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2022 (7) TMI 858 - AT - Income TaxRectification u/s 154 - Credit of TDS - HELD THAT - As position of law being clear, we have no hesitation to accept the plea of the assessee. Denial of TDS credit in contradiction to the plain provisions of Section 199 r.w. Section Rule 37BA is clearly in the league of apparent error and thus liable to be rectified u/s 154 of the Act. Hence, the assessee would be entitled to claim of credit of TDS corresponding to the income reported in Assessment Year 2016-17 itself, provided the assessee has not claimed any credit for TDS in earlier Assessment Year 2015-16. On being satisfied, the AO shall grant the TDS credit in terms of observations made hereinabove. The impugned order of the CIT(A) is set aside and the matter restored back to the file of the Assessing Officer for grant of credit in accordance with law. Appeal of the assessee is allowed for statistical purposes.
Issues:
Claim for TDS credit in Assessment Year 2016-17, Denial of TDS credit by Assessing Officer, Dismissal of appeal by CIT(A) as debatable issue, Appeal before Tribunal, Interpretation of Section 199 r.w. Rule 37BA, Applicability of TDS credit in the year of income accrual, Precedents on TDS credit eligibility, Rectification under Section 154 of the Act. The judgment involves an appeal filed by the assessee against the order of the ld. CIT(A)-I, Gurgaon regarding the denial of TDS credit for Assessment Year 2016-17. The assessee declared income and claimed TDS credit amounting to Rs.5,70,516/- deducted by the deductor in the preceding Assessment Year 2015-16. The Assessing Officer denied the credit of TDS while processing the return under Section 143(1) based on it not being reflected in the annual information statement in form 26AS. The assessee's rectification application was also rejected by the Assessing Officer, leading to the appeal before the CIT(A), who dismissed it as a debatable issue beyond the scope of Section 154 of the Act. In the appeal before the Tribunal, the assessee argued that the income was reported in the year it accrued, i.e., Assessment Year 2016-17, and thus, TDS credit should be allowed in the same year as per Section 199 r.w. Rule 37BA. The assessee referred to legal precedents supporting the eligibility of TDS credit in the year of income reporting. The Revenue, represented by the DR, relied on the lower authorities' order. The Tribunal cited a similar case where TDS credit was allowed in the year of income reporting, emphasizing that the law is clear that TDS credit should not be deferred to another assessment year. The Tribunal accepted the assessee's plea, stating that denial of TDS credit contradicted the provisions of Section 199 r.w. Rule 37BA and constituted an apparent error rectifiable under Section 154 of the Act. Consequently, the Tribunal directed the Assessing Officer to grant TDS credit corresponding to the income reported in Assessment Year 2016-17, provided no credit was claimed for the earlier Assessment Year 2015-16. The impugned order of the CIT(A) was set aside, and the matter was remanded to the Assessing Officer for granting credit in accordance with the law. In conclusion, the appeal of the assessee was allowed for statistical purposes, and the Tribunal's decision was pronounced in an open court on 18/07/2022.
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