Sanjeev Rajendra Pandit Vs Assistant Director of Income Tax (CPC) (ITAT Mumbai)
ITAT Mumbai held that the Department cannot swallow tax paid by the assessee and deny credit of tax deducted, which pertains to the assessee. AO cannot simply decline the credit of TDS. AO directed to allow the TDS credit after due verification.
Facts- In the return of income filed, the assessee claimed credit of tax deducted at source (TDS) of ₹3,93,891/- which included TDS credit of ₹1,78,032/ – in respect of rental income from property at Navbharat Chambers and TDS of ₹64,458/- in respect of dividend income disbursed by M/s Tata Steel Ltd. In processing order passed u/s 143(1) of the Income-tax Act, 1961 (in short ‘the Act’) dated 28.03.2022, AO of Central Processing Centre, Bangalore restricted the TDS credit to ₹1,63,196/ – in respect of TDS on rental income from property at Navbharat Chambers as against credit of ₹1,78,032/- claimed in the return of income. AO also did not allow credit of the TDS of ₹64,458/- in respect of “dividend” income offered to tax under the head ‘income from other sources.
Aggrieved with the denial of credit of TDS of ₹92,792/-, the assessee filed appeal before the Ld. CIT(A), however, could not succeed.
Aggrieved with the order of the Ld. CIT(A), the assessee is in appeal before the Tribunal
Conclusion- The Department cannot swallow tax paid by the assessee and deny credit of tax deducted, which pertains to the assessee. In the instant case, the assessee has offered the income following the accrual system. As far as rental income is concerned if tax has been deducted and deposited in subsequent year, the assessee should be allowed credit of same in the year under consideration of tax which has been deducted subsequently However, the assessee could not be allowed the benefit of the interest on refund which arise if any on account of credit of tax deducted and deposit in the subsequent assessment year. We accordingly set aside the finding of the Ld. CIT(A) on the issue-in-dispute and direct the Ld. Assessing Officer to verify the amount of tax deducted and deposited in respect of income from rental property which has been shown by the assessee in the year under consideration and allow the credit as directed above.
As far as TDS credit in respect of divided income is concerned the assessee is directed to furnish TDS certificate issued by the deductor and the Ld. Assessing Officer is directed to allow the credit of the said TDS after due verification The Assessing Officer cannot simply decline the credit of TDS and he is bound to verify TDS certificate issue in accordance with provisions of law. Further, the Assessing Officer is also directed to verify if any relief has already been granted in the rectification application filed by the assessee. If so then further benefit of TDS credit may not be allowed. In view of the our direction above, the grounds of appeal of the assessee are accordingly allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
Bothe these appeals by the assessee are directed against two separate orders, both dated 29.09.2022, passed by the Ld. Commissioner of Income-tax (Appeals)-National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’]. Being common ground of TDS credits involved in both these appeals , same were heard together and disposed off by way of this consolidated order for convenience.
2. The Parties agreed to take up , firstly the appeal for AY 2021 – 22 for adjudication. The grounds raised in said appeal are reproduced as under:
On the facts and circumstances of the case:
1. The learned CIT(A) erred in confirming the action of the Assessing officer (CPC) restricting credit for the TDS to Rs. 1,63,196 as against credit of Rs. 1,78,032 claimed in the return of income in respect to rent income from property at Navprabhat Chambers thereby not granting credit for TDS of 14,836.
2. The learned CIT(A) erred in confirming the action of the Assessing officer (CPC) of not granting credit of Rs. 64,458 being tax deducted at source u/s 206AA in respect to dividend income from Tata Steel Ltd.
3. The learned CIT(A) erred in not appreciating that the appellant was entitled to credit of TDS as per the provisions of section 199 of the Income Tax Act, 1961.
4. The learned CIT(A) erred in dismissing the appeal without appreciating that the tax on the rent and dividend had already been deducted at source and that the appellant cannot be called upon to pay the tax on such income in view of the provisions of Section 205 of the Act.
Relief Sought:
Your appellant prays that:
1. The learned Assessing officer be directed to grant full TDS credit of 3,93,891 as claimed by the appellant in the return.
2. Your appellant craves leave to add, to amend or delete the above ground on or before the final date of hearing.
The learned AO be directed not to recover the demand in respect of TDS deducted.
3. Briefly stated, facts of the case are that the assesse is an individual and filed his return of income on 28.01.2022 declaring total income of ₹87,26,230/ -. In the return of income filed, the assessee claimed credit of tax deducted at source (TDS) of ₹3,93,891/- which included TDS credit of ₹1,78,032/ – in respect of rental income from property at Navbharat Chambers and TDS of ₹64,458/- in respect of dividend income disbursed by M/s Tata Steel Ltd. In processing order passed u/s 143(1) of the Income-tax Act, 1961 (in short ‘the Act’) dated 28.03.2022, the Assessing Officer of Central Processing Centre, Bangalore restricted the TDS credit to ₹1,63,196/ – in respect of TDS on rental income from property at Navbharat Chambers as against credit of ₹1,78,032/- claimed in the return of income. The Ld. Assessing Officer also did not allow credit of the TDS of ₹64,458/- in respect of “dividend” income offered to tax under the head ‘income from other sources.
3.1 Aggrieved with the denial of credit of TDS of ₹92,792/-, the assessee filed appeal before the Ld. CIT(A), however, could not succeed.
4. Aggrieved with the order of the Ld. CIT(A), the assessee is in appeal before the Tribunal by way of raising grounds as reproduced
5. Before us, the assessee has filed intimation for payment of dividend issued by Tata Steel Ltd along with case laws relied upon by the assessee.
6. We have heard rival submission of the parties on the issue-in-dispute and perused the relevant material on record. In the grounds raised, the assessee is aggrieved with restricting of the TDS credit by the Assessing Officer/Ld. CIT(A) in respect of the income form house property and income from dividend. In respect of income from house property, the assessee has provided breakup of receipt of rental income from Navbharat Property as under:
