TDS Credit eligible in year in which Assessee shows relevant Income despite credit appearing in 26AS of next Year

Mahesh Software Systems Pvt. Ltd. Vs ACIT (ITAT Pune)

The issue under consideration is whether TDS will be granted in the year in which assessee has recorded the corresponding income even if the deposit of TDS is in next financial year?

ITAT states that, the AO has relied on sub-rule (1) of section 37BA for denying the benefit of TDS during the year under consideration. This part of the Rule provides that the credit for TDS shall be given to the person to whom payment has been made or credit has been given on the basis of information relating to TDS furnished by the deductor. What is material for sub-rule (1) is the beneficiary of credit for the TDS, being the person to whom payment has been made, which in the instant case is the assessee. The ld. CIT(A) has, in addition, relied on sub-rule (4) of Rule 37BA, which again provides that the credit for TDS shall be granted on the basis of information relating to deduction of tax at source furnished by the deductor. How, this rule prejudices the claim of the assessee is anybody’s guess. Obviously, the information about the TDS by Ashok Leyland is not denied. Both the sub-rules simply provide for granting of the benefit of TDS. The point of time at which the benefit of TDS is to be given, is governed by sub-rule (3) of Rule 37BA, which unequivocally provides through clause (i) that the ‘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’. It is, ergo, abundantly clear from the mandate of Rule 37BA(3)(i) that the benefit of TDS is to be given for the assessment year for which the corresponding income is assessable. Since the income of Rs.84.10 lakh, on which tax of Rs.8,41,050/- was deducted at source, is patently assessable in the year under consideration, ITAT hold that the benefit of the TDS should also be allowed in the same year, namely, the year under consideration. ITAT, therefore, overturn the impugned order and direct accordingly. In the result, the appeal is allowed.

FULL TEXT OF THE ITAT JUDGEMENT

This appeal by the assessee arises out of the order passed by the Commissioner of Income-tax (Appeals)-7, Pune on 12.01.2017 in relation to the assessment year 2011-12.

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