ITAT: TDS Credit Cannot Denied if Sale of Agricultural Property Income Not Reflected in ITR

The Ahmedabad bench Income Tax Appellate Tribunal ( ITAT ) ruled that the Tax Deduction at Source ( TDS ) credit must not be refused if the income from the sale of agricultural property was not declared in the Income Tax Return (ITR).

Dhirajlal Savailal Shah, the taxpayer at the time of the AY 2017-18, the taxpayer has sold agricultural land located in rural areas and hence did not pay capital gain tax on that. The land buyer was not directed to make TDS on the same. However a TDS of Rs. 1,42,500/- by blunder is been made by the buyer of the land.

In Form 26AS, the TDS was reflected and hence the taxpayer claimed credit for that in the return of income. During the return of income processing under Section 143(1) of the Income Tax Act, the CPC, Bangalore did not provide a credit of TDS on the property for Rs. 1,42,500/- and hence the taxpayer furnished the rectification against that.

However, the Revenue did not accept it. Dissatisfied with the rectification order under section 154 of the Income Tax Act, the taxpayer furnished a plea before the CIT(A). The appeal of the assessee was dismissed by the CIT(A). Subsequently, another appeal is been furnished by the taxpayer before the ITAT.

Representative ( AR ) of the taxpayer, Hardik Vora, contended that as the TDS is shown in 26AS credit must have been permitted since there is only Banakhat and no income was needed to be reported in the return of income. If the receipt is not accountable to tax in the hands of the receiver for any reason, it cannot be a foundation for not giving TDS credit.

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Saumya Pandey Jain, the Department representative ( DR ) claimed that the income was not shown whether it is agricultural land or the selling of the said land, thus the Assessing Officer and CIT(A) have incurred the addition correctly.

DR concluded that when the claim must be incurred in the income return and in the absence of that then the taxpayer is not qualified for any claim as such because no related income in the income return is there.

The tribunal while adjudication observed that in the return of earlier years of the taxpayer, 26AS statement, Form 16 & Form 16A, and especially in the case of taxpayer Form 26AS, the TDS deducted by the purchaser of the stated agricultural land was properly shown.

Thus the observations of the CIT(A) and the Assessing Officer that it is not reflected in 26AS are not justifiable.

The single member bench Suchitra Kamble ( Judicial Member ) noted that Tax Deduction at Source( TDS ) credit must not be rejected if the income from the sale of agriculture property was not reflected in the Income Tax Return ( ITR ). As per that the bench permitted the appeal furnished via the taxpayer.