Top Stories Assessee Entitled to claim TDS Deduction in year on which Corresponding Income offered to Tax on non claiming of Double Deduction: ITAT [Read Order] Assessee Entitled to Claim Tax Deducted at Source (TDS) Deduction in year on which Corresponding Income Offered to Tax on Non Claiming of Double Deduction, rules, ITAT By Aiswarya Krishnadas – On February 21, 2024 1:33 pm – 3 mins read In a major ruling the Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) observed that assessee entitled to claim Tax Deducted at Source (TDS) deduction in year on which  corresponding Income offered to Tax on non-claiming of double deduction: The assessee submitted their income tax return for the assessment year 2020-21 on January 1, 2021, disclosing a total income of Rs. 5,72,97,190/-.

The return underwent processing under Section 143(1) of the Income Tax Act, 1961.  During this processing by the Centralized Processing Center ( CPC ), among other adjustments, a TDS credit amounting to Rs. 14,38,505/- was disallowed. This disallowance was based on the assertion that the TDS credit did not appear in Form 26AS. The assessee lodged an appeal against the aforementioned notification before the Learned Commissioner of Income Tax (Appeals) [CIT(A)], asserting that they are involved in the construction business, specializing in erecting factories, buildings, and warehouses on a contractual basis across various regions of India. Their filed income tax return declared a total income of Rs. 5,72,97,190/-. During the appeal process before the CIT (A), the taxpayer contended that the disallowance of the claimed TDS amount of Rs. 14, 38,505/- solely because it did not appear in Form No. 26AS was unwarranted.

The counsel for the assessee Urvashi Sodhan argued that based on these documents, it was evident that the invoices were raised by the assessee during the disputed assessment year, A.Y. 2019-20. Consequently, the income related to these invoices was also declared and taxed by the assessee in the same assessment year, A.Y. 2019-20. The counsel further highlighted which contained the computation of income, emphasizing that the assessee had not claimed TDS credit for the sum of Rs. 14, 38,505/- in the income tax return filed for A.Y. 2019-20. They further pointed out that while the total TDS credited by the payer according to Form 26AS was Rs. 1,26,19,719/- for A.Y. 2019-20, the assessee had claimed TDS of Rs. 1,11,81,214/-. Consequently, the difference between the TDS deducted by the payer for A.Y. 2019-20 and the amount of TDS claimed by the assessee  in the return of income amounted to Rs. 14,38,505/-, precisely matching the TDS deducted by the payer for the invoices dated 04.06.2019, 24.05.2019, and 01.05.2019 in the A.Y. 2020-21, which was the year under scrutiny.

The counsel for the revenue Ashok Kumar Suthar referenced the remarks made by the  Commissioner of Income Tax (Appeals) [Ld. CIT(A)] in the appellate decision, noting that Form 26AS for the disputed assessment year failed to indicate the aforementioned TDS amount. Consequently, the counsel contended that TDS credit for the stated sum cannot be granted to the assessee The two member bench of the tribunal comprising Waseem Ahamad ( Accountant member) and Siddhartha Nautiyal ( Judicial member) observed that  if the assessee has not sought duplicate credit for TDS, they are entitled to claim TDS deduction in the year when the corresponding income has been declared for taxation and invoices have been raised on the payer. In this particular case, the assessee asserted that both the services and invoices were executed in the contested assessment year, i.e., A.Y. 2020-21, and additionally, they have not claimed TDS deduction in any previous assessment year. Furthermore the bench decided to refer the matter back to the Assessing Officer for further examination.

The purpose was to ascertain whether the assessee has indeed claimed TDS for the mentioned amount in any other assessment year. Subsequently, appropriate relief should be granted to the assessee in accordance with the law. In the result, the appeal of the assessee was allowed for statistical purposes.