TDS Credit Can’t Be Denied Merely Because It Appears in Sister Concern’s 26AS: ITAT Delhi

Deloitte Haskins & Sells Vs DCIT (ITAT Delhi)

The appeal was filed by the assessee before the Income Tax Appellate Tribunal (ITAT), Delhi, against the order of the CIT(A)/NFAC dated 14.08.2025 for Assessment Year 2024–25. The primary grievance related to non-grant of full credit of Tax Deducted at Source (TDS), particularly where such TDS did not appear under the assessee’s Permanent Account Number (PAN) but corresponded to income offered to tax.

The assessee, a firm engaged in the profession of chartered accountancy, filed its return declaring income of ₹31.31 crore and claimed TDS credit of ₹11.64 crore. The return was processed under Section 143(1), but full TDS credit was not granted, resulting in a shortfall of ₹11,62,312.

Aggrieved, the assessee approached the CIT(A), who partly allowed the appeal for statistical purposes. The CIT(A) directed the Assessing Officer (AO) to verify the income declared and corresponding TDS credits across relevant years and allow credit accordingly, subject to availability in Form 26AS. However, the CIT(A) also directed that if TDS was not reflected under the assessee’s PAN, the assessee should ensure that the deductor revises the TDS return so that the credit reflects correctly before being allowed.

The assessee challenged this direction before the Tribunal, arguing that requiring it to ensure revision of TDS returns by the deductor was beyond its control. It was also submitted that TDS credits related to income already offered to tax, including amounts reflected in earlier or subsequent years’ Form 26AS and in the accounts of associate concerns.

The Tribunal considered the details of disputed TDS credits, which included amounts appearing in the assessee’s Form 26AS for different assessment years, credits reflected in the Form 26AS of an associate concern, and certain amounts not appearing in Form 26AS.

The assessee relied on a decision of a coordinate bench of the ITAT, Chennai, where it was held that TDS credit cannot be denied merely because the TDS certificate is in the name of a sister concern, provided the income is assessed in the hands of the assessee and the sister concern has not claimed such credit.

After considering rival submissions, the Tribunal held that while verification of TDS claims is necessary, the assessee cannot be compelled to ensure that the deductor files revised TDS returns. Such a requirement was found to be beyond the assessee’s control.

Accordingly, the Tribunal set aside the matter and remitted it back to the AO with directions to verify the claim and allow TDS credit, including those appearing in the name of sister concerns, provided that such credit has not already been claimed by the assessee or related entities in any assessment year. The Tribunal also directed that the assessee be given a reasonable opportunity of being heard during the verification process.

In conclusion, the appeal was allowed for statistical purposes, with directions for fresh verification and grant of eligible TDS credit without imposing impractical conditions on the assessee.

FULL TEXT OF THE ORDER OF ITAT DELHI

The above captioned appeal is preferred by the assessee against the order dated 14.08.2025, passed by CIT(A)/NFAC u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for A.Y. 2024-25.

2. The assessees has raised following grounds of appeal:

“1. The order of the Addl / Joint Commissioner of Income Tax (Appeals) [“CIT(A)”] is contrary to law, facts and circumstances of the case.

2. Non grant of TDS credit appearing in other entity 26AS:

2.1 The order passed by the Hon’ble CIT(A) is contrary to law, facts and circumstance of the case.

2.2 The learned AO/CIT(A) erred in law as well as on facts in not granting full credit in respect of Tax deducted at source (TDS) to which the Appellant is eligible.

2.3 The learned AO/ CIT(A) erred in not granting credit in respect of the TDS not appearing in the Appellant’s Permanent Account Number, without appreciating the fact that income corresponding to such TDS credits has been offered to tax and has also been taxed in the hands of the Appellant.

2.4 The learned CIT(A) erred in not appreciating that, in substance, the TDS pertains to the income assessable in the hands of the Appellant, and therefore, as per the provisions of section 199 of the Income-tax Act, 1961 read with Rule 37BA, credit of such TDS ought to have been allowed to the Appellant.

2.5 The learned JCIT(A) erred in making TDS credit conditional upon the deductor revising the TDS return, which is beyond the Appellant’s control..”

