EXXONMOBIL CATALYSTS AND LICENSING LLC,GURGAON vs. DCIT CPC, BENGALURU

Briefly, the facts are, for the assessment year under dispute, assessee filed its return of income on 14.02.2018 declaring income of Rs.7,12,37,430. In the return of income so filed, the assessee claimed credit for TDS of Rs.26,21,695. While processing the return the Centralized Processing Centre (CPC), Bangaluru rejected the claim of TDS as it was not reflected in Form 26AS. Against the intimation issued under Section 143(1) of the Act, the assessee moved rectification application, which was rejected. Against the said rejection order, assessee filed an appeal before Learned Commissioner (Appeals). However, the appeal filed by the assessee was dismissed.

Before us, learned counsel appearing for the assessee submitted, the assessee follows accounting system of recognizing revenue on accrual basis. He submitted, on 31.03.2016 the assessee raised an invoice on Reliance Industries for an amount of US dollar 309870.

Learned Departmental Representative submitted, since, the deductor has deducted tax in assessment year 2017-18 and TDS certificate was issued for assessment year 2017-18 as well as the TDS amount was reflected in Form 26AS for assessment year 2017-18, the TDS credit could not have been given in assessment year 2016-17.

We have considered rival submissions and perused the material on record.

Facts on record reveal that the assessee raised an invoice on Reliance Industries Ltd. on 31.03.2016 for an amount of 309,870 US dollar. It is not disputed that the assessee recognizes income on accrual basis and in the return of income filed for the impugned assessment year, the assessee has offered to tax the invoice amount raised on Reliance Industries Ltd. The assessee also claimed the corresponding TDS credit in the impugned assessment year. However, since the payment was released by Reliance Industries Ltd. in the subsequent assessment year after deduction of tax at source, the TDS amount was reflected in Form 26AS for assessment year 2017-18. In fact, the TDS certificate issued by Reliance Industries Ltd., the TDS amount was shown for assessment year 2017-18. To a specific query raised by us, learned counsel appearing for the assessee made a statement at the Bar that neither the assessee has claimed TDS credit for the amount in dispute in assessment year 2017-18 nor Assessing Officer has granted any such credit. On a perusal of Rule 37BA, it is observed that TDS credit has to be granted in the year in which the corresponding income is taxable. As per the accounting principle followed by the assessee, the income relating to the TDS is taxable in assessment year 2016-17. In fact, the assessee has offered the amount to tax in assessment year 2016-17. That being the factual position emerging on record, the assessee must get credit for the TDS amount of Rs.26,61,695 in the impugned assessment year. More so, when the assessee has claimed that the TDS credit for the amount in dispute has not been granted in assessment year 2017-18.