TDS Credit Cannot Be Denied Merely Because Income Is Taxed in Sister Concern

Haddock Propbuild Pvt. Ltd. Vs ITO (ITAT Delhi)

The Delhi Bench of the ITAT held that denial of TDS credit of ₹3,41,286/- was unsustainable where the TDS was duly reflected in Form 26AS and the tax was deposited with the Government. The assessee, engaged in real estate and operating under a collaboration agreement with Emaar MGF Land Ltd., demonstrated that the corresponding income was contractually required to be passed on and was in fact offered to tax by the principal. The Tribunal observed that Section 199 of the Act does not permit the Revenue to retain tax deducted at source without granting credit to any taxpayer. Relying heavily on the binding judgment of the Hon’ble Delhi High Court in CIT v. Relcom Ltd. and allied precedents, the ITAT held that procedural technicalities cannot defeat substantive justice. It was emphasized that TDS credit cannot be denied merely because the corresponding income is assessed in the hands of a sister concern, provided such concern has not claimed the same credit. The Tribunal directed the Assessing Officer to grant TDS credit after verifying that the deductee had not availed the benefit. Consequently, the appeal of the assessee was allowed in full.

FULL TEXT OF THE ORDER OF ITAT DELHI