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June 20, 2022

TDS credit is adjustable in the year of receipt under the cash system.

by CA Shivam Jaiswal in Income Tax

TDS credit is adjustable in the year of receipt under the cash system.

Facts  and issues of the case

The assessee  is  an individual and Chartered Accountant by profession. The assessee filed Income Tax Return on 28.11.2014 declared total income of Rs. 14,31,540/- wherein tax payable worked is Rs. 2,67,246/- which is inclusive of education cess. The assessee claimed credit for TDS of Rs. 2,96,734/- and thereby claiming a refund of Rs. 29,488/-. The return was processed by Deputy Commissioner of Income Tax, Computer Processing Centre, Bangalore CPC Centre,Bangalore on 10.06.2015 by intimation under Section 143(1) of the Income Tax Act, 1961 (hereinafter referred to as ‘Act’). By this intimation the CPC Centre has gives TDS credit of Rs. 62,721/- only and raised a tax demand of Rs. 2,46,857/-.

The grievances of the assessee is that the entire TDS amount of Rs. 2,96,734/- was not duly given credit by the CPC Centre. Aggrieved by this intimation order the assessee filed an rectification application under Section 154 on 03.07.2015 to the jurisdictional AO namely ITO, Ward-4(2)(1) and also e-filed rectification to the CPC Centre Bangalore. The assessee also claimed that the CPC Centre has wrongly charged interest under Section 234A as the assessee has filed the Return of Income well in time within the extended due date period of 30.11.2014. The assessee also claimed the CPC Centre has wrongly charged interest under Section 234B  and 234C of the Act. The Deputy Commissioner of Income Tax has passed an order dated 28.09.2016 confirming the same addition made in the intimation and reject the rectification petition filed by the assessee.

Aggrieved against the same the assessee before us raising the following grounds of appeals:

  • To direct Ld.A.O./ Hon’ble CIT(Appeals) to pass the necessary Rectification Order u/s. 154 of the I.Tax Act and to allow claim of Refund of Tax, as claimed as per ITR filed.
  • To issue necessary directions to grant credit of TDS of Rs. 78,653/- pertaining to A.Y. 2012-13 & 2013-14 (out of Total Claim of TDS of Rs. 2,96,734) for which your Appellant has offered Income on cash basis in A.Y. 2014-15.
  • The Ld. CIT(A) erred in directing the Ld.A.O to grant TDS of F.Y. 2013- 14 relevant to A.Y.2014-15 only being Rs.2,18,081/-.The learned CIT(A) has erred in law and on facts in confirming the action of Ld.AO by not granting credit of TDS of Rs. 78,653/- pertaining to A.Y.2012-13 & 2013-14 in the Appellant order passed by CIT(A) dt. 15/03/2019.
  • Your Appellant requests your honour to grant necessary directions to appropriate authorities to grant further credit of TDS of Rs. 78,653/- pertaining to A.Y.2012-13 & 2013-14 of which for both the years the income is offered for taxation for the year under consideration.
  • Both the lower authorities have erred in law and on facts in passing the orders without properly appreciating the fact and erred by ignoring various submissions and explanations submitted by your  appellant  from time to time which ought to have been considered before passing the impugned order. This action of both the authorities have not adhered to the principles of Natural Justice and therefore full relief is to be granted to your Appellant for claim of TDS.
  • Therefore it is submitted by your Appellant that full relief of claim of TDS be allowed.

Observation by the court

Reiterating the grounds of appeal the  Ld. Counsel  appearing for the assessee submitted that an appropriate TDS credit should be given to the assessee and proper rectification order is to  be passed. Per contra, the Ld. DR appearing for the Revenue supported orders passed by the lower authorities and also pointed out the assessee is only asking for the TDS  credit  whereas  the corresponding income is not offered  for  the  A.Y.  2014-15. Therefore, the Ld. CIT(A) is correcting the  denying  the  benefit  to the assessee.

On going through this judgement, it is crystal  clear  that there are provisions of under the IT Act; namely, section  199 of the IT Act, 1961 and Rule 37BA of the IT Rules, 1962 and proper mechanism is also provided under the Act and Rules. Thus, respectfully following the ratio of the Jurisdictional High Court judgement, the assessee is entitled to get credit on TDS of Rs.2,96,734/-. Hence, this ground of appeal raised by the assessee is allowed by setting-aside the orders passed by lower authorities and direct the DCIT, CPC to pass fresh orders giving proper opportunities to the assessee and in accordance with law within a period of 12 weeks from the date of receipt of this order.

As far as ground Nos.3 to 6 of appeal are concerned,  the same are charging of interest u/s.234B & 234C of the Act, which are consequential in nature and, hence, no separate adjudication is required. Thus, these grounds of appeal raised by the assessee are allowed for statistical purpose.

Conclusion

In the result, the appeal filed by the assessee is allowed for statistical purpose.

Chirag-M.-Shah-Vs-ITO-ITAT-Ahmedabad-1

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