Shri Jitendra P. Shah, Ahmedabad vs. The DCIT - (Income Tax Appellate Tribunal) (30 Nov 2022)

Where income is assessable to tax over a number of years, credit for tax deducted at source shall be allowed across those years in same proportion in which income is assessable to tax

MANU/IB/0707/2022

Direct Taxation

Present is an appeal filed by the assessee against the order of the learned Commissioner of Income Tax (Appeals), in proceeding under Section 154 of Income Tax Act, 1961 (IT Act) vide orderpassed for the assessment year 2016-17.

The limited point for consideration is whether in the instant set of facts, the assessee is eligible to claim credit of TDS in assessment year 2016-17, when the assessee offers this income on "receipt" of the same, since the assessee is following the cash basis of accounting and offers income on receipt basis.

In the case of Shri Anupallavi Finance & Investments, the ITAT held that for the assessee, who was following cash basis of accounting, credit for TDS, under section 199 is to be allowed in year in which corresponding income is assessable/ offered to tax. In the case of Sasken Network Engineering Ltd, the ITAT held that in terms of Section 199, Rule 37BA provides that credit for tax deducted at source and paid to Central Government shall be given for assessment year for which such income is assessable/ offered to tax. The ITAT held that where income is assessable / offered to tax over a number of years, credit for tax deducted at source shall be allowed across those years in same proportion in which income is assessable/offered to tax. The ITAT, Ahmedabad on identical set of facts in the case of Chirag M Shah has also held that the assessee is entitled to get credit of TDS in the year in which he has offered to tax the professional fees income on receipt basis i.e. by following cash basis of accounting, even though the client/deductor had deducted tax in earlier years by following an "accrual" basis of accounting.

In view of the consistent position on this issue by various Courts, present Tribunal is of the considered view that the assessee is eligible to claim credit for TDS in assessment year 2016-17, when such professional income has been offered to tax by the assessee on "receipt" basis, since the assessee has been consistently following cash basis of accounting since inception, even though TDS was deducted on such income in the prior assessment year 2015-16. The appeal of the assessee is allowed.

Tags : TDS CREDIT ELIGIBILITY