TDS Credit Cannot Be Denied Due to Discrepancy Of Form 26AS: ITAT Sets Aside ₹13.15 Lakh CPC Adjustment [Read Order]
The ITAT Hyderabad held that Form 26AS discrepancies cannot defeat legitimate TDS credit claims.
The Income Tax Appellate Tribunal (ITAT)Hyderabad Bench held that the credit for TDS cannot be disallowed merely because of discrepancies in the Form 26AS and ordered that the AO should make a relief of Rs 13.15 lakh to due to an adjustment of the same amount done by the CPC.
The Tribunal ruled that the TDS credit can be claimed in the assessment year when the corresponding income is taxable, notwithstanding the time of reporting or depositing of the TDS by the deductor.
In relation to the business of manufacturing of IMFL, the assessee R.K. Distilleries Private Limited had made the declaration of income at ₹1.66 crores in the assessment year 2020-21. On consideration of the matter under Section 143(1) CPC issued a notice seeking recovery of tax due to mismatch between the TDS credit claimed and the entries shown in Form 26AS.
However, such inconsistency occurred due to the fact that in FY 2019-20, the assessee received the income whereas the deductor Pernod Ricard India Pvt. Ltd. reported the TDS deduction in the next financial year.
The application for rectification was not accepted under Section 154, whereas CIT(A) upheld the same, leading the assessee to file the appeal before the ITAT.
The assessee stated that according to Sections 199 along with Rule 37BA(3), TDS credit must be allowed in the year when the income becomes accessible to avoid double taxation, and denying it would amount to a contravention of law.
The Tribunal comprising Ravish Sood (Judicial Member) and Madhusudan Sawdia (Accountant Member) observed that the issue is squarely covered by precedents including Greatship (India) Ltd. vs DCIT, wherein it was held that TDS credit is inextricably linked to the year of assessability of income. It emphasized that procedural mismatches in Form 26AS cannot override substantive entitlement.
Accordingly, the appeal of the assessee was allowed.
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