2017 (5) TMI 67 - AT - Income Tax

Credit of TDS denied - TDS deducted and deposited by certain customers wrongly in the erstwhile name of the appellant - Held that - We find that undisputedly there is a mistake committed by the deductor while deducting and depositing the TDS, but it does not mean that deductee should suffer for the act of deductor. When there is mismatch in the TDS accounts, the AO should make necessary verification and if it is found that TDS was deducted and paid in the Government account, credit of the same should be given to the deductee. This aspect was also clarified by the CBDT by issuing Instruction No.5/13. In the light of this Instruction, we set aside the order of CIT(Appeals) and restore the matter to the file of Assessing Officer to adjudicate the issue afresh, after making necessary verification and if it is found that the deductor has deducted the TDS and deposited in the Government account, credit of the same should be given to the assessee. - Decided in favour of assessee for statistical purposes.

Issues:
1. Denial of credit for TDS deducted and deposited in the erstwhile name of the appellant.
2. Discrepancy in TDS credit due to name change and PAN number.
3. Interpretation of statutory right of credit for TDS.
4. Discrepancy in TDS credit between original certificates and Form 26AS.
5. Applicability of Circular issued by CBDT regarding TDS credit mismatch.
6. AO's duty to verify TDS payment and credit the same to the deductee.
7. Appeal against the order of CIT(Appeals) for TDS credit.

Issue 1: Denial of credit for TDS deducted and deposited in the erstwhile name of the appellant:
The appellant contested the denial of credit for TDS amounting to &8377; 61,84,211, which was deducted and deposited by certain customers in the appellant's former name. The appellant argued that despite the name change and new PAN, the entity remained the same, and thus, the credit should not be denied solely due to the mismatch in names.

Issue 2: Discrepancy in TDS credit due to name change and PAN number:
The appellant highlighted the discrepancy arising from the name change from IT &T Technology Services Ltd. to iGate Infrastructure Management Services Ltd. The appellant consistently filed returns under the new name and PAN, but some payers continued to deduct TDS in the old name, causing a mismatch in TDS credit.

Issue 3: Interpretation of statutory right of credit for TDS:
The appellant argued that the statutory right of credit for TDS should not be denied based on the failure of payers to update the appellant's name change. The appellant emphasized that no separate entity existed under the old name and that TDS credit should be allowed based on the entity's continuity.

Issue 4: Discrepancy in TDS credit between original certificates and Form 26AS:
The appellant sought credit for the differential TDS amount of &8377; 41,173, representing the variance between TDS claimed in original certificates and Form 26AS. The appellant asserted that credit should be based on TDS certificates provided and not solely on Form 26AS.

Issue 5: Applicability of Circular issued by CBDT regarding TDS credit mismatch:
The appellant referred to a Circular by CBDT instructing Assessing Officers to verify TDS payments against mismatched amounts and credit the same to the assessee upon confirmation of payment. The appellant argued that this Circular supported their claim for TDS credit.

Issue 6: AO's duty to verify TDS payment and credit the same to the deductee:
The Tribunal emphasized the AO's obligation to verify TDS payments and credit them to the deductee upon confirmation of payment. The Tribunal cited the CBDT's Instruction No. 5/13, directing AOs to ensure proper verification and credit allocation based on TDS payment confirmation.

Issue 7: Appeal against the order of CIT(Appeals) for TDS credit:
The Tribunal set aside the order of CIT(Appeals) and remanded the matter to the AO for fresh adjudication. The Tribunal directed the AO to verify TDS payments and credit the same to the appellant if payments were confirmed, aligning with the CBDT's Instruction No. 5/13.

In conclusion, the Tribunal allowed the appeal for statistical purposes, emphasizing the importance of verifying TDS payments and ensuring proper credit allocation to the deductee in cases of mismatched TDS amounts.

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