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.

AI Summary

Company Challenges Denial of TDS Credit on Advances; Seeks Clarification on Income Recognition Method A company received advance payments from customers with TDS deducted and deposited by the customers, appearing in Form 26AS. The company uses the percentage completion method for income recognition and claimed the full TDS in its income tax return, including TDS on advances not yet recognized as income. The assessing officer denied the TDS credit because the corresponding income was not included in the ITR, or added the advance to the income, which conflicted with the accounting method. A respondent suggested that TDS credit should be claimed in the year it is deducted. The company seeks guidance and relevant Supreme Court decisions.