Disallowance of TDS Credit on IMP Transfer Due to assessed in wrong AY: ITAT directs to give Credit in Relevant AY [Read Order]

The Surat Bench of Income Tax Appellate Tribunal ( ITAT ) held that Tax deducted at source ( TDS ) credit on immovable property shall be allowed only for the relevant assessment year for which the income is assessable and directed the AO to credit TDS in the relevant assessment year.

Vanitaben Gamalsingh Solanki (assessee) filed her income tax return on 03.03.2018 for the assessment year (AY)2018 -2019 declaring a total income of Rs. 6,40,220. The Assessee received sale consideration for her transfer of immovable property of Rs.4,50,00,000 for which she claimed credit of Tax deducted at source (TDS) of Rs. 4,50,000 and for other receipts of money she claimed TDS credit of Rs. 59,447. Therefore she claimed a total TDS credit of Rs. 5,09,477 for the AY 2016-2017.

The Centralised Processing Center ( CPC ), Bengaluru did not allow the credit of TDS. The Assessee filed an application for rectification which was not allowed by the CPC. Aggrieved by the order, the assessee filed an appeal before Commissioner Income Tax [appeal]CIT(A).

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The CIT(A) rejected the contention of the assessee and directed the AO to TDS credit of Rs.4,50,000 in relevant AY 2018-2019. But the CIT(A) granted the TDS credit of Rs.59,447 thereby partly allowing the appeal. Aggrieved by the order of CITA, the assessee filed an appeal before ITAT.

The Counsel of the Assessee argued that the order does not contain the reason for the disallowance of TDS and he claimed to allow TDS credit of Rs. 4,50,000. On the other hand, the Counsel of the Revenue argued that the order passed by the CIT(A) was in accordance with law and directed the AO to credit TDS amount of Rs. 4,50,000 for the AY 2018 -2019.

The two-member bench comprising Pawan Singh (Judicial Member) and Bijayananda Pruseth (Accountant Member) observed that as per Rule 37BA of the Income Tax Rules, 1962, the TDS credit shall be given for the relevant  Assessment Year (AY) for which income was assessable.

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It also observed that though the payments received by the assessee in three years, the income shall be assessable only in AY 2018-2019 which was the relevant Assessment Year as the assessee declared her capital gain of Rs. 3,29,57,386 on AY 2018-2019. Therefore the tribunal directed the AO to allow the credit of Rs. 4,50,000 for the relevant assessment year. The appeal was allowed for statistical purposes.

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