TDS retention requires deposit with the tax department before credit can be given to the assessee.

A prima facie view was taken that a utility cannot retain a deducted keep-back amount against alleged TDS liability without depositing the sum with the Income Tax Department, because tax deducted at source should be deposited so the assessee can receive corresponding credit in the income tax return. No final adjudication was made. The matter was adjourned for one week to allow the utility to take a conscious decision on deposit of the deducted amount, with further hearing listed for 21 March 2024.

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Issues: Whether the amount retained by the utility as a keep back amount towards alleged TDS liability could be withheld without deposit of the deducted sum with the Income Tax Department, and whether the matter required further consideration before any final direction.

Analysis: The order records a prima facie view that retention of the deducted amount would be without authority in law if the amount is not deposited with the Income Tax Department. It also notes that, on a cursory view of the Income-tax Act, 1961, once tax is deducted at source, the deducted amount ought to be deposited so that the assessee can obtain corresponding credit in the income tax return. No final adjudication is made at this stage.

Outcome: The matter was adjourned for one week to enable the utility to take a conscious decision on deposit of the deducted amount, with the case listed for further hearing on 21 March 2024.

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