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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether the assessee was entitled to TDS credit in the assessment year in which the corresponding income was offered to tax, despite the deductor depositing the tax and reflecting the credit in Form 26AS in the subsequent year.
Analysis: Section 199 of the Income-tax Act, 1961 and Rule 37BA(3) of the Income-tax Rules, 1962 provide that credit for tax deducted at source shall be given for the assessment year for which the income is assessable, and where income is assessable over more than one year, the credit is to be allowed in the same proportion. The assessee had accounted for the service income in the relevant year, while the deductor accounted for the expenditure and deducted tax in the next year, causing a mismatch in Form 26AS. The Tribunal applied the statutory rule that TDS credit follows the year of assessability of the related income, and the mere fact that the deductor reported the tax in a later year could not defeat the assessee's substantive entitlement.
Conclusion: The assessee was entitled to the TDS credit in the year in which the corresponding income was assessable, and the denial of credit on the basis of the Form 26AS mismatch was not sustainable.
Ratio Decidendi: Credit for tax deducted at source must be granted in the assessment year in which the related income is assessable, and it cannot be shifted to a different year merely because the deductor reported or deposited the tax later.
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