The Income Tax Appellate Tribunal (ITAT), Mumbai Bench consisting of Rahul Chaudhary, Judicial Member, and Om Prakash Kant, Accountant Member held that supporting evidence is mandatory for claiming TDS Credit in absence of a TDS Certificate.
The assessee DZ Bank provided loans to Indian borrowers and received payments from its Indian borrowers towards interest on borrowed amounts, after deduction of TDS. The Assessing Officer disallowed the TDS for which the assessee did not furnish TDS certificates. The Indian borrowers have paid the interest income after deducting tax at the source in accordance with Article 11 of the Double Taxation Avoidance Agreement (DTAA) between India and Germany.
The Counsel for the assessee, P.J. Pardiwala/Jeet Kamdar, contended that it only received the net amount, i.e., after the deduction of TDS. Thus, TDS credit must be allowed to the assessee, including for items where the assessee could not furnish the TDS certificates.
The Counsel for the Revenue, Somendu Kumar Dash contended that the assessee has not submitted any evidence that tax was deducted by the payer of income and that the issue may be restored back to the file of the Assessing Officer for allowing TDS credit to the assessee in accordance with law after verification whether the payer of the income has deducted the tax at source or not.
The Tribunal observed that “The assessee has even neither furnished any details of the amount of TDS in respect of interest income, which it has shown if any in its profit and loss account nor furnished any evidence to support the deduction of tax at source by the payer of income. The assessee has not furnished any certified copies of the ledger account of the assessee in the books of borrower parties so as to reflect the amount credited in the account of the assessee.
In the background of the above facts and circumstances, statutory provisions, and judicial precedents, we feel it appropriate to restore this issue of granting credit of tax deducted source to the file of the Assessing Officer for verification as to whether the assessee has shown interest income corresponding to the TDS in profit and loss account for the year under consideration and whether the tax has been deducted at source by the payer of the income.”
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