be given for assessment year for which corresponding income is assessable, therefore, where assessee raised invoice on ‘A’ in March 2011, benefit of TDS had to be allowed in Assessment Year 2011-12 even though tax on invoice amount was deposited by ‘A’ in April 2011. In the case of Anup Rajendra Tapadia 147 taxmann.com 167 (Pune – Trib.) the ITAT held that in terms of Rule 37BA(3)(i), benefit of TDS is to be given for assessment year for which corresponding income is assessable, therefore, where assessee received rental income on 31.03.2020, benefit of TDS had to be allowed in Assessment Year 2020-2 1 even though tenant inadvertently reported same in Assessment Year 2021-22.
10. In view of the facts noted above and the judicial precedents on the subject, we are of the considered view that in case the assessee has not claimed double deduction of credit of TDS, then the assessee is entitled to claim deduction of TDS in the year in which the corresponding income has been offered to tax by the assessee and the assessee has raised invoices on the payer. In the instant case, the assessee’ s contention is that both the services as well as invoices have been raised on the payer in the impugned assessment year i.e. Y. 2020-2 1 and further, the assessee has not claimed deduction of TDS in any prior assessment year as well. Accordingly, in the interest of justice, the matter is being restored to the file of Assessing Officer with a view to verify whether the assessee has claimed TDS of the aforesaid amount in any other assessment year and accordingly, relief may be granted to the assessee as per law.
11. In the result, the appeal of the asses see is allowed for statistical
This Order pronounced in Open Court on 20/12/2023
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