3. Brief facts are that the assessee firm is engaged in profession of practicing Chartered Accountant and filed its return for A.Y. 2024-25 on 28.10.2024 declaring income of Rs.31,31,96,110/- and claimed credit for TDS of Rs.11,64,29,068/-. Return was processed on 27.05.2025 by the CPC, Bangalore u/s 143(1) wherein full credit of TDS claimed was not granted.

3.1 Aggrieved by the short grant of TDS credit of Rs.11,62,312/-, the assessee preferred an appeal before Id. CIT(A). Assessee’s appeal was allowed for statistical purposes by Id. CIT(A) vide order dated 14.08.2025 with the following directions to the Id. AO:

“4.1.6 Since the issue under consideration requires verification of income offered and corresponding TDS credit available against the same, the AO is directed to verify the Appellant’s return of income for the previous and subsequent years and ascertain the turnover offered to tax against which TDS credit is allowable vis-à-vis TDS credit available in Form 26AS of the Appellant in each of the years. The AO is also directed to allow TDS credit as per the turnover offered to tax during the year under consideration subject to availability of TDS credit available as per 26AS after duly verify TDS available in Form 26AS of the Appellant. In case the TDS credit is not appearing on the concerned PAN of the Appellant, the latter may be asked to get the TDS return revised by the deductor so that the TDS gets reflected on the PAN of the Appellant and only then allow the TDS credit. The AO may provide opportunity of being heard to the Appellant for carrying out necessary verification. The appeal filed on Ground No 1 to 2 are Partly allowed for statistical purposes.”

3.2 Further aggrieved, the assessee is in appeal before the Tribunal.

4. Before us, Id. AR has filed a summary of the TDS credit not allowed alongwith his explanation:

It has been explained that in respect of S. No. 1 to 4 above, the credits are appearing in Form 26AS of either assessee itself or its associate concerns while in respect of S. No. 5 & 6, there is no entry in Form 26AS. Even though Id. CIT(A) has directed the AO to verify and allow due credit. The assessee is aggrieved with the burden cast upon it to get the TDS return revised by the decuctor so that TDS gets reflected on the PAN of the assessee to get the TDS credit.

4.1 In this regard, Id. AR has placed reliance on the decision of the co-ordinate bench of ITAT, Chennai in ITA Nos.2467, 2526, 2527, 2656, 2657, 2668 & 2684/Chny/2025, order dated 31.12.2025 in his case wherein an identical issue and facts, following directions were given:

“7. The ratio laid down in the above decision of the Hon’ble High Court is that claim for TDS credit to the assessee cannot be denied on the technical ground that the TDS certificate is in the name of the sister concern after having assessed the income in the hands of the assessee. In the present case we notice that the AO has denied the credit of TDS to the assessee on the ground that in Form 26AS the TDS is against the name of the sister concerns and not in the name of the assessee. Therefore in our considered view the above ratio is applicable to assessee’s case also. In view of these discussions we are remitting the issue back to the AO to allow credit of TDS to the assessee even to those appearing in the name of the sister concerns provided assessee’s sister concern had not availed benefit of such TDS certificates. Needless to say that the assessee be given a reasonable opportunity of being heard. It is ordered accordingly.”

4.2 In view of above, Id. AR has submitted that similar direction be issued to the Id. AO in the instant case.

5. On the other hand, Id. DR has relied on the order of Id. CIT(A) and has argued that the directions issued to Id. AO are in consonance with the relevant provisions of the Act and hence there is no cause of grievance to the assessee.

6. We have heard the rival submissions and perused the material placed on record. We are of the considered view that while the required verification has to be carried out by the Id. AO, the assessee cannot be directed to ensure that the deductor files revised TDS returns. Accordingly, respectfully following the decision of the co-ordinate bench, we remit the issue back to the AO to allow credit of TDS after making requisite verification to ensure that the benefit of such TDS has not been claimed by the assessee/sister concerns in any assessment year.

7. In the result, assessee’s appeal is allowed for statistical purposes.

Order Pronounced in the Open Court on 23/04/2026.