Tribunal rules TDS credit withdrawal under Income Tax Act section 154 illegal

The Tribunal ruled in favor of the assessee, stating that the withdrawal of TDS credit under section 154 of the Income Tax Act was legally untenable. The decision emphasized that the issue was debatable and not suitable for rectification under section 154. The Tribunal allowed the appeal and directed the treatment of the TDS credit, specifying that it should not be claimed in any other assessment year when the income was offered for taxation.

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Issues:
- Whether the credit of Rs. 2,57,500 given in the assessment order can be withdrawn in an order passed under section 154 of the Income Tax Act on the ground that corresponding income was not offered for tax in the relevant assessment yearRs.

Analysis:
1. The appeal was filed by the assessee against the CIT(A)'s order confirming the withdrawal of TDS credit of Rs. 2,57,500 by the Assessing Officer under section 154 of the Income Tax Act. The issue revolved around whether the credit could be withdrawn due to non-disclosure of corresponding income in the relevant assessment year.

2. The assessee, a film producer and director, had the tax credit of Rs. 2,57,500 wrongly granted as the corresponding receipt was not declared as income during the assessment year 2008-2009. The Assessing Officer issued a notice under section 154 to rectify this mistake, which was objected to by the assessee but eventually passed the order on 09.07.2014.

3. The CIT(A) upheld the Assessing Officer's decision based on a Third Member order of the Tribunal, stating that the assessee cannot claim the tax credit if the corresponding income was not disclosed in the relevant assessment year.

4. The assessee argued before the Tribunal that the issue was debatable, citing a Delhi Bench Tribunal case where it was held that TDS credit should be given to the assessee to avoid complications. The Tribunal agreed that the issue was debatable and not suitable for rectification under section 154, referencing similar decisions by other Tribunals.

5. The Tribunal concluded that the withdrawal of the tax credit under section 154 was legally untenable and allowed the appeal. However, it specified that the TDS credit should not be claimed in any other assessment year when the income was offered for taxation. The decision was pronounced on March 15, 2019.

6. In summary, the Tribunal ruled in favor of the assessee, emphasizing that the issue of withdrawing TDS credit due to non-disclosure of corresponding income was debatable and not appropriate for rectification under section 154 of the Income Tax Act. The decision was supported by precedents from various Tribunals, ultimately allowing the appeal and directing the treatment of the TDS credit accordingly.

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