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Facts
The assessee filed an appeal against the order of the CIT(A)/NFAC which upheld the disallowance of TDS credit amounting to Rs. 6,45,453. This disallowance was based on the AO's observation that mobilization advances received by the assessee were outstanding and not offered to tax.
Held
The Tribunal held that TDS credit should be allowed in the year when the relevant income has been offered to tax. The matter was set aside to the AO for necessary verification to allow TDS credit in the respective assessment years where mobilization advance has been adjusted and corresponding income has been offered.
Key Issues
Whether TDS credit can be denied solely on the ground that the advance against which it was deducted has not been offered to tax in the same year.
Sections Cited
250, 148, 37BA(3)
AI-generated summary — verify with the full judgment below
Order PER VIKRAM SINGH YADAV, A.M. : This is an appeal filed by the Assessee against the order of the Ld. CIT(A)/NFAC, Delhi dt. 25/06/2024 pertaining to Assessment Year 2014-15. 2. In the present appeal, the Assessee has raised the following grounds of appeal:
“1. That the order dated 25.06.2024, under section 250 of the Income Tax Act, 1961 passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi in Appeal No. ITBA/NFAC/S/250/2024- 25/1066009272(1) is contrary to law and facts of the case. 2(a). That in the facts and circumstances of the case, Ld. Commissioner of Income Tax (Appeals), gravelly erred in upholding the disallowance of credit of TDS amounting to Rs.6,45,453/- made by the Id. Assessing Officer. 2(b). Without prejudice to the above, the TDS deducted is allowable as prepaid tax in the respective year in which mobilisation advance has been adjusted against the running bills.
That in the facts and circumstances of the case. Ld. Commissioner of Income Tax (Appeals), gravelly erred in upholding the reassessment under Section 148 as invalid.
4. That the appellant craves to add, amend or alter any ground of appeal
before or at the time of hearing of appeal, with the permission of the Hon'ble Income Tax Appellate Tribunal. Chandigarh.”
3. During the course of hearing, the Ld. AR referred to Ground No. 2 of the assessee’s appeal challenging the action of the Ld. CIT(A) in sustaining the disallowance of TDS credit amounting to Rs. 6,45,453/- made by the AO and in this regard, our reference was drawn to the relevant facts and findings of the Ld. CIT(A) which read as under:
“8. Vide ground No. 3, the appellant contented that the assessing officer erred in making an addition of Rs. 6,45,453 on account of incorrect TDS credit. The AO noted at the assessment stage that the appellant had received 8.1 mobilization advance of Rs. 2,85,59,883, on which TDS was deducted. However, the mobilisation advances received from different parties were not adjusted and remained outstanding at the end of the year. In view of this, the AO held that since the mobilization advances received by the assessee to the tune of Rs. 2,85,59,883 were outstanding and no income was returned, TDS credit of Rs. 6,45,453 claimed by the appellant should not be given. Accordingly, TDS amounting to Rs. 6,45,453 was added to the total income. 8.2 The appellant by relying on the decision of Hon'ble ITAT, Chennai Bench in the case of Supreme Renewal Energy, 3 ITR (Chennai) contented that credit for TDS cannot be denied merely on the ground that the income from which tax has been deducted has not been offered to tax. However facts of the above case relied on by the appellate are different and as such the ratio is not applicable to the facts of this case. 8.3 The position of law has been clarified in Rule 37BA(3) of the Income-tax Rules 1962 which states that credit for TDS shall be given for the assessment year for which such income is assessable. In my opinion, mobilization advance is nothing but a bundle of income embedded therein for future years and the assessee will be entitled to credit of TDS as and when he offers the income therein for taxation. Hon'ble Tribunal in the case of DCIT, Circle - 2(1)(1) vs. Cicon Engineers P. 8.4 Ltd. In [2024] 160 taxmann.com 142 held that where assessee-company received mobilization advance during financial year 2016-17 but offered income on said advance in subsequent years, assessee was to be allowed TDS credit on said advance only in the relevant assessment year when the income was offered. Relevant extract is as under:
In our opinion, as rightly pointed out by the Id. D.R., income and TDS credit to go together in any assessment year when the income has been accrued to the assessee. The contention of the Id. A.R. is that in earlier assessment year, it has been shown as a mobilization advance by payee and not an expenditure in the hands of that assessee as the assessee has no right to receive such amount as sales receipt. In other words, it is only payment made in advance. In our opinion, this issue requires to be examined at the end of Id. AO and TDS credit to be given to the assessee in the year of offering the said amount of Rs.24,85,54,177/- + TDS as income of the assessee. In other words, TDS cannot be isolatedly taken in any assessment year without offering the corresponding income for taxation. With this observation, we remit the issue to the file of Id. AO for fresh consideration.
