TaxTMI 
TaxTMI 
2018 (1) TMI 1228
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....3(3) dated 18.12.2013 assessing the income as Rs. 62,95,030/- after making certain additions of Rs. 2,73,000/-. 3) The Assessing officer has not allowed TDS claim of Rs. 12,07,747/- on account of the fact that corresponding income was not offered for taxation in the relevant assessment year of such claim. The Commissioner of Income Tax (Appeals) has upheld the order of the assessing officer. Against this we would like to submit that the assessee is following cash system of accounting and therefore the income is offered to tax on receipt basis. The income to the extent of TDS deducted and paid by the customers in respect of AY 2011-12 is already offered for taxation in the return of income of AY 2011-12. Thus the disallowance of tax credit by the assessing officer is not justified. 4) Your Appellant submits that the said disallowance is not justified and therefore your Honour is requested to grant us the TDS credit. 3. The relevant facts as culled out from the materials on record are as under:- The assessee is engaged in the business as land survey contractor. The return of income was filed on 16.09.2011 declaring total income of Rs. 60,22,030/. The assessmen....
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.... basis in the year in which the certificate is issued and also in future where balance of such income is found to be assessable as per the mandate of section 199 of the Act. She has held that any amount which has not been assessed in any year but referred in the TDS certificate cannot be claimed under section 199 of the Act. 9. Sub-section (1) of section 199 of the Act provides that "any deduction made in accordance with the foregoing provisions of this chapter and paid to the Central Government shall be treated as a payment of tax on behalf of the person from whose income the deduction was made. In view thereof, since the tax was deducted at source by the deductor and the amount was deposited by the deductor on behalf of the assessee, the said sum is deemed to be the payment of tax made on behalf of the assessee. Also, section 198 of the Act provides that all sums deducted in accordance with Chapter XVII-B of the Act shall for the purposes of computing the income of an assessee be deemed to be income received. Thus, section 198 of the Act specifically provides that tax deducted at source shall for the purpose of computing income of an assessee will be deemed to be income ....
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.... at source and paid to the Central Government and the income is assessable over a number of years, credit for tax deducted at source shall be allowed across those years in the same proportion in which the income is assessable to tax. (4) Credit for tax deducted at source and paid to the account of the Central Government shall be granted on the basis of- (i) the information relating to deduction of tax furnished by the deductor to the income-tax authority or the person authorized by such authority; and (ii) the information in the return of income in respect of the claim for the credit, Subject to verification in accordance with the risk management strategy formulated by the Board from time to time.]" 10. A reading of the aforesaid will make it apparent that Rule 37BA(1) of the Act provides rules relating to have credit for the purpose of section 199 of the Act as is provided in section 199(3) of the Act. Rule 37BA(3)(i) of the Act provides that credit for tax deducted at source and credited to the account of Central Government shall be given for the assessment year for which, such income is assessable. Thus, if the said rule is read, it is clear t....
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.... of the revenue, the assessee would not be entitled to credit of the entire TDS of Rs. 10/- but would be entitled to proportionate credit only. Now let us assume that Rs. 90/- is never paid to the assessee by the deductor. In such circumstances, Rs. 9/- which was deducted as TDS by the deductor would never be available for credit to the assessee though the said sums stand duly deposited to the account of the Central Government. Rule. 37BA(3) of the Act cannot be interpreted so as to say that TDS deducted at source and deposited to the account of the Central Government is though income of the assessee but is not eligible for credit of tax in the year when such TDS was offered as income. This view is otherwise also not in accordance with the provisions contained in section 198 and 199 of the Act. The proposition as laid out by the CIT(A) and learned DR before us therefore cannot be countenanced. In arriving at the above conclusion, we also derive support from the decision of Visakhapatnam Bench in the case of Peddu Srinivasa Rao (supra) has held as under: "8. We have carefully perused the provisions of section 199 of the Act and according to the pre-amended provisions of sec....