Deloitte Haskins & Sells Vs DCIT (ITAT Chennai)
Short TDS Credit Quashed for Timing Mismatch Between Deduction and Income Recognition; TDS Credit Cannot Be Denied Merely Because It Appears in Sister Concern’s Name; Mechanical Processing Under Section 143(1) Cannot Override Substantive TDS Entitlement; TDS Credit Dispute Remanded Where Income Taxed and Credit Unclaimed Elsewhere
The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) adjudicated a batch of appeals filed by the assessee for Assessment Years (AYs) 2017-18, 2020-21, 2021-22, 2022-23, and 2024-25, all raising a common issue relating to denial or short grant of credit for tax deducted at source (TDS). The appeals arose from intimations and rectification orders passed under sections 143(1) and 154 of the Income-tax Act, 1961. For adjudication, AY 2021-22 was treated as the lead case.
The assessee, a firm of Chartered Accountants, follows the cash system of accounting and recognizes income in the year of receipt. In contrast, its clients, who generally follow the mercantile system, deduct TDS on an accrual basis. For AY 2021-22, the assessee filed its return declaring total income of ₹23.93 crore and claimed TDS credit of ₹5.31 crore. While processing the return under section 143(1), the Assessing Officer (AO) restricted the TDS credit to ₹4.32 crore, citing reasons that certain TDS certificates related to different assessment years and that some TDS appeared in Form 26AS in the names of sister concerns rather than in the assessee’s name.
