TDS deposit as payment on account of debt can extend limitation when linked to the same liability.

A Delhi HC decision considered whether deposit of tax deducted at source on 30 September 2015 extended limitation under Section 19 of the Limitation Act, 1963 in a suit arising from a deed of cancellation. The Court held that the decisive question was whether the TDS reflected in the certificate related to the same liability and amounted to a payment on account of the debt. As the appellant did not plead any separate transactions to which the deposit was referable, and the statutory scheme under Sections 194A and 198 of the Income-tax Act supported the certificate, the TDS deposit was treated as payment on account of the debt. The limitation objection therefore failed.

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Issues: (i) Whether the suit was barred by limitation on the ground that the tax deducted at source deposited on 30 September 2015 did not extend limitation under Section 19 of the Limitation Act, 1963.

Analysis: The only substantive controversy was whether the TDS deposit reflected in the certificate related to the liability arising from the Deed of Cancellation and, if so, whether it amounted to a payment on account of the debt within the meaning of Section 19 of the Limitation Act, 1963. The Court noted that the appellant had not pleaded in the leave to defend application any specific independent transactions to which the deposit of TDS was said to relate. The learned Single Judge's reliance on the TDS certificate and the statutory scheme, including Sections 194A and 198 of the Income-tax Act, 1961, was therefore upheld. On the material pleaded, the deposit of TDS was treated as a payment on account of the debt, and the issue of the TDS certificate satisfied the statutory requirement for extending limitation.

Conclusion: The suit was not barred by limitation and the limitation objection failed.

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