ITAT: Acceptance of TDS Credit is Proposed When Taxed Along With TDS

The Chennai bench of the Income Tax Appellate Tribunal( ITAT ) stated that TDS Credit is permissible when Income is provided to the tax concerned to specified TDS.

Taxpayers firm M/s. PKF Sridhar & Santhanam LLP, in the profession of consulting and auditing. The appellant furnished its income return for the assessment year 2018-19 on 29.09.2018 showing a total income of Rs. 5,45,49,293. The taxpayer furnished income tax return for the assessment year 2019-20 dated 29.10.2019 admitting a total income of Rs. 5,84,96,540.

The income return furnished via the taxpayer for both assessment years has been processed u/s. 143(1)(a) of the Income-tax Act, 1961 (“the Act”), and nextly the assessment has been completed u/s. 143(3) of the Act defined the total income of Rs. 6,14,27,080 for the assessment year 2018-19 and Rs. 5,84,96,540 for the assessment year 2019-20.

The AO allotted credit for TDS in the AY 2018-19 at Rs. 2,42,96,750 as against the taxpayer’s claim at Rs. 3,21,27,758. Likewise towards the AY 2019-20, credit has been allocated for Rs. 2,63,71,542 as against the taxpayer claim at Rs. 3,62,37,959.

In front of the first appellate authority, the taxpayer carries the case for appeal and loses. The Ld. CIT(A), NFAC, Delhi, for the grounds mentioned in the appellate order on 19.02.2021 & 02.07.2020 upheld the rejection of credit to TDS. Dissatisfied with the CIT(A) orders, the taxpayers are in appeal to us. He mentioned, the AO has permitted TDS credit under Form 26AS without appreciating the fact i.e under provisions of sections 199 & 200 of the Act, TDS credit must be approved when the income related to TDS has been proposed to tax.

As the taxpayer would propose to tax income concerned to TDS credit on the grounds of the mercantile system of accounting, claimed TDS credit, and stated particulars have been filed in ITR-5 furnished for the related assessment year. The taxpayer’s claim was rejected by AO.

The taxpayer, income for the mentioned TDS has been proposed to tax for the impugned assessment years. A Coram of Shri V Durga Rao, JM, and Shri G Manjunatha, AM stated that when the taxpayer claim is valid, the credit for TDS must be permitted as per the claim of the taxpayer along with the TDS drawn from former fiscal years.

Validation would be needed for the fact, for statical purposes permitting the appeal, the Tribunal set aside the problem to the AOs file and states the Assessing Officer to validate the taxpayers claim and if AO discovers that income for the mentioned TDS has been proposed to tax, impugned assessment years, the credit for Tax Deducted at Source(TDS) would be required to get permitted as claimed via the taxpayer.

Case Title	M/s. PKF Sridhar & Santhanam LLP Vs DCIT
Citation	ITA Nos.: 669 & 670/Chny/2022
Date	19.10.2022
Appellant	Shri. D. Palanevel, Advocate
Respondent	Shri. P. Sajit Kumar, JCIT
Chennai ITAT	Read Order