The Hyderabad bench of the Income Tax Appellate Tribunal (ITAT) maintains the refusal of tax deduction at source (TDS) credit for failure to reconcile the claim with the income offered to tax.
The taxpayer, M/s. Ashoka Developers & Builders Ltd, is in the business of construction. It has filed its return for AY 2023-24 showing income of Rs 2.43 crores and claimed TDS credit of Rs 67.37 lakhs. While processing the return u/s 143(1) of the Income Tax Act, CPC authorised only Rs 36.18 lakhs of TDS credit and disallowed the balance Rs 31.19 lakhs.
The taxpayer’s rectification application u/s 154 of the Income Tax Act was denied, and the CIT(A) upheld the action of CPC. The dissatisfied taxpayer appealed before the Tribunal.
The taxpayer’s counsel said that in all the preceding assessment years, i.e., Assessment Years 2016-17 to 2022-23, and also in Assessment Year 2024-25, CPC has permitted the TDS credit as claimed by the taxpayer in the income return. Thus, following the principle of consistency, the TDS credit refused during the year under consideration must be permitted.
The counsel said that the TDS credit claim is duly supported by Form 26AS and hence the balance credit of Rs 31,19,028 should be permitted.
The departmental representative put reliance on the orders of the lower authorities, and it said that the CIT(A) had accurately upheld the measure of CPC after considering Section 199 of the Income Tax Act and Rule 37BA of the Income-tax Rules. It was claimed that the taxpayer did not reconcile the TDS claimed with the income proposed to tax and thus the refusal of excess TDS credit was justified.
The two-member bench of Ravish Sood, Judicial Member and Madhusudan Sawdia, Accountant Member said that “We find that it has been specifically mandated that credit for TDS shall be given for the assessment year for which the corresponding income is assessable to tax. It has further been categorically provided that where such income is assessable over several years, the credit for TDS shall be allowed across those years in the same proportion in which the income is assessable to tax.”
The tribunal stated that, due to the lack of proper reconciliation proving that the income for the disputed TDS credit was proposed to tax in the related year, the refusal of TDS credit by the CIT(A) was justified.
| Case Title | M/s Ashoka Developers & Builders Ltd Vs ACIT |
| Case No. | ITA No. 416/Hyd/2026 |
| For Petitioner | CA C. Maheshwar Reddy |
| For Respondent | Shri Mohan Babu, Sr. AR |
| Hyderabad ITAT | Read Order |
