TDS credit in advance received from customers

[Bijay Shrestha]

Dear Experts/Friends.

Suppose a Company received Advance Money from customers after TDS deductions and these TDS is deposited by the Customers and reflecting in the 26AS.

The Company Recognises income on percentage Completion method. While filing Income Tax Return, the Company claimed full TDS as per 26AS including TDS on Advance money received. Needless to say that All Advance money is not forming part of Income offered in ITR. But AO did not give credit of these TDS as corrresponding Income/Advance did not form part of Income OR added Advance on which TDS was deducted to the Income in ITR which is incorrect as far as Accounting method followed is concerned.

Please kindly suggest with proper explanation how can the Company claim full TDS credit.

Also suggest any Supreme Court decision, if any.

[Ganeshan Kalyani]

In my view TDS credit is eligible in the year in which it is deducted .

AI Summary

TDS credit: entitlement to claim in the year it is deducted even when advance receipts are not yet revenue. The dispute concerns TDS on advances where the taxpayer uses the percentage completion method and did not include advances as income; TDS deposited by customers appears in Form 26AS but the assessing officer denied credit or added advances to income. The discussion concludes that TDS credit is eligible in the year in which tax is deducted and thus the credit should be allowed despite non-recognition of advances as revenue under the accounting method.