Company Entitled to TDS Credit Even When Corresponding Income Taxed Elsewhere: ITAT Allows Rs. 3.41 Lakh TDS Credit [Read Order]

The New Delhi Bench of Income Tax Appellate Tribunal (ITAT) held that an assessee was entitled to claim TDS credit as reflected in Form 26AS, even if the corresponding income had been offered to tax in the hands of another entity. The court directed the Assessing Officer to allow TDS credit of ₹3.41 lakh to the assessee.

The Assessee, Haddock Propbuild Pvt Ltd, a private limited company engaged in the business of real estate, filed an appeal against the order of the NFAC, Delhi dated 12.03.2025 pertaining to Assessment Year (A.Y) 2017-18.

The Assessee filed its return for A.Y. 2017-18 declaring a loss of Rs. 6,995/- and claiming a TDS refund of Rs. 3,41,286/-. The CPC disallowed the entire TDS credit under Section 143(1) and rejected the refund claim on the ground that corresponding income was not offered for taxation by the assessee.

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The Section 143(1) of the Income Tax Act, 1961 explained that: Assessment

“Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, such return shall be processed in the following manner, namely:— (a)the total income or loss shall be computed after making the following adjustments, namely:—(i)any arithmetical error in the return;(ii)an incorrect claim, if such incorrect claim is apparent from any information in the return;(iii)disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished beyond the due date specified under sub-section (1) of section 139;(iv)disallowance of expenditure [or increase in income] indicated in the audit report but not taken into account in computing the total income in the return;(v)disallowance of deduction claimed under [section 10AA or under any of the provisions of Chapter VI-A under the heading "C.—Deductions in respect of certain incomes", if] the return is furnished beyond the due date specified under sub-section (1) of section 139; or(vi)addition of income appearing in Form 26AS or Form 16A or Form 16 which has not been included in computing the total income in the return:”

The CIT(A) dismissed the assessee's appeal. The ITAT remanded the matter to the Assessing Officer for verification of TDS in Form 26AS and whether corresponding income was offered to tax. However, the AO again disallowed the TDS credit, which was confirmed by CIT(A)/NFAC.

The assessee had entered into a collaboration agreement with Emaar MGF Land Limited to acquire land on behalf of the principal. Income generated from sale of property was legally required to be handed over to the principal pursuant to the agreement. The corresponding income of Rs. 3,41,28,527/- on which TDS of Rs. 3,41,285/- was deducted was declared and offered for taxation by Emaar MGF Land Limited, as evidenced by their confirmation dated 18.09.2019. Aggrieved by the second disallowance, the assessee appealed to the Tribunal.

The Counsel for the Assessee, Ananya Kapoor and Shivam Yadav, stated that under a collaboration agreement with Emaar MGF Land Limited, the assessee acquired land on behalf of its principal. Though registered in the assessee's name, the land remained under the principal's supervision and control. Income generated from sale of property was legally required to be handed over to the principal pursuant to the agreement.

The Counsel submitted that CPC wrongly disallowed the TDS credit under Section 143(1) on the ground that corresponding income was not offered for tax by the assessee in the current year and the assessee also furnished that Form 26AS showing TDS of Rs. 3,41,285/- deducted and Confirmation from Emaar MGF Land Ltd dated 18.09.2019 stating that corresponding income of Rs. 3,41,28,527/- was declared in their financial statements and offered for taxation in their return.

Further, the Counsel relied on the decisions of CIT Vs. Relcom Hon'ble High Court of Delhi ITA No. 26 of 2015, Tocsin Builders Pvt Ltd ITA No. 1192/DEL/2023 and Haft Probuild Pvt Ltd ITA No. 891/DEL/2019 ITAT Delhi, supporting the claim for TDS credit even when income is taxed in sister concern's hands.

On the other hand, the Senior Departmental Representative for the Respondent, relied on the orders of the CIT(A) and Assessing Officer, contending that the assessee has not offered the corresponding income in its own hands and therefore is not entitled to claim the TDS credit.

The Tribunal consisted of Judicial Member, Challa Nagendra Prasad and Accountant Member, Naveen Chandra, heard and reviewed the matter.

The Tribunal, after considering the submissions made, observed that the assessee claimed TDS credit of Rs. 3,41,286/- as per Form 26AS, while the corresponding income was declared by its sister concern, Emaar MGF Land Ltd. The issue was whether under Section 199 of the Income Tax Act, TDS credit can be allowed when claimed by one entity while the corresponding income is offered for taxation by another.

Further, the Tribunal held that the assessee is entitled to TDS credit as reflected in Form 26AS. The Assessing Officer was directed to allow the credit after verifying that the sister concern has not claimed the corresponding TDS.

Thus, the Appeal of the assessee was allowed and the order was pronounced in the open court on 17.12.2025.