Summary: Entitlement to Tax Deducted at Source (TDS) credit is tied to the financial year in which the related income is offered to tax, as upheld by several ITAT Delhi rulings. In Abhay Kumar Jha v. DCIT [2023], the tribunal held that where TDS appears in Form 26AS, the Assessing Officer must verify and allow credit without raising unjustified objections. Similarly, in Solutions Integrated Marketing Services v. DCIT [2024], it was clarified that taxpayers can approach tax authorities for credit in the relevant year, and such claims must be considered per law. In Krishraj Hotels & Motels (P.) Ltd. [2012], ITAT emphasized Section 199(1) requires granting TDS credit in the year income is taxed. Interglobe Technology Quotient (P.) Ltd. v. ACIT [2024] reinforced that substantive rights to TDS credit cannot be denied due to procedural lapses. Taxpayers should align claims with income recognition and maintain supporting records.
The appellate tribunals in Delhi have contributed significantly to clarifying this legal position. For example, in the case of Abhay Kumar Jha v. DCIT [2023] 146 taxmann.com 344, the Income Tax Appellate Tribunal (ITAT) Delhidirected that where TDS is duly reflected in Form 26AS, the Assessing Officer must verify the same and, if correct, allow the credit without unwarranted objections. The onus lies on the assessee to provide relevant documentation and details supporting their claim. But mere technical errors or lapses on the part of the department will not override the substantive entitlements of the assessee.
Another important principle provided by ITAT Delhi in Solutions Integrated Marketing Services v. DCIT [2024] 166 taxmann.com 204 (Delhi – Trib.) is that the TDS credit is to be granted in the financial year when the income corresponding to such TDS is taxed, with respect to the same, the assessee is at liberty to approach the Assessing Officer to claim such credit, and the authorities are bound to entertain such requests in accordance with law. Similarly, in ITO v. Krishraj Hotels & Motels (P.) Ltd. [2012] 27 taxmann.com (Delhi – Trib.), ITAT Delhi observed in terms of Section 199(1) of the Income Tax Act, TDS credit has to be allowed in the year in which the corresponding income has been offered to tax upon production of TDS certificate by the assessee.
In a similar vein, the ITAT Delhi in Interglobe Technology Quotient (P.) Ltd. v. ACIT [2024] 163 taxmann.com 542 held that orders denying TDS credit where income has been duly offered to tax in the relevant year must be set aside. The right of the assessee to claim TDS credit is substantive and cannot be made illusory by procedural technicalities.
In practice, taxpayers are advised to align the claim for TDS credit with the year of income recognition and maintain all supporting documents such as Form 26AS and TDS certificates. If the department refuses to allow credit on technical grounds, the above judicial precedents unequivocally empower the taxpayers to seek due relief.
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