Tribunal grants TDS credit for rent & maintenance income, aligning with income year.

The tribunal allowed the appellant's plea against the denial of TDS credit by the National Faceless Appeal Centre and directed the CPC to grant the TDS credit for rent and maintenance income from M/s Bosch Limited in the assessment year 2020-21. The tribunal emphasized that TDS credit should align with the year of income reporting and cannot be postponed to a subsequent assessment year based on the deductor's reporting. The decision was based on the clear legal position, overturning the NFAC's ruling and rectifying the error in denying the TDS credit.

---

---

Issues:
Challenge to order denying TDS credit by National Faceless Appeal Centre under Income Tax Act, 1961 for assessment year 2020-21.

Analysis:
The appellant challenged the order of the National Faceless Appeal Centre (NFAC) denying TDS credit by CPC under the Income Tax Act for the assessment year 2020-21. The primary ground of appeal was directed against the denial of TDS credit by CPC. The tribunal heard both parties and examined the case records in accordance with the ITAT Rules. The appellant, a resident individual, had income from various sources except capital gains for the relevant assessment year. The appellant's return of income was processed by CPC, denying TDS credit due to a mis-match in the reporting year by the tenant deductor, M/s Bosch Limited.

The denial of TDS credit was partially rectified under section 154 of the Act, but the appellant sought further relief by approaching the NFAC, without success. The appellant contended that the actions of the tax authorities were contrary to the law and sought rightful TDS credit against the income offered for tax in the assessment year. The tribunal noted that the tenant deductor had reported the TDS for the appellant's rental income for the subsequent year, resulting in a shortfall of credit for the impugned assessment year.

Upon examining the availability of TDS credit under Section 199(3) read with Rule 37BA(3) of the Income Tax Rules, the tribunal found that the credit should be allowed for the assessment year in which the income is assessable or assessed. The tribunal agreed with the appellant's argument that TDS credit cannot be postponed to a different assessment year based on the deductor's reporting, especially when the income from the transaction had been reported in the impugned assessment year.

The tribunal held that the law was clear that TDS credit should align with the year in which the income is reported, and it cannot be deferred to a subsequent assessment year. The tribunal cited a similar view taken by a co-ordinate bench in a previous case. Therefore, the tribunal accepted the appellant's plea against the denial of TDS credit and directed the CPC to allow the TDS credit for the corresponding income of rent and maintenance accrued from M/s Bosch Limited and offered for tax in the impugned assessment year. Consequently, the appeal of the appellant was allowed based on the clear position of the law and the apparent error in denying the TDS credit.

The tribunal pronounced the order in open court, reversing the decision of the NFAC and directing the CPC to allow the TDS credit for the appellant in the assessment year 2020-21.

---