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Income Tax Appellate Tribunal, DELHI ‘E’ BENCH,
Before: SHRI CHALLA NAGENDRA PRASAD, & SHRI NAVEEN CHANDRA
PER NAVEEN CHANDRA, ACCOUNTANT MEMBER:-
1. This appeal by the assessee is preferred against the order of the NFAC, Delhi dated 12.03.2025 pertaining to A.Y. 2017-18. disallowance of the TDS credit despite the fact that the TDS has been duly deducted and deposited with the Government and the same is reflected in Form 26AS.
Representatives of both the sides were heard at length. Case records carefully perused. Relevant documentary evidence brought on record duly considered in light of Rule 18(6) of the ITAT Rules.
Brief facts of the case are that the assessee is a private limited company and is engaged in the business of real estate. The assessee filed its return of income on 27.10.2017 for A.Y 2017-18 declaring loss of Rs. 6,995/- while claiming a refund amounting to Rs. 3,41,286/-/-. The return was processed by CPC and intimation u/s 143(1) of the Income-tax Act, 1961 [the Act, for short] was issued on 27.10.2019. The CPC while processing the return of income disallowed the entire TDS credit amounting to Rs. 3,41,286/- and rejected the refund as claimed by the assessee.
Being aggrieved, the assessee went in appeal before the ld. CIT(A) who dismissed the appeal. The assessee appealed before the ITAT which set aside the issue to the file of the Assessing Officer to examine the issue and verify the status of TDS as reflected in Form 26AS and also verify
Page 2 of 9 in A.Y 2017-18 and grant credit of corresponding TDS of Rs. 3,41,286/-.
The AO, again disallowed the TDS claimed which was confirmed by the CIT(A)/NFAC. Second time aggrieved, the assessee is before the ITAT.
7. The Id. counsel for the assessee submitted that the assessee has entered into a collaboration agreement with Emaar MGF Land Limited to procure land for and on behalf of its principal. It is submitted that the land was acquired by the assessee company for development project which was to be registered in its own name though it shall remain under the supervision and control of its principal. Possession of such land was to be handed over to the principal for development/sale thereof. The assessee company was legally required to hand over any income generated from sale of property to principal pursuant to collaboration agreement. It is the say of the AR that the CPC has disallowed the claim u/s 143(1) on the ground that corresponding income for which TDS is being claimed has not been offered for tax in the current year.
8. The ld AR furnished copies of Form 26AS showing the TDS of Rs 3,41,285/- deducted, as also a confirmation from EMAAR MGF Land Ltd dated 18.09.2019 declaring that the corresponding income of Rs 3,41,28,527/- on which TDS of Rs 3,41,285/-has been declared, in their
Page 3 of 9 their return. The Id. counsel for the assessee further placed reliance on the following decisions:
Tocsin Builders Pvt Ltd 2. Haft Probuild Pvt Ltd ITAT Delhi 3. CIT Vs. Relcom Hon'ble High Court of Delhi of 2015 4. Sewak Developers Pvt Ltd CIT(A) Delhi -8 10064/2019-20 5. Gauge Prop Build Pvt Ltd ITBA/NF AC/S/250/2022- 23/1047213645(1)
Per contra, the Id DR has relied on the orders of CIT(A) and the AO and stated that the assessee has not offered the corresponding income in their hands.
We have heard the rival submissions and have perused the relevant material on record. In the instant case, we find that the assessee has claimed a TDS credit of Rs. 3,41,286/ as per its Form 26AS. The assessee has furnished a confirmation to the effect that the corresponding income, on which the said TDS was deducted, has been declared in the hands of EMAAR MGF Land Ltd. The issue is whether under section 199 of the IT Act, for claiming credit of any TDS deducted and deposited to the government, such credit should match/relate to the assessee's corresponding income which is assessable in the year when the TDS credit is claimed. In the instant case, the credit for TDS is being claimed by the assessee and the Page 4 of 9 such a situation credit for TDS can be extended to the person claiming the TDS.
