ITAT Directs to Give TDS Benefits for AY Where The Income is Assessable

Now, the TDS benefits will be granted for the assessment year for which corresponding income is assessable, as per the ruling of the Income Tax Appellate Tribunal (ITAT), Pune.

This ruling was jointly delivered by Vice President R.S.Syal and Judicial Member Viswanethra Ravi in reference to the appeal made by M/s. Mahesh Software Systems.

The assessee, who is involved in a business of catering software services, claimed credit for TDS of INR 8,41,050/- which the Form No.26AS was not showing. When the assessee was asked to clarify how this TDS was claimed, he submitted an invoice that he raised on Ashoka Leyland, Chennai in March 2011 for INR 84,10,500/-. He clarified that Ashoka Leyland paid a tax of INR 8,41,010/- on this invoice in April 2011 because of which it is appearing in the succeeding year.

However, the contention was not supported by the Assessing Officer (AO) on the grounds of Rule 37BA(1) of the Income tax Rules A simple way to understand all major changes under rebates and deductions in income tax rules for the FY (Financial Year) 2019-20. Also, we included penalty charges if ITR filing missed. Read More, 1962. The assessment order was also confirmed by ld. CIT (A).

Rule 37 BA(1) of the Income-tax Rules, 1962, reads, “Credit for tax deducted at source for the purposes of section 199. (1) Credit for tax deducted at source and paid to the Central Government in accordance with the provisions of Chapter XVII shall be given to the person to whom payment has been made or credit has been given (hereinafter referred to as deductee) on the basis of information relating to deduction of tax furnished by the deductor to the income-tax authority or the person authorized by such authority” w.r.t. the credit for TDS for the purposes of section 199.

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Tribunal ruled that the TDS benefit to be given is dealt by sub-rule (3) of Rule 37BA, which certainly states that the ‘credit for tax deducted at source and paid to the Central Government, shall be given for the assessment year for which such income is assessable’ via its clause (i). So, the Rule 37BA(3)(i) makes it quite evident that the TDS benefits are to be given for the AY for which the respective income is assessable.

As the income of INR 84.10 lakh, on which TDS of INR 8,41,050/- was deducted, is apparently assessable in the year under consideration, the ruling allowed the associated TDS benefits in the same year i.e. the year under consideration. Therefore, the ruling invalidated the contradictory order and gave directions subsequently and accordingly.