TDS credit cannot be denied when deductor fails to deposit tax, while an unserved demand remains unenforceable.

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....TDS credit cannot be denied where the assessee establishes that tax was deducted from its income, merely because the deductor failed to deposit it with the Central Government. A claim admitted in the deductor's insolvency process for unpaid receivables does not preclude such credit. The Assessing Officer must verify the claim under the prescribed procedure and grant credit and consequential relief if established. An intimation under Section 143(1), as a deemed notice of demand, must be served on the assessee before the demand can be enforced. In the absence of proof of service, recovery and refund adjustment under Section 245 cannot stand; the demand is quashed and adjusted amounts must be refunded with applicable interest.....