2017 (11) TMI 514 - AT - Income Tax

Non grant of Credit of TDS - following cash system of accounting - TDS has been claimed this year but income for the same has not been taken in gross receipts - Held that - The assessee would be entitled to credit of the entire TDS offered as income by the assessee in his return of income. The tax credit was allowed to the assessee of ₹ 94,60,649/- instead of ₹ 97,36,440/-. In other words, the issue remains relating to non grant of credit of ₹ 2,75,791/- i.e. the difference of ₹ 97,36,440/- less ₹ 94,60,649/-. Levy of interest u/s 234B & u/s 234 C - Held that - The same is not leviable as the main issue is allowed.

Summary

Issues Involved:
1. Credit of TDS of ?7,16,040/-.
2. Restriction of credit of TDS of ?43,31,947/-.
3. Deletion of interest of ?18,21,816/- u/s 234B and ?2,32,844/- u/s 234C.

Issue-wise Detailed Analysis:

1. Credit of TDS of ?7,16,040/-:
The assessee contested that the CIT(A) erred in not directing the grant of credit for TDS amounting to ?7,16,040/-. The CIT(A) directed the Assessing Officer (AO) to give credit of TDS strictly as per Section 199 and Rule 37BA of the Income Tax Rules, 1962. The AO had restricted the TDS credit to ?79,560/- based on the professional income shown by the assessee, disallowing the balance TDS credit of ?7,16,040/-. The Tribunal referred to its previous decision for the Assessment Year 2011-12, where it was held that the assessee is entitled to get credit for the tax deducted at source once such income is included in his income. The Tribunal reiterated that the TDS deducted and offered as income should be allowed as credit in the year of deduction, irrespective of the income being assessable over multiple years.

2. Restriction of credit of TDS of ?43,31,947/-:
The assessee argued that the AO erred in restricting the credit of TDS to ?43,31,947/- despite furnishing TDS certificates amounting to ?97,36,440/-. The CIT(A) partly allowed the appeal, directing the AO to give credit as per Section 199 and Rule 37BA. The Tribunal, referring to its previous order, directed the AO to allow credit for the entire TDS in respect of which TDS certificates were furnished by the assessee. The issue was restored to the AO with instructions to allow credit of the entire TDS as per the provisions of Section 198 and Section 199 of the Act.

3. Deletion of interest of ?18,21,816/- u/s 234B and ?2,32,844/- u/s 234C:
The assessee contested the levy of interest under Sections 234B and 234C, arguing that the interest was not leviable as the main issue regarding the TDS credit was allowed. The Tribunal agreed with the assessee, noting that since the primary issue regarding the TDS credit was resolved in favor of the assessee, the interest levied under Sections 234B and 234C should be deleted.

Conclusion:
The Tribunal allowed the appeal of the assessee, directing the AO to grant the TDS credit as claimed and to delete the interest levied under Sections 234B and 234C. The order emphasized that the assessee is entitled to the credit of TDS in the year of deduction, as per the provisions of Section 198 and 199, and Rule 37BA of the Income Tax Rules, 1962. The appeal was allowed, and the AO was instructed to comply with the Tribunal's directions.