8.5 In view of the facts of the matter and relying on the above judicial pronouncement, I hold that TDS credit should be allowed in the year when relevant income has been offered. Therefore, I dismiss ground no. 3 raised by the appellant.”
It was submitted by the ld AR that though the Ld. CIT(A) has given the directions that the TDS credit should be allowed in the year when the relevant income has been offered and in this regard, our reference was drawn to the following chart depicting the respective years where the mobilization advance has been adjusted and income has been offered to tax:
DETAILS OF RECOVERY OF MOBLIZATION ADVANCE AT MCD CAR PARKING PROJECT YEAR WISE 01/04/2014 TO 31/03/2020 DATE PARTICULARS AMOUNT RECOVERED BALANCE 01-04-2014 OPENING BALANCE 25000000 31-03-2015 RECOVERED DURING THE FY 2014-15 4000000 21000000 BALANCE ON 31/03/2015 21000000 31-03-2016 RECOVERED DURING THE FY 2015-16 5500000 15500000 BALANCE ON 31/03/2016 15500000 31-03-2017 RECOVERED DURING THE FY 2016-17 5200000 10300000 BALANCE ON 31/03/2017 10300000 31-03-2018 RECOVERED DURING THE FY 2017-18 350000 9950000 BALANCE ON 31/03/2018 31-03-2019 RECOVERED DURING THE FY 2018-19 5250000 4700000 BALANCE ON 31/03/2019 31-03-2020 RECOVERED DURING THE FY 2019-20 4700000 NIL BALANCE ON 31/03/2020 NIL DETAILS OF RECOVERY OF MOBLIZATION ADVANCE AT PWD PUNHANA YEAR WISE 01/04/2014 TO 31/03/2017 DATE PARTICULARS AMOUNT RECOVERED BALANCE 01-04-2014 OPENING BALANCE 1196000 31-03-2015 RECOVERED DURING THE FY 2014-15 296000 900000 BALANCE ON 31/03/2015 900000 31-03-2016 RECOVERED DURING THE FY 2015-16 0 900000 BALANCE ON 31/03/2016 900000 31-03-2017 RECOVERED DURING THE FY 2016-17 900000 NIL BALANCE ON 31/03/2017 NIL DETAILS OF RECOVERY OF MOBLIZATION ADVANCE AT PWD UJINA BOYS YEAR WISE 01/04/2014 TO 31/03/2015 DATE PARTICULARS AMOUNT RECOVERED BALANCE 01-04-2014 OPENING BALANCE 1232783 31-03-2015 RECOVERED DURING THE FY 2014-15 1232783 NIL BALANCE ON 31/03/2015 NIL DETAILS OF RECOVERY OF MOBLIZATION ADVANCE AT PWD UJINA GIRLS YEAR WISE 01/04/2014 TO 31/03/2015 DATE PARTICULARS AMOUNT RECOVERED BALANCE 01-04-2014 OPENING BALANCE 1131100 31-03-2015 RECOVERED DURING THE FY 2014-15 1131100 - NIL BALANCE ON 31/03/2015 NIL DETAILS OF RECOVERY OF MOBLIZATION ADVANCE AT PWD PINGWAN YEAR WISE 01/04/2014 TO 31/03/2015 DATE PARTICULARS AMOUNT RECOVERED BALANCE 01-04-2014 OPENING BALANCE 898000 31-03-2015 RECOVERED DURING THE FY 2014-15 898000 NIL BALANCE ON 31/03/2015 NIL