TDS Credit can be granted only in the year in which the Income/Receipt on which such Tax Deducted at Source is Assessable to Tax: ITAT [Read Order]

Kolkata bench of Income Tax Appellate Tribunal (ITAT) recently held that credit of Tax Deducted at Source (TDS) can be allowed only in the year in which the income or receipt on which TDS is assessable to tax.

Assessee in the present case is an AOP and is a joint venture of M/s Rahee Infratech Ltd. and M/s Jhajharia Nirman Private Ltd., both having 50% profit sharing ratio. During the financial year the assessee was engaged in the business of construction of road bed, Bridge, supply of Truck/Rails, Track installation, Signaling and Telecom and Overhead Electrification and associated equipment.

The main issue in this case is whether the CIT (A) was right in allowing credit of TDS of Rs. 12,96,167 deducted from the payment of mobilization advance and the mobilization advance was not offered to tax during the assessment year.

The revenue contended that as per provision of Section 199 of the Income Tax Act 1961, credited of TDS made on mobilization advance cannot be allowed in the current year.

While perusing the material facts and figures the Accountant Member of the tribunal bench Mr. J. Sudhakar Reddy observed that credit of TDS can be granted only in the year in which the income/receipt on which such tax deducted at source is assessable to tax and also mentioned that the action of CIT (A) is against the provision of the Act. Hence the Assessing Officer has directed to grant credit as per law to the assessee in the year which mobilization receipt is offered to tax as income.