Case Law Details
Ignitive Digitech Private Limited Vs DCIT (ITAT Mumbai)
Introduction: The case of Ignitive Digitech Private Limited Vs Deputy Commissioner of Income Tax (DCIT) at the Income Tax Appellate Tribunal (ITAT) Mumbai, decided on July 10, 2023, provides significant clarity on the taxation procedure regarding the year of allowance for Tax Deducted at Source (TDS) benefits. This case emphasizes the rule that TDS benefits must align with the assessment year for which such income is considered.
Analysis: Ignitive Digitech appealed against the decision of the National Faceless Appeal Centre (NFAC) which did not grant the TDS credit despite Ignitive Digitech’s detailed submission and adherence to Rule-37BA, Income-tax Rules. According to the rule, the credit for TDS paid to the Central Government shall be given for the assessment year for which such income is assessable. Ignitive Digitech claimed TDS credit for the assessment year 2018-19. However, the TDS was deducted and deposited in AY 2019-20, causing a discrepancy that led to denial of the TDS credit.
Despite the denial, the ITAT Mumbai saw merit in Ignitive Digitech’s claim, citing the decisions of previous similar cases. The tribunal determined that as the income was declared in the AY 2018-19, the TDS credit must also be granted for the same year, regardless of when the TDS was deducted and deposited.
Conclusion: The ruling of the ITAT Mumbai underscores the importance of aligning TDS benefits with the assessment year of the income. In Ignitive Digitech’s case, despite the TDS being deducted and deposited in AY 2019-20, it was rightful to consider TDS credit for AY 2018-19 as that was the year in which the income was declared. This ruling further establishes the significance of the income assessment year in determining TDS benefits, providing a precedent for future taxation scenarios.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
