Benefit Of TDS Is To Be Given For Assessment Year For Which Corresponding Income Is Assessable

Facts of the case:

➢ Assessee was engaged in the business of providing software services. It claimed Tax Deducted at Source (TDS) credit which was not appearing in Form 26AS.
➢ Assessee raised an invoice to a Company in March, 2011 and the amount of tax deducted by the Company was deposited in April, 2011 due to which the deducted amount was not appearing in Form 26AS of AY 2011-12.
➢ Proceeding was initiated against the assessee in which the assessee was asked to submit the grounds on which he claimed the benefit of such TDS.

Contentions by the Department

➢ Assessing Officer (AO) relied on Rule 37BA(1) of Income Tax Rules, 1962 (the Rules) for denying the benefit of TDS during the year under consideration.
➢ This part of the rule provides that the credit for TDS shall be given to the person to whom payment has been made or credit has been given on the basis of information relating to TDS furnished by the deductor.
➢ The Commissioner (Appeals) in addition to the contention of AO relied on Rule 37BA(4) of the Rules, which provides that the credit for TDS shall be granted on the basis of information relating to deduction of tax at source furnished by the deductor.

Contentions by the Assessee

• Credit for tax deducted at source and paid to the Central Government shall be given for the assessment year in which such income is assessable.
• Decision by the Income Tax Appellate Tribunal
• Both the sub-rules stated above by the Department, simply provided for granting of the benefit of TDS. The point of time at which the benefit of TDS is to be given, is governed by Rule 37BA(3)(i) of the Rules which provides 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’.
• Therefore, the contention of the assessee was held to be right as Hon’ble ITAT of Pune Bench ‘B’.

Conclusion

The benefit of TDS is to be given for the assessment year for which the corresponding income is assessable irrespective of fact TDS was deposited in next assessment year.

Source: [2019] 112 taxmann.com 354 (Pune – Trib.) Assistant Commissioner of Income-tax v. Mahesh Software System (P.) Ltd., ITAT PUNE Bench B.