In a significant case the Delhi bench of Income Tax Appellate Tribunal (ITAT) has recently ordered full Tax Deduction at Source (TDS) credit after the assessing office withdrew TDS benefit on advance rent and failed to carry forward for 20 years.
B. K. Anand appeared for the assessee. Kanv Bali appeared for the revenue.
Besto Electronics Pvt. Ltd. owns properties which it has leased out to various parties. In respect o f the assessment year 2001-02, the assessee had claimed credit for TDS of Rs.54 ,23,068/- on rent of Rs.1 ,56,18 ,636/-.
The only issue involved in the appeal relates to not allowing full credit in respect of tax deducted at source as claimed by the assessee in its return o f total income for the reason that out of the TDS claimed a portion of tax relates to income under the head house property assessable in the subsequent assessment year .
While computing assessable income from house property the income was determined for the relevant assessment year 2001-02 at Rs.1,01,95,028/- the difference being on account of rent received in advance to be adjusted in the period subsequent to assessment year 2001-02 .
Accordingly,assessee was allowed credit of tax o f Rs.26,41,956 only and the balance amount of Rs.27,81,652 refund of tax the assessee was deemed to be carried forward to subsequent year 2002-03.
Meantime, Assesee filed its return of income for the assessment year 2002-03 claiming refund of Rs.8,31,276 on the basis of TDS is deducted on rent actually received in terms o f certificates issued by the payer.
The assessee did not claim adjustment for the brought forward balance of TDS because up to that time the order of adjustment of TDS had not been made by the AO.
Thereafter, the CPC processed the return as filed and it was granted refund together with interest under Section 244A of the Income Tax Act on the basis of the said return copy acknowledgement of Return 86 intimation from CPC are enclosed on record.
Moreover CPC was not concerned with the order of the AO for the assessment year 2001-02 it never took credit o f the TDS deducted in preceding year the benefit of which the assessee was to receive assessment year 2002-03 as per the impugned order of AO under Section 154 of Income Tax Act, 1961.
Against the disallowance of full TDS credit, the assessee filed an appeal before the CIT(A) though the CIT(A) dismissed its application with the remarks that proportionate TDS had already been allowed to the assessee in assessment year 2001-02. AO was obligated to carry forward the TDS credit but he failed to do so.
Aggrieved assessee filed a second appeal before the tribunal.
After observing the facts and circumstances involved in the appeal the two member bench of the tribunal comprising C. M. Garg, (Judicial Member) and B. R. R. Kumar, (Accountant Member) allowed the appeal filed by the assessee and ordered AO to call for the record of assessment year 2002-03 and pass appropriate rectification order giving full credit for the TDS amounts to the assessee and issue refund o f tax which the assessee is entitled consequent to such rectification order.
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