We find that the above question has been answered in assessee’s favour by catena of decisions relied upon by the assessee, including the decision of the Hon'ble High Court of Delhi in the case CIT Vs. Relcom (supra) to justify its claim. At Para 6 of its order, the Hon'ble High Court [supra] has decided the issue in favour of the assessee and against the Revenue by holding as under:
“6. Having heard the submissions made on behalf of the revenue and after a perusal the orders passed by the CIT(A) and the ITAT, we are of opinion that the said orders do not call for any interference and were warranted and justified in the facts and circumstances of the case. Before we proceed to elaborate on our reasons for the same, a perusal of Section 199 of the Act is necessary. Section 199 reads as follows: “199. Credit for tax deducted. (1) Any deduction made in accordance with the foregoing provisions of this Chapter and paid to the Central Government shall be treated as a payment of tax on behalf of the person from whose income the deduction was made, or of the owner of the www.taxguru.in ITA 26/2015 Page 5 security, or of the depositor or of the owner of property or of the unit-holder, or of the shareholder, as the case may be. (2) Any sum referred to in sub-section (1A) of section 192 and paid to the Central Government shall be treated as the tax
Page 5 of 9 [A.Y. 2017-18] Haddock Propbuild Pvt Ltd paid on behalf of the person in respect of whose income such payment of tax has been made. (3) The Board may, for the purposes of giving credit in respect of tax deducted or tax paid in terms of the provisions of this Chapter, make such rules as may be necessary, including the rules for the purposes of giving credit to a person other than those referred to in sub-section (1) and sub-section (2) and also the assessment year for which such credit may be given.”
The revenue relies on the phrase “shall be treated as a payment of tax on behalf of the person from whose income the deduction was made” to contend that the assessee’s TDS claim cannot be based on the receipts of M/s REPL. However, the assessee fairly admitted throughout the proceedings for its TDS claim of 1,20,73,097/- that the benefit of such claim has not been availed by M/s. REPL. Therefore, the revenue, having assessed M/s REPL’s income in respect to such TDS claim cannot now deny the assessee’s claim on the mere technical ground that the income in respect of the said TDS claim was not that of the assessee, given that M/s Relcom (the assessee) and M/s REPL are sister concerns and M/s REPL has not raised any objection with regard to the assessee’s TDS claim of 1,20,73,097/-.
This Court’s reasoning is supported by a ruling of the Division Bench of the Andhra Pradesh High Court in CIT v. Bhooratnam, (2013) 357 ITR 196 (AP), where the Court noted as follows: www.taxguru.in ITA 26/2015 Page 6 “In our view, the CIT (Appeals) and the Tribunal have rightly held that the assessee is entitled to the credit of the TDS mentioned in the TDS certificates issued by the contractor, whether the said certificate is issued in the name of the Joint Venture or in the name of a Director of the assessee company. They have considered the terms of the agreement dated 12-03- 2003 among the parties to the joint venture and held that credit for TDS certificates cannot be denied to the assessee while assessing the contract receipts mentioned in the said certificates as income of the assessee. The income shown in the TDS certificates has either to be taxed in the Page 6 of 9 [A.Y. 2017-18] Haddock Propbuild Pvt Ltd hands of the joint venture or in the hands of the individual co-joint venturer. As the joint venture has not filed return of income and claimed credit for TDS certificates and the TDS certificates have not been doubted, credit has to be granted to the TDS mentioned therein for the assessee. XXX XXX XXX The Revenue cannot be allowed to retain tax deducted at source without credit being available to anybody. If credit of tax is not allowed to the assessee, and the joint venture has not filed a return of income, then credit of the TDS cannot be taken by anybody. This is not the spirit and intention of law.”(emphasis supplied) 9. At this stage, it is also relevant to note the provisions of Rule 37BA of the Income Tax Rules, 1962, which envisions grant of TDS credit to entities other than the deductee (herein, M/s REPL). We must clarify that we are not oblivious of the fact that Rule 37BA is not directly applicable in the facts of this case. The reliance placed on Rule 37BA is merely to demonstrate that in not all circumstances is TDS credit given to the deductee.
10. This Court relies upon the well-settled dictum that procedure is the handmaid of justice, and it cannot be used to hamper the cause of justice [Sardar Amarjit Singh Kalra v. Pramod Gupta, (2003) 3 SCC 272]. Therefore, the revenue’s contention that the assessee, instead of claiming the entire TDS amount, ought to have sought a correction of the vendor’s mistake, would unnecessarily prolong the entire process of seeking refund based on TDS credit.
11. In light of the aforesaid reasons, the question of law framed is answered against the revenue and the appeal is accordingly dismissed.”
Considering the facts and circumstances of the present case in hand, we find that the decision of the Hon'ble Delhi High Court [supra] is squarely applicable in the instant case. Respectfully following the decision of the Page 7 of 9 is entitled to the credit of the TDS mentioned in Form 26AS issued to it.
We accordingly direct the Assessing Officer to allow credit of TDS after verification that the said sister concern has not claimed the corresponding TDS in its own hand. Grounds are allowed. allowed.
The order is pronounced in the open court on 17.12.2025.