Irrespective of year of appearance in form 26AS Refund of TDS credit cannot be denied
Facts and issues of the case
Brief facts of the case are that the assessee is a company, involved in the business of executing civil contracts with various Government and non-Governmental entities. During the FY.2016-17, the assessee received Rs. 6,28,98,875/- on 18/03/2017, which they declared in their return of income on accrual basis and paid the taxes thereon. The Government department, however, failed to remit the TDS, though deducted, within thirty days. Due to delay in the deposit, the TDS credit appeared in the FY.2017-18, corresponding to the AY.2018-19 in Form 26-AS.
For the AY.2018-19, the assessee filed the return of income on 27/09/2018 declaring an income of Rs.1,78,06,380/- and claimed credit of the TDS relatable to the receipt of Rs.6,28,98,875/- received on 18/03/2017. The reason for this is that the State Government deposited the deducted TDS amount with delay on 31/07/2017. Such a claim for credit for TDS of Rs.12,57,976/- was denied during the scrutiny by applying Rule 37BA(3)(i) of the Income Tax Rules (“the Rules”) on the ground that there was no corresponding income during the AY.2018-19.
Assessee is aggrieved by the said denial of TDS and preferred an appeal challenging the said action. The assessee pleaded that the assessee declared income during the AY.2017-18 on accrual basis, and TDS was deducted when the amount was paid to the assessee by the State Government, but due to the delay on the part of the State Government department in deposit of the TDS, such a credit appeared during the FY.2017-18 corresponding to the AY.2018-19 and, therefore, under the amended Section 199 of the Act, the assessee is entitled to benefit of the TDS credit in the AY.2018-19.
Observation by the court
The Court has gone through the record in the light of the submissions made on either side. So far as the facts are concerned, absolutely there is no dispute. What is required to be considered is, whether the refund of TDS amount of Rs.12,57,976/-, which was effected during the FY.2016-17 but remitted by the Government on 31/07/2017, resulting in such credit appearing in Form-26AS during the AY.2018-19 is allowable during the AY.2018-19? This question is no longer res integra. In the case of ACIT Vs. Peddu Srinivasa Rao (supra), a Co-ordinate Bench of this Tribunal observed that once any TDS is effected in accordance with the provisions of the Act and paid to the Central Government, such an amount shall be treated as a payment of tax on behalf of the person from whose income the deduction was made, and, therefore, a credit of the same must be given to the person on whose behalf such TDS was made, irrespective of the year to which it relates. For the sake of completeness, we deem it just and necessary to extract the relevant observations of the Co-ordinate Bench.
The said view is followed by the another Co-ordinate Bench of this Tribunal in the case of Zelan Projects (P) Ltd Vs. DCIT (supra). Since consistent view has been taken by the Co-ordinate Benches on this aspect, we are of the considered opinion that the refund of TDS though in fact was effected during the AY.2017-18 cannot be denied to the assessee when it was appearing in Form-26AS in the AY.2018-19 and claimed by the assessee. With this observation, we direct the Ld. AO to allow the claim of the assessee in respect of the TDS amount of Rs.12,57,976/- during the AY.2018-19. Consequent to our above direction, Stay application becomes infructuous and accordingly stands dismissed.
The Court disposed off the appeal and ruled in favour of the assessee