ABARNA & ANANTHAN,BANGALORE vs. DEPUTY COMMISSIONER OF INCOME TAX, CPC, BANGALORE

PER CHANDRA POOJARI, ACCOUNTANT MEMBER:

Page 2 of 5 04.06.2019 was issued to the assessee by CPC holding the return filed by the assessee to be defective. As per the said notice, the assessee had claimed credit for TDS, but the corresponding receipts / income had been omitted to be offered for taxation. The above omission was a defect as per clause (a) of the explanation to Section 139(9). On the other hand, the assessee's claim is that it had correctly declared its gross profit from profession of Rs. 3,78,91,947/- and had correctly claimed the TDS of Rs. 46,52,284/-. However. as per the intimation u/s 143(1) dated 10.12.2019, the credit for TDS was restricted to Rs. 38,12,470/- without giving the assessee an opportunity of being heard.

Page 3 of 5 5. We have heard the rival submissions and perused the materials available on record. In this case, form No.26AS filed by the assessee along with return shown at Rs.46,52,284/-. According to the CPC, tax credit claimed by assessee in return of income not matched with form 26AS at the time of processing of return in the assessment year under consideration, the difference was to the tune of Rs.8,39,814/- and to that extent no tax credit has been given. According to the assessee, the total amount reflected in form No.26AS was at Rs.46,52,284/- and AO gave only credit to the tune of Rs.38,12,470/-.He submitted that this credit to be given full amount as shown in form 26AS. For this purpose, he relied on the order of the Tribunal in the case of TVS Auto Assist (India) Ltd. Vs. ACIT (2022) TMI 1375 ITAT Chennai and Zelan Projects Pvt. Ltd. Vs. DCIT 30 ITR (Trib) 41 (Hyd). In the above decisions, it was held that u/s 199(1) of the Act, once the TDS was deducted credit of the same is to be given to the assessee irrespective of the year to which it relates. Hence, the Tribunal directed the AO to allow the TDS credit as per form No.26AS after verification of the TDS certificate. Hence, coordinate bench in the case of Hushachiguru Enterprises Pvt. Ltd. In dated 5.1.22 wherein it was held as under:-

“14. We have heard both the parties and perused the materials on record. The assessee in the present case offered an amount of Rs.88,66,500/- as income out of an amount of Rs.1,95,77,290/- mentioned in the Form No.26AS. However, the assessee claimed TDS benefit to the full extent Rs.3,91,546/-, which is relating to the total amount of Rs.1,95,77,290/- mentioned in the Form No.26AS. The AO added balance amount of Rs.1,07,10,790/- as income mentioned in the Form No.26AS observing that as per principle, entire amount covered in From No.26AS has to be taxed, as the assessee has claimed entire amount of tax as credit mentioned in From No.26AS. In our opinion, the assessee has followed accrual system of accounting and offered the income as and when it was accrued to the assessee. The lower authorities misconstrued the distinction between the recognition of income on the basis of the Page 4 of 5 accounting on accrual of income and cash system of accounting. In fact, the income accrued to the assessee only on the recognition of the income, which is based on the raising of bills. Therefore, it is not possible to hold that the assessee has deviated from the regular method of accounting followed by it. We should notice that the distinction between raising of bills and accounting of receipt. In our opinion, the receipts of money relating to the deduction of TDS by the payer, the assessee has to account the actual amount accrued to the assessee and balance portion which is not accrued to the assessee to be treated as receipt of advance and the receipt of advance subject to the TDS not to be offered for taxation in this asst. year and that portion of the TDS would not be allowed to claim the credit in terms of provisions of sec. 198 and 199 of the Act and the income covering that TDS has not been accrued to the assessee as a result of the method of accounting employed by the assessee. The credit for that TDS portion would be carry forwarded and assessee would get the credit for that TDS certificate in the year in which corresponding receipts were offered to tax on the basis of method of accounting regularly employed by the assessee. With these observations, we remit this issue to the file of the AO to decide the issue in dispute in the light of the above findings. This ground of appeal of the assessee is partly allowed for statistical purposes.”