TDS Credit shall not be denied when Income from Sale of Agriculture property not reflected in ITR: ITAT [Read Order]

The Ahmedabad bench Income Tax Appellate Tribunal ( ITAT ) recently held that  the Tax Deduction at Source ( TDS ) credit should not be denied when the income from sale of agriculture property was not reflected in Income Tax Return ( ITR ).

The assessee, Dhirajlal Savailal Shah, During the assessment year 2017-18, assessee sold agricultural land located in rural areas and therefore did not pay capital gain tax on the same. The buyer of the land was also not required to make TDS on the same. However, the buyer of the land made TDS of Rs. 1,42,500/- by mistake.

The TDS was reflected in Form 26AS and therefore the assessee claimed credit for the same in the return of income. While processing the return of income under Section 143(1) of the Income Tax  Act, the CPC, Bangalore did not give credit of TDS on property for Rs. 1,42,500/- and therefore the assessee filed rectification against the same. However, the same was not accepted by the Revenue.

aggrieved by the rectification order u/s. 154 of the Income Tax Act  the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. Thereafter the assesee filed another appeal before the ITAT.

Assesee representative ( AR ), Hardik Vora, argued that  as the TDS is reflected in 26AS credit should have been allowed as there is only banakhat and no income was required to be shown in the return of income. If the receipt is not liable to tax in the hands of the recipient for any reason, the same cannot be a ground for not granting credit for TDS.

Saumya Pandey Jain, the Department representative ( DR ) argued that the income was not reflected whether it is agricultural land and the selling of the said land, therefore the Assessing Officer as well as CIT(A) has rightly made the addition.

Therefore the DR concluded that if a claim should be made in return of income and in absence of the same, the assessee is not entitled for any claim as such since there is no corresponding income in the return of income.

The tribunal during the adjudication observed that  the return of earlier years of the assessee, 26AS statement, Form 16 & Form 16A and specially in assessee’s case Form 26AS, the TDS deducted by the purchaser of the said agricultural land was properly reflected.

Hence the observations of the CIT(A) as well as by the Assessing Officer that the same is not reflected in 26AS is not justifiable.

Therefore  the single member bench Suchitra Kamble ( Judicial Member ) observed that Tax Deduction at Source( TDS ) credit should not be denied when the income from sale of agriculture property was not reflected in Income Tax Return ( ITR ).

Accordingly the bench allowed  the appeal filed by the assessee.

To Read the full text of the Order CLICK HERE

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