Mahesh Chandra Bansal Vs ITO (ITAT Jaipur)
Summary: The ITAT Jaipur allowed the assessee’s appeal concerning denial of TDS credit of ₹19,215 on salary for January and February 2012. The assessee had filed the return for AY 2012-13 including salary for those months, but the Assessing Officer denied TDS credit on the ground that the salary was received and TDS deducted in May 2012, with the deduction reflected in Form 26AS for AY 2013-14. The CIT(A) upheld the Assessing Officer’s view. The Tribunal noted that the assessee had returned the salary for January and February 2012 in AY 2012-13 and referred to Section 199 of the Income-tax Act read with Rule 37BA(3) of the Income-tax Rules, 1962, which provides that TDS credit is to be given for the assessment year in which the related income is assessable. Holding that the salary income had been returned in AY 2012-13, the Tribunal directed the Assessing Officer to grant TDS credit of ₹19,215 relating to the salary for January and February 2012 and allowed the appeal.
Ratio. Under section 199 read with Rule 37BA(3)(i), credit for tax deducted at source is to be allowed in the assessment year in which the corresponding income is assessable. Therefore, TDS credit cannot be denied merely because the tax was deducted and reflected in Form 26AS in a subsequent financial year, if the related income has already been offered to tax in the earlier assessment year.
Facts. The assessee, a senior citizen and Government doctor, filed his return for AY 2012-13 declaring salary income. While processing the return, the Assessing Officer denied TDS credit of ₹19,215 relating to salary for January and February 2012 on the ground that the salary was actually paid in May 2012, TDS was deducted in FY 2012-13, and the credit appeared in Form 26AS for AY 2013-14. The assessee’s rectification application under section 154 was rejected, and the CIT(A) affirmed the denial, holding that TDS could be claimed only in the assessment year corresponding to the year of deduction reflected in Form 26AS.
Held. Allowing the appeal, the ITAT held that the decisive factor for granting TDS credit is not the year in which tax was deducted or reflected in Form 26AS, but the assessment year in which the corresponding income is assessable. Section 199 of the Income-tax Act, read with Rule 37BA(3)(i), expressly provides that credit for tax deducted at source shall be granted for the assessment year in which the related income is assessed.
The Tribunal noted that the assessee had produced before the Assessing Officer the month-wise salary details, Form 16, salary bills and supporting documents establishing that the salary for January and February 2012 had been included in the total salary income returned for AY 2012-13. Once the salary income formed part of the taxable income for that assessment year, the corresponding TDS credit could not be denied merely because the employer disbursed the salary in May 2012 and deducted tax in the succeeding financial year.
The ITAT observed that the Revenue authorities had incorrectly linked the availability of TDS credit solely with the year in which the deduction appeared in Form 26AS. Form 26AS is only an evidentiary statement and cannot override the statutory mandate contained in section 199 and Rule 37BA. The statutory scheme ensures that TDS credit follows the assessment of income and not merely the timing of deduction or reporting by the deductor.
Accordingly, the Tribunal held that since the salary for January and February 2012 was assessable and had been offered to tax in AY 2012-13, the assessee was legally entitled to the corresponding TDS credit of ₹19,215 in that year itself.
Final Conclusion. The appeal was allowed. The Assessing Officer was directed to grant TDS credit of ₹19,215 relating to salary for January and February 2012 in AY 2012-13. The decision reaffirms that under section 199 read with Rule 37BA(3)(i), TDS credit must be allowed in the assessment year in which the corresponding income is assessable, irrespective of the year in which the tax is deducted or reflected in Form 26AS.
FULL TEXT OF THE ORDER OF ITAT JAIPUR
The present appeal has been filed by the assessee against the order passed by the Office of the Commissioner of Income Tax, Appeal Addl./JCIT(A) Mysore(hereinafter referred to as “Ld. CIT(A)”), dated 12.08.2025 under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”).
2. The grounds raised by the assessee read as under:-
1. The learned ADDL/JCIT (Appeals), Mysore (hereinafter referred to as [“the CIT (A) “) is erred in facts and law while passing the order.
2. The CIT (A) erred in dismissing the appellant’s claim for tax deducted at source (TDS”) of Rs. 19215/- for which credit was not granted by the ITO, Ward 1, Bharatpur, Rajasthan (“the Assessing Officer”) while passing order under section 154 of the Income tax Act, 1961 (“the Act”) dated 22/11/2023.
3. The CIT(A) erred in dismissing the appellant’s claim of TDS of Rs 19215/- which was not granted by the assessing officer in passing the order U/s 154, though the income is assessed in the assessment year 2012-13, but the credit for the corresponding TDS as claimed was not given because the TDS was not reflected in Form 26AS of the assessment year 2012-13 but was included in Form 26AS for the assessment year 2013- 14 against the legislative intent of section 199 of the act read with Rule 37BA.
4. The CIT(A) has erred in law and on facts in not applying/giving effect to Rule 37BA of the Income-tax Rules, 1962 and thereby in dismissing the appellant’s claim.
5. The CIT(A) has erred in dismissing the appellant’s claim on the facts and in the circumstances and the law, without appreciating the facts that the assessing officer has passed the order U/s 154 and not allowing the TDS Credit of Rs 19215.00 and creating a demand of Rs 19215 and without issuing the demand notice as mandated u/s 156 and U/s 154 of the act, thereby collecting taxes on the same income twice.
6. The CIT(A) erred in dismissing the assessee’s appeal and in sustaining the levy of interest under sections 220(2), 234B, and 234C without properly considering the facts, circumstances, and applicable provisions of the Act.
7. That the appellant craves the indulgence of the Hon’ble ITAT in and to add, modify, delete, withdraw and/or alter any of the grounds and to submit such statements, documents and papers as may be considered necessary either at or before the hearing.
PRAYER:
In view of the above, the appellant very humbly prays:
1. This appeal may kindly be allowed on all the grounds along with the prayer for appropriate directions to the Ld. Assessing officer.
1.1. That TDS credit of Rs 19215.00 shall be given in the assessment year 2012-13.
1.2. That any interest U/s 234 B, 234C, and 220 shall be deleted.
1.3. That a due refund along with interest be issued to the appellant.
3. The solitary issue in the present appeal relates to denial of grant of benefit of tax deducted at source TDS on the income earned by the assessee by way of salary. The assessee is a senior citizen, Doctor, working as an Employee in Community Health Centre Baseri, District Dholpur. The assessee filed return of income for the A.Y. 2012-13 on 30/07/2012 declaring total income of Rs. 5,74,830/-. The return was processed u/s. 143(1) of the I.T. Act, 1961 on 06/06/2013 determining total income at Rs. 5,74,830/-;the same as declared in the return of income. However, the TDS credit claimed by the assessee was denied to the tune of Rs. 31,215/- by applying Rule 37BA of Income Tax Rules,1962. The assessee filed multiple rectification applications u/s 154 and against the last rectification application u/s 154 dated 05/10/23 order was passed by the AO on 22/11/2023 wherein TDS credit of Rs. 19,215/- was not given noting that salary for the month of January 2012 and February 2012 of the impugned year was received by the assessee in May 2012, i.e. the succeeding Financial Year F.Y 2012-13 relevant to A.Y 2013-14, i.e. and TDS thereon was also deducted in the same month.
4. Aggrieved by the said order, the assessee went in appeal before the first appellate authority who upheld the order of the AO.
5. The order of the AO passed u/s 154 reveals that the credit of TDS was denied by the AO noting that the salary for the month of January and February was received by the assessee in the month of May 2012 and TDS thereon was also deduced in the Month of May 2012 i.e. FY 2012-13 relevant to AY 2013-14 which was also appearing in Form 26AS. The AO stated that since the TDS amounting to Rs. 19,215/- was deducted in the Financial Year therefore, the assessee was required to claim the same in the succeeding assessment year in which it was deducted i.e. AY 2013-14, accordingly, the application of the assessee u/s 154 was rejected by the AO. His findings in this regard are as under:-
On perusal of detail/documents i.e. month wise salary, Form no.16, letter dated 31.10.2022 issued by the P.H.C. Sarmathura and detail of 26AS etc, it is found that the salary for the month of January, 2012 &Feb, 2012 was received by assessee in the month of May, 2012 and TDS thereon was also deducted in the month of May, 2012 i.e. FY 2012-13 relevant to AY 2013-14 which is also appearing in 26AS. Since, the TDS amounting to Rs. 19,215/-which was deducted in next financial year i.e. 2012-13, therefore, the assessee is required to claim the same in the FY 2012-13 relevant to AY 2013-14. Therefore, the application u/s 154 of the Act filed by assessee is hereby rejected.
