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Facts
The assessee, a partnership firm using cash basis accounting, claimed TDS credit of Rs. 1,31,74,662/- in its return for AY 2017-18. The CPC granted only Rs. 91,57,596/-, leading to a shortfall and a conversion of refund to liability. The assessee contended that Rs. 39,38,139/- of TDS credit was erroneously not carried forward from AY 2016-17.
Held
The Tribunal noted that the assessee followed cash basis accounting and had offered the income related to the TDS to tax in the assessment year under consideration. Therefore, the assessee is entitled to the TDS credit. However, for verification purposes, the matter was remitted back to the Assessing Officer.
Key Issues
Whether the assessee is entitled to claim TDS credit for the amount not carried forward from the previous assessment year, when the corresponding income was offered to tax in the current year.
Sections Cited
143(1), 234B, 234C, 199, 200, 37BA(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH MUMBAI
Before: SHRI AMIT SHUKLA & SHRI GIRISH AGRAWAL
Assessment Year: 2017-18 Shashi Prabhu & Associates Assistant Commissioner of C Wankhede Stadium, Income Tax, Mumbai D-Road, Churchgate, Mumbai - Vs. 400020 (PAN : AAAFS3813K) (Appellant) (Respondent) Present for: Assessee : Shri Bhupendra Karkhanis,CA Revenue : Shri Leyaqat Ali Aafaqui, Sr. AR Date of Hearing : 04.08.2025 Date of Pronouncement : 12.08.2025 O R D E R
PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of Ld. CIT(A)- 4, Kolkata, vide order no. ITBA/APL/S/250/2024-25/1073259510(1), dated 13.02.2025 passed against intimation by Centralized Processing Centre, Bengaluru, u/s. 143(1) of the Income-tax Act (hereinafter referred to as the “Act”), dated 09.03.2019 for Assessment Year 2017- 18.
Grounds taken by the assessee are reproduced as under: " 1. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in granting TDS Credit of Rs. 91,57,596/- only as against Rs. 1,31,74,662/- claimed in the income tax return resulting in short granting of TDS credit on a incorrect assumption of fact that the TDS credit of Rs. 39,38,139 had already been allowed to appellant firm in AY 2016-17, which is wrong and contrary to the facts and circumstances of the case, provisions of the Income Tax Act, 1961 and the Rules made there under.
Shashi Prabhu & Associates AY 2017-18 2. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in not giving TDS credit of Rs. 39,38,139/- without appreciating the facts that: (i) The appellate firm follows cash basis of accounting therefore claims the TDS as and when the income is received and offered to tax as per the provisions of Rule 37BA(3) of the Income tax rules, 1962. (ii) Neither claim for the TDS of RS. 39,38,139/- was made by the appellant the Ld. AO. CPC nor has Ld. AO. CPC granted the said credit of TDS of Rs. 39,38,139/- in AY 2016-17. (iii) Though the TDS was deducted in previous year AY 2016-17, merely since the TDS was not carried forward in AY 2016-17 while filing of return of income the said credit cannot be lost.
On the facts and circumstances of the case and in law, the ld. AO erred in levying additional interest of Rs. 10,19,749/- u/s 234B and additional interest of Rs. 2,02,889/- u/s 234C of the Act which is wrong and contrary to facts of the case, provisions of the Act and Rules made thereunder.”
3. The only issue involved in this appeal is in respect of short granting of TDS credit of Rs. 39,38,139/- which according to the Ld. AO has already been allowed to the assessee in AY 2016-17.
Brief facts of the case are that assessee is a partnership firm engaged in providing architectural services and maintain books of accounts on cash system of accounting. Assessee filed its return of income on 13.10.2017 reporting total income at Rs. 6,29,27,080/- wherein TDS credit of Rs. 1,31,74,662/- was claimed, resulting into a refund of Rs. 2,67,100/-. While processing the return u/s. 143(1) by CPC credit of Rs. 91,57,596/- was granted against TDS thought assessee had claimed TDS credit of Rs. 1,31,74,662/-. On account of short grant of TDS credit, the refund claimed by the assessee got converted into liability of Rs. 50,07,430/-, including consequential effect of levy of interest u/s. 234B and 234C. Aggrieved, assessee went in appeal before Ld. CIT(A) who dismissed it. Aggrieved assessee is in appeal before Tribunal.
