TDS Benefit is to be given for Assessment Year for which Corresponding Income is Assessable: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Pune ruled that that the benefit of the TDS should be given for assessment year for which corresponding income is assessable.

Ruling was rendered by Vice President R.S.Syal and Judicial Member Viswanethra Ravi on an appeal given by M/s. Mahesh Software Systems.

The assessee is engaged in the business of providing software services. It claimed credit for TDS amounting to Rs.8,41,050/- which was not appearing in Form No.26AS. On being called upon to explain as to how the benefit of this TDS was claimed, the assessee submitted that it raised invoice on Ashoka Leyland, Chennai, for Rs.84,10,500/- in March, 2011. Since tax of Rs.8, 41,010/- on the invoice amount was deposited by Ashoka Leyland in April, 2011, they showed it in the succeeding year. The Assessing Officer (AO) did not accept the contention of the assessee by relying on Rule 37BA(1) of the Income-tax Rules, 1962. The ld. CIT (A) also affirmed the assessment order on this point.

The observed that 37BA which is reproduced as under:“Credit for tax deducted at source for the purposes of section 199. (1) Credit for tax deducted at source and paid to the Central Government in accordance with the provisions of Chapter XVII shall be given to the person to whom payment has been made or credit has been given (hereinafter referred to as deductee) on the basis of information relating to deduction of tax furnished by the deductor to the income-tax authority or the person authorized by such authority.

Tribunal ruled that the benefit of TDS is to be given, is governed by sub-rule (3) of Rule 37BA, which unequivocally provides through clause (i) that the ‘credit for tax deducted at source and paid to the Central Government, shall be given for the assessment year for which such income is assessable’. It is, ergo, abundantly clear from the mandate of Rule 37BA(3)(i) that the benefit of TDS is to be given for the assessment year for which the corresponding income is assessable. Since the income of Rs.84.10 lakh, on which tax of Rs.8,41,050/- was deducted at source, is patently assessable in the year under consideration, we hold that the benefit of the TDS should also be allowed in the same year, namely, the year under consideration. We, therefore, overturn the impugned order and direct accordingly.