The Delhi bench of the Income Tax Appellate Tribunal (ITAT) allowed TDS Credit for the assessment year for which income is assessable.
Prakash Sunrise Healthcare Limited, the assessee is carrying on the business of running and maintaining of Nursing Home and has been imparting medical services to various government employees including military personnel for and on behalf of the CGHS and ECHS. The Assessee filed its return of income declaring a total income of Rs.1,92,27,329/- for which the total receipts of business and profession were declared at Rs.7,58,33,708/-.
The assessee claimed TDS credit as appearing in Form 26AS for the Assessment Year 2018-19 at Rs.90,63,042/- which was deducted by the payers from total professional receipts of Rs.8,20,76,867/-. The Assessing Officer (CPC) while processing the return of income disallowed credit of TDS at Rs.6,65,610/- holding the same as unmatched TDS, i.e, the TDS for which corresponding income has not been offered.
The assessee filed a rectification application citing the reason for the mismatch that the assessee has been following the accrual system of accounting whereas the Government Department (payers of income to the assessee) have been following the cash system of accounting. As stated, the reason for the mismatch flows from the fact that the assessee has declared income in the year of accrual of income while the payer Government bodies have, at times, made payments of bills in later years and TDS were deducted in the year of payments following cash method of accounting.
The CIT(A) granted partial relief of Rs.1,05,220/- and retained the action of the Assessing Officer in respect of TDS credit of Rs.5,60,390/- comprising of four parties namely, ECHS Bareilly, ECHS Meerut Cell, ECHS Babugarh and Bank of Baroda citing provisions of Section 199 of the Income Tax Act and Rule 37BA of the IT Rules.
It was observed that the assessee follows the accrual method of accounting whereas the corresponding deductors follow the cash method and deducted TDS in the year in which the invoice of the assessee is acknowledged and accounting entries are made in their books. The Tribunal noted that the assessee has placed threadbare details of various patients availing services of the assessee’s nursing home through the deductor agencies.
A Coram comprising of Shri Challa Nagendra Prasad, Judicial Member & Shri Pradip Kumar Kedia, Accountant Member remitted the issue back to the file of AO and held that the Assessing Officer shall grant credit of TDS deducted and claimed by the assessee on being satisfied with the fact that the corresponding income has been duly declared by the assessee in any of the assessment years.
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