Shashi Prabhu & Associates AY 2017-18 5. Before us, Ld. Counsel for the assessee submitted that assessee follows cash basis of accounting and therefore claims TDS as and when the income is received and offered to tax as per the provisions of Rule 37BA(3) of the Income Tax Rules, 1962 (The ‘Rules’). According to the assessee, claim of TDS of Rs. 39,38,193/- was neither made by the assessee nor granted by the CPC in AY 2016-17. This TDS was done in the year AY 2016-17, but inadvertently could not be carried forward while filing of return. According to the assessee, this cannot be the basis of denying credit to the assessee. TDS credit of Rs. 39,38,138/- was inadvertently reported as zero in column no. 7 of table under Schedule TDS-1 of the return for AY 2016-17 because of which same did not auto populated in the return form for the year under consideration i.e. AY 2017-18 under the head unclaimed TDS brought forward. According to the assessee the income relating to this was offered to tax during AY 2017-18. It is eligible to claim the credit of TDS in the year under consideration even though the deduction appeared in Form No. 26AS for AY 2016-17. Assessee furnished a reconciliation in respect of the credit of TDS for this amount which relate to four transactions tabulated below:-
Assessee thus, contended that out of the TDS claim in the return of Rs. 1,31,74,662/- the amount of Rs. 39,38,138/- was reflected in Form No. 26AS of AY 2016-17, amount of Rs. 91,57,596/- was reflected in Form No. 26AS for AY 2017-18 i.e. the year under consideration and amount of Rs. 78,928/- deducted by sports complex Chirmur, Chandrapur did not reflect in Form No. 26AS even though deducted by the said party. To corroborate the factual position, Ld. Counsel for the assessee referred to the return form filed in ITR-5 for AY 2016-17 placed in the paper book to demonstrate that Schedule TDS - 1 contains the tabulated items for which TDS amount was filed in as zero. He also referred to Form No. 26AS for AY 2016-17 to point out at serial no. 11 about the deduction of tax by Brihanmumbai Municipal Corporation (BMC) with TAN - MUMM01325C. He further corroborated the income reported by the assessee in its return for AY 2017-18 filed in Form ITR Shashi Prabhu & Associates AY 2017-18 - 5 where the total revenue from operations was reported at Rs. 13,86,70,741/-. This amount of total revenue reported in the return was explained by way of income register containing details of professional fees received during AY 2017-18 in respect of which TDS credit was not granted. These details are placed in the paper book forming part of the record.
We have heard both the parties and perused the material on record and have gone through the orders of the authorities below. The factual position as narrated above remains uncontroverted. It is noted that assessee had claimed for TDS relating to the preceding year as income relating to the said TDS was offered to tax in the impugned assessment year on the basis of cash system of accounting. Assessee has furnished all the necessary details in this respect, corroborating with documentary evidences as discussed above. We take note of provisions contained in Section 199 and 200 of the Act, according to which credit for TDS is ought to be allowed when the assessee has offered its income in respect of the said TDS. In the present case before us, assessee has evidently demonstrated that income relating to the TDS has been offered to tax in the year under consideration and therefore is entitled to the credit of TDS on the basis of claim made including TDS brought forward from the earlier year. However, this fact needs to be verified by the Ld. AO and therefore we find it appropriate to remit the matter back to the file of Ld. Jurisdictional Assessing Officer (JAO) for the limited purpose of verification of the claim of the assessee and allow the same based on his verification. Accordingly, grounds raised by the assessee are allowed.
In the result, appeal of the assessee is allowed for statistical purposes.