Delhi ITAT Permits TDS Credit for Assessable Income for Concerned A.Y.

The TDS Credit was permitted for the assessment year in which income is assessable by the Delhi bench of the Income Tax Appellate Tribunal (ITAT).

In addition to operating and maintaining a nursing home, the assessee, Prakash Sunrise Healthcare Limited, has been providing medical treatment to different government workers, including military personnel, on behalf of the CGHS and ECHS. The taxpayer furnished an income return showing a total income of Rs.1,92,27,329/- for which the total receipts of business and profession were declared at Rs.7,58,33,708.

The assessee claimed TDS credit for the Assessment Year 2018–19 on Form 26AS at a cost of Rs. 90,63,042, which the payers deducted from the sum of Rs. 8,20,76,867 in professional receipts. As mismatched TDS, or TDS for which matching revenue has not been supplied, the Assessing Officer (CPC) refused credit of TDS at Rs. 6,65,610/- when processing the return of income.

The assessee submitted a request for correction, noting the fact that it has been using the accrual method of accounting whereas the government department (which pays the assessee’s income) has been using the cash system of accounting. As previously mentioned, the reason for the discrepancy is due to the fact that the assessee reported income in the year of accrual of income while the payer Government bodies occasionally made bill payments in later years and TDS were deducted in the year of payments in accordance with the cash method of accounting.

Invoking provisions of Section 199 of the Income Tax Act and Rule 37BA of the IT Rules, the CIT(A) given a partial relief of Rs. 1,05,220 and upheld the action of the Assessing Officer in respect of a TDS credit of Rs. 5,60,390 that involved four parties, ECHS Bareilly, ECHS Meerut Cell, ECHS Babugarh, and Bank of Baroda.

The taxpayer complied with the accrual method of accounting while the corresponding deductors obey the cash method and deducted TDS in the year where the invoice of the taxpayer is acknowledged and accounting entries are made in their books. The Tribunal, the taxpayer has put older information of different patients who claimed for the services of the taxpayer’s nursing home via the deductor agencies.

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A Coram comprising of Shri Challa Nagendra Prasad, Judicial Member & Shri Pradip Kumar Kedia, Accountant Member remitted the matter back to the file of the AO and ruled that the Assessing Officer must provide credit for TDS that the assessee had deducted and claimed if he or she is satisfied that the assessee has properly disclosed the relevant income in one of the assessment years.