TDS Credit allowable when Income offered to Tax relating to said TDS: ITAT [Read Order]

The Chennai bench of the Income Tax Appellate Tribunal( ITAT ) has held that TDS Credit is allowable when Income is offered to tax relating to said TDS.

M/s. PKF Sridhar & Santhanam LLP, the assessee is engaged in the profession of consulting and auditing.  The appellant filed its return of income for the assessment year 2018-19 on 29.09.2018 declaring a total income of Rs. 5,45,49,293/-.  The assessee had also filed a return of income for the assessment year 201920 on 29.10.2019 admitting a total income of Rs. 5,84,96,540/-.

The return of income filed by the assessee for both assessment years has been processed u/s. 143(1)(a) of the Income-tax Act, 1961 (“the Act”) and subsequently the assessment has been completed u/s. 143(3) of the Act and determined total income of Rs. 6,14,27,080/- for assessment year 2018-19 and Rs. 5,84,96,540/- for assessment year 2019-20.

 The AO had also given credit for TDS for the assessment year 2018-19 at Rs. 2,42,96,750/- as against the claim of the assessee at Rs. 3,21,27,758/-.  Similarly, for the assessment year 2019-20, credit has been given for Rs. 2,63,71,542/- as against the claim of the assessee at Rs. 3,62,37,959/-. 

The assessee carried the matter in appeal before the first appellate authority, but could not succeed.  The Ld. CIT(A), NFAC, Delhi, for the reasons stated in the appellate order dated 19.02.2021 & 02.07.2020 sustained denial of credit for TDS.  Being aggrieved by the CIT(A) orders, the assessee is in appeal before us. 

He further submitted that the AO has allowed TDS credit as per Form 26AS without appreciating the fact that as per the provisions of sections 199 & 200 of the Act, credit for TDS should be allowed when the income pertains to TDS has been offered to tax. 

Since the assessee has offered to tax income relating to TDS credit based ona mercantile system of accounting, has rightly claimed credit for TDS and said particulars have been furnished in ITR-5 filed for the relevant AY.  The AO without appreciating the fact rejected the claim of the assessee.   The assessee claims that income relating to said TDS has been offered to tax for the impugned assessment years.

A Coram of  Shri V Durga Rao, JM and Shri G Manjunatha, AM held that if the claim of the assessee is correct then the credit for TDS should be allowed based onthe claim of the assessee including TDS brought forward from earlier financial years.  The fact needs to be verified.

While allowing the appeal for statical purposes, the Tribunal set aside the issue to the file of the AO and directed the Assessing Officer to verify the claim of the assessee and in case the AO finds that income relating to said TDS has been offered to tax for the impugned assessment years, then the credit for TDS also needs to be allowed as claimed by the assessee.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates