Upasani Super Speciality Hospital Private Limited Vs ITO (ITAT Mumbai)
TDS Credit Cannot Be Denied for Deductor’s Error – TDS Must Follow Income, Not PAN- Mismatch in Form 26AS No Ground to Withhold TDS Credit When Income Taxed in Assessee’s Hands
The appeal by Upasani Super Speciality Hospital Pvt. Ltd. challenged denial of TDS credit of ₹9,88,132/– disallowed during processing u/s 143(1) on the ground that such credit was not reflected in its Form 26AS.
Assessee, a company running a hospital, had taken over the business of a partnership firm in 2019. Certain insurance companies, despite invoices being raised in the name of the company, continued to deduct TDS in the name & PAN of the erstwhile partnership firm. The income was, however, duly offered to tax by the company. The firm, though still in existence, did not claim the credit in its return.
While the CPC & AO refused to allow credit citing absence of reflection in Form 26AS, the CIT(A) directed AO to grant the same only upon compliance with Rule 37BA (i.e., declaration by deductee & reporting by deductor). Since deductors did not revise their returns, AO once again declined relief.
Before Tribunal, Assessee argued that denial would amount to double taxation as income was assessed in its hands, while the firm had not claimed such TDS. It relied on Delhi HC ruling in Court on Its Own Motion v. CIT (352 ITR 273) and coordinate bench decision in Reliance Infrastructure Ltd. (ITA 233 & 234/Mum/2023) emphasising that TDS credit must follow income & taxpayers cannot be penalised for deductors’ errors.
