TDS credit and consequential interest on leave travel concession tax were denied? ITAT Surat noted employer deposit entitled assessee to relief.

Tax credit for leave travel concession TDS cannot be denied where the employer has already deducted and deposited the tax, so the assessee is entitled to corresponding credit in accordance with law. Interest under sections 234B and 234C was also held not leviable on the assessee where the employer had already been treated as the defaulting deductor and interest had been charged from the employer under section 201 and section 201(1A). The discussion therefore records that the assessee obtained relief on both the TDS credit and consequential interest issues, with the remaining ground not pursued.

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Issues: (i) whether the assessee was entitled to TDS credit in respect of tax deducted and deposited by the employer on leave travel concession; (ii) whether interest under sections 234B and 234C was chargeable to the assessee where the employer had already been treated as the defaulting deductor and interest had been levied on the employer.

Issue (i): whether the assessee was entitled to TDS credit in respect of tax deducted and deposited by the employer on leave travel concession.

Analysis: The credit related to tax deducted from the employer's payment on the assessee's leave travel concession. Since the employer had deposited the TDS, the corresponding credit could not be denied to the assessee and was required to be given in accordance with law.

Conclusion: The issue was decided in favour of the assessee and the Assessing Officer was directed to grant the TDS credit.

Issue (ii): whether interest under sections 234B and 234C was chargeable to the assessee where the employer had already been treated as the defaulting deductor and interest had been levied on the employer.

Analysis: The employer had already been proceeded against for failure to deduct tax and interest under section 201 and section 201(1A) had been charged from the employer. In that situation, further levy of interest on the assessee was not warranted.

Conclusion: The issue was decided in favour of the assessee and against the Revenue, and the interest demand was not sustainable.

Final Conclusion: The appeal succeeded only on the substantive tax-credit and interest issues, while the remaining ground was not pursued, resulting in partial relief to the assessee.

Ratio Decidendi: Where tax has already been deducted and deposited by the employer, the assessee cannot be denied corresponding credit, and once interest for deductor default has been levied on the employer, consequential interest cannot again be fastened on the assessee for the same default.

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