AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (4) TMI 117
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.... 2. The Appellant has offered income in AY 2020-21 (FY 2019-20) and claimed TDS on the same in AY 2020-21 itself as per provisions of Sec 199 read with Rule 37BA sub-rule (3). 3. The deductor seems to have claimed expense in the subsequent year ie, AY 2021-22 & deducted tax in the subsequent year. The appellant has not claimed TDS credit in the subsequent year as it was already availed in previous year. Hence the difference. 4. That the Learned CIT(A) failed to appreciate that the appellant had raised invoice for bottling services on 31.03.2020, duly offered the same income to tax in A.Y. 2020-21 as per the mercantile system of accounting, and therefore was entitled to TDS credit in the same year, in terms of Section 199 read with Rule 37BA(3) of the Income-tax Rules, 1962. 5. That the Learned CIT(A) erred in holding that TDS credit could not be allowed merely because the deductor accounted for the expenditure and deducted tax in the subsequent year, ignoring the settled principle that TDS credit is to be given in the year in which the related income is assessable. 6. That the Learned CIT(A) erred in not appreciating that denial of TDS credit in ....
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....d India Private Limited (in short, "PRIPL)), i.e., the deductor had accounted for the aforesaid invoices in the subsequent financial year and deducted the tax at source (TDS) in the subsequent financial year. The Ld. AR submitted that for the aforesaid reason, there has been a mismatch of TDS as was claimed by the assessee company as against that in Form-26AS. Carrying his contention further, the Ld. AR submitted that the assessee company had filed an application for rectification under section 154 of the Act with AO/CPC, Bangaluru, which, however, was rejected vide order, dated 12/04/2022. The Ld. AR submitted that the CIT(A) had though accepted the claim of the assessee company that the mismatch in TDS was for the reason that while for the assessee company had declared the subject income during the year under consideration, i.e., AY 2020-21, but the deductor, viz., PRIPL had accounted for the said transaction and deducted the tax at source (TDS) in AY 2021-22. The Ld. AR submitted that the controversy involved in the present appeal finds its genesis in the observation of the CIT(A), wherein he had observed that the deductor, viz., PRIPL should revise its return of income so that ....
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.... (Emphasis supplied by us). In our considered view, the aforesaid statutory provision contemplates that the Board may, for the purpose of giving credit in respect of tax deducted or tax paid in terms of the provisions of Chapter VII of the Act, make such rules as may be necessary, including the rules for the purposes of giving credit to a person other than those referred to in sub-section (1) and sub-section (2) and also the assessment year for which such credit may be given. On a perusal of the relevant Rule 37BA, we find, that the same reads as under: "Credit for tax deducted at source for the purposes of section 199. (1) Credit for tax deducted at source and paid to the Central Government in accordance with the provisions of Chapter XVII, shall be given to the person to whom payment has been made or credit has been given (hereinafter referred to as deductee) on the basis of information relating to deduction of tax furnished by the deductor to the income-tax authority or the person authorized by such authority. (2) (i) where under any provisions of the Act, the whole or any part of the income on which tax has been deducted at source is assessab....
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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. Accordingly, the legislative intent of emphasizing an inextricable nexus between the credit for tax deducted at source (TDS) and the correlating assessable income, can safely be gathered beyond any doubt. In fact, we hold a strong conviction, that the credit for tax deducted at source (TDS) and the corresponding assessable income is so much inextricably interlinked or rather interwoven, that in case they are divorced and considered on a standalone basis in separate years, then the same would result to a distorted tax/interest liability of the assessee under the Act. As such, we are unable to comprehend as to on what basis the aforesaid claim of the assessee for credit of TDS of Rs. 45,41,995/-, which as claimed by the assessee pertains to its duly accounted for sales/receipts for the year under consideration i.e. A.Y 2015-16, had been declined by the lower authorities. Our aforesaid view that as per section 199(1) r.w.r 37BA, the credit for the tax ded....
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....(hereinafter referred to as deductee) on the basis of information relating to deduction of tax furnished by deductor to the income-tax authority or the person authorised by such authority. (2) (i) where under any provisions of the Act, the whole or any part of the income on which tax has been deducted at source is assessable in the hands of a person other than the deductee, credit for the whole or any part of the tax deducted at source, as the case may be, shall be given to the other person and not to the deductee Provided that the deductee files a declaration with the deductor and the deductor reports the tax deduction in the name of the other person in the information relating to deduction of tax referred to in sub-rule (1). (ii) The declaration filed by the deductee under clause (1) shall contain the name, address, permanent account number of the person to whom credit is to be given, payment or credit in relation to which credit is to be given and reasons for giving credit to such person. (iii) The deductor shall issue the certificate for deduction of tax at source in the name of the person in whose name credit is shown in the information rela....
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....is to be given for the assessment year for which the corresponding income is assessable. Since the income of Rs. 84.10 lakh, on which tax of Rs. 8,41,050/- was deducted at source, is patently assessable in the year under consideration, we hold that the benefit of the TDS should also be allowed in the same year, namely, the year under consideration. We, therefore, overturn the impugned order and direct accordingly." 7. On the basis of our aforesaid deliberations, we are unable to subscribe to the view taken by the lower authorities that despite the fact that the sales/receipts were accounted for by the assessee during the year under consideration viz. A.Y 2015-16, the corresponding credit of TDS of Rs. 45,41,995/- was not be allowed to it in the said year. In fact, we are unable to persuade ourselves to subscribe to the view taken by the lower authorities, that the credit for the tax deducted at source (TDS) was to be allowed to the assessee in the immediately succeeding year i.e A.Y 2016-17, despite the absence of the assessable income in the said year. Accordingly, we restore the matter to the file of the A.O, with a direction to allow the short/deficit credit of TDS of R....