2020 (2) TMI 21 - AT - Income Tax

Tribunal grants TDS credit for AY 2015-16, emphasizes income-year match, remands for verification.

The Tribunal allowed the appeal, directing the Assessing Officer to grant the TDS credit of Rs. 45,41,995/- for AY 2015-16 to the assessee. The Tribunal ... Entitlement to TDS credit - short/deficit credit of TDS - Whether credit for TDS should be given for the assessment year for which the income is assessable? - HELD THAT:- Unable to subscribe to the view taken by the lower authorities that despite the fact that the sales/receipts were accounted for by the assessee during the year under consideration viz. A.Y 2015-16, the corresponding credit of TDS of ₹ 45,41,995/- was not be allowed to it in the said year. We are unable to persuade ourselves to subscribe to the view taken by the lower authorities, that the credit for the tax deducted at source (TDS) was to be allowed to the assessee in the immediately succeeding year i.e A.Y 2016-17, despite the absence of the assessable income in the said year. Accordingly, we restore the matter to the file of the A.O, with a direction to allow the short/deficit credit of TDS of ₹ 45,41,995/- to the assessee in the year under consideration i.e A.Y 2015-16. A.O before allowing the credit of the TDS of ₹ 45,41,995/- shall verify the veracity of the claim of the assessee that the sales/receipts corresponding to the TDS credit of ₹ 45,41,995/- were accounted for by it during the year under consideration viz. A.Y. 2015-16. Also, as a word of caution, the A.O shall take necessary steps in order to ensure that no TDS credit of the aforesaid amount of ₹ 45,41,995/- is/was availed by the assessee in the immediately succeeding year i.e A.Y 2016-17 in which the same is reflected in its “Form 26AS”. Issues Involved:1. Entitlement to TDS credit of Rs. 45,41,995/- for AY 2015-16.2. Interpretation of Rule 37BA(3) concerning the assessment year for which TDS credit should be given.Issue-Wise Detailed Analysis:1. Entitlement to TDS credit of Rs. 45,41,995/- for AY 2015-16:The assessee filed its return for AY 2015-16, claiming a TDS credit of Rs. 22,74,02,171/-. However, the Assessing Officer (A.O) allowed a TDS credit of only Rs. 22,28,60,176/-, resulting in a short credit of Rs. 45,41,995/-. The assessee contended that this shortfall was due to the TDS not being reflected in its 'Form 26AS' because the invoices were raised at the end of FY 2014-15, and the client deducted the tax when making payments in FY 2015-16. The CIT(A) upheld the A.O's decision, noting that as per the amended provisions of section 199 read with Rule 37BA, TDS credit is to be given in the year of deduction.2. Interpretation of Rule 37BA(3) concerning the assessment year for which TDS credit should be given:The Tribunal analyzed section 199(3) and Rule 37BA, which stipulate that TDS credit should be given for the assessment year in which the corresponding income is assessable. Rule 37BA(3)(i) explicitly states that TDS credit should be given for the assessment year for which the income is assessable, reinforcing the inextricable link between TDS credit and the corresponding assessable income.The Tribunal referenced the case of Mahesh Software Systems P. Ltd. vs. ACIT, where it was held that TDS credit should be given in the same year the income is assessable, even if the TDS was deposited in the subsequent year. This precedent supports the assessee's claim that TDS credit of Rs. 45,41,995/- should be allowed in AY 2015-16, as the corresponding income was accounted for in that year.Conclusion:The Tribunal disagreed with the lower authorities' view that the TDS credit should be given in the subsequent year, noting that such an approach would distort the tax/interest liability. The Tribunal restored the matter to the A.O, directing him to allow the TDS credit of Rs. 45,41,995/- for AY 2015-16 after verifying that the corresponding income was indeed accounted for in that year. The A.O was also instructed to ensure that no TDS credit for this amount is claimed by the assessee in AY 2016-17.Result:The appeal filed by the assessee was allowed, with specific directions to the A.O to verify and grant the TDS credit for AY 2015-16.