6. The Ld. CIT(A) confirmed the order of the AO reiterating the reasoning of the AO in his decision rendered at para 7 of the order.
7. It is abundantly clear from the facts of the case noted above that the assessee is seeking the credit of TDS on salary for the month of January 2012 and February 2012 relating to the impugned assessment year which has been denied consistently by the Authorities below for the reasons that the salary was received in the next year in May 2012 and TDS deducted thereon in the next year which has been accordingly reflected in Form 26AS of the assessee for the next year.
8. At this juncture, the ld. Counsel for the assessee was asked whether he had returned salary for January 2012 and February 2012 in the return of income for the impugned year, in response to which he responded by pointing out that this fact was brought to the notice of the AO in response to his application filed u/s 154 reproduced at page 4 of the Ld. CIT(A)’order as under:-
14. That in response to the above application U/s 154 the assessee received the notice dated 25/10/2023 vide DIN: ITBA/COM/F/17/2023-24/1057335818(1), asking to the submit month wise salary received for the F.Y. 2011-12 (Assessment Year 2012-13).
15. That the assessee had submitted its response on the income tax portal and submitted below mentioned details/information in response to notice dt 25/10/2023 before LAO vide its letter dt 14/11/2023.
a. month wise salary summary of Rs. 5,67,531/- as shown in Form 16 of the Assessee by the DDO P.H.C. Sarmathura for the F.Y. 2011-12 (A.Υ. 2012-13).
b. month wise salary drawn of Rs. 4,72,573/- Map from the month Mar 2011 to Dec 2011, as received by the assessee from DDO P.H.C. Basedi for the F.Y. 2011-12 (Α.Υ. 2012- 13).
c. salary drawn of Rs. 94,978/- and its pay bill for the month of Jan 2012 to Feb 2012 as received by the assessee from DDO PHC Sarmathura for the F.Y. 2011-12 (Α.Υ. 2012- 13).
d. Form 16 as received by the assessee from DDO PHC Sarmathura for the F.Y. 2011-12 (Α.Υ. 2012 13).
9. Referring to the above, he pointed out that the assessee had submitted to the AO that the salary returned to tax as per Form 16 included the salary for the month of January and February 2012. It is evident therefore that, the assessee had returned its income by way of salary in the impugned year for the month of January and February 2012. There was no reason therefore to disallow the assessee’s claim of TDS deducted thereon in the impugned year as per Section 199 of the Act read with Rule 37BA of the Income Tax Rules 1962.
10. The credit for tax deducted at source and paid to the Central Government as per section 199 of the Act r.w Rules 37BA of the Income tax Rules,1962 is to be given for the assessment year for which the income is assessable. The relevant provisions of Section 199 of the Act read as under:-
……….
199. Credit for tax deducted.
(1) Any deduction made in accordance with the foregoing provisions of this Chapter and paid to the Central Government shall be treated as a payment of tax on behalf of the person from whose income the deduction was made, or of the owner of the security, or of the depositor or of the owner of property or of the unit-holder, or of the shareholder, as the case may be.
(2) Any sum referred to in sub-section (1A) of section 192 and paid to the Central Government shall be treated as the tax paid on behalf of the person in respect of whose income such payment of tax has been made.
(3) The Board may, for the purposes of giving credit in respect of tax deducted or tax paid in terms of the provisions of this Chapter, make such rules as may be necessary, including the rules for the purposes of giving credit to a person other than those referred to in sub-section (1) and sub-section (2) and also the assessment year for which such credit may be given.
………
11. The relevant provisions of Rule 37BA Sub-Rule (3) are as under:-
……….
Credit for tax deducted at source for the purposes of section 199.
37BA. ………
(3) (i) Credit for tax deducted at source and paid to the Central Government, shall be given for the assessment year for which such income is assessable.
(ii) ……
12. It is abundantly clear, therefore that, as per law since the assessee was entitled to credit of TDS in the year in which the income had been returned/assessed to tax and in the facts of the present case, since the assessee had returned his salary for the month of January and February 2012, in the impugned year itself i.e. AY 2012-13, he was entitled to credit of TDS deducted thereon.
13. We therefore, direct the AO to grant the assessee the credit of tax deducted at source pertaining to the salary earned for January and February 2012 amounting to Rs. 19,215/-.
14. In effect, the appeal of the assessee is allowed.
Order pronounced in the Open Court on 30.07.2026
