TDS Benefit shall be Allowed in Year under Consideration for which such Income is Assessable: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT) Mumbai Bench Ruled that the Tax Deduction at Source should be allowed in a year under consideration for which such income is assessable.

Ignitive Digitech Private Limited, the assessee company filed its return of income declaring total income of Rs. 1,74,333/-. The assessee had declared turnover of Rs. 16, 21,500/- on which TDS under Section  194J of the Income Tax Act was deducted by the client of the assessee M/s. Kotak Mahindra Asset Management Co. Ltd.

Assessee has a liability of Rs. 44,890/- against returned income and has a credit of TDS deducted by KMAMC amounting to Rs. 1, 62,150/-.  The return of the assessee was processed under Section  143(1)  Income Tax Act by the CPC, but TDS credit was not granted to the assessee.

It was found that assessee was following mercantile system of accounting and declared the income during the assessment year 2018-19, whereas the deductor deducted and deposited the amount of TDS on payment basis that is in Assessment Year  2019-20, accordingly TDS credit in Form No. 26AS also reflected in assessment year 2019-20.

Aggrieved by the order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) {CIT(A)}, who upheld the order of the CPC. Accordingly, against the order the assessee filed an appeal before the tribunal.

It was observed by the tribunal after verifying the records and GST Return that assessee and its client are corporate entities, require to follow books of account on mercantile basis as per the requirement of section 145 of the Income Tax Act.

During the assessment year 2019-20, assessee has claimed TDS and refund was also issued, but the amount of TDS credit was neither considered in the assessment year under consideration (as the same is not reflecting in Form No. 26AS) nor granted the same in succeeding year i.e. AY 2019-20 as the income pertains to earlier years.

Thus, it was clear that the assessee has already claimed the TDS  amount  in AY 2018-19 and the same was not claimed in the succeeding year.

The tribunal after reviewing the facts and submissions of the both parties, the two member bench of Gagan Goyal, (Accountant Member)  and Kuldip Singh (Judicial Member) held that as per Rule 37BA (3) (i) of Income Tax Rules, 1962 that the benefit of TDS is to be given for the assessment year for which the corresponding income is assessable.

To Read the full text of the Order CLICK HERE

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