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2022 (12) TMI 1279 - AT - Income TaxTDS Credit - AO issued notice u/s 139(2) for the reason that credit of TDS has been claimed, but the corresponding receipts/income has been omitted to be offered for taxation - HELD THAT - If the assessee has offered income to tax in either in the current year or any earlier year and TDS has been deducted on the same in the current year at the time of execution of sale deed, credit for the TDS so deducted should be allowed to the assessee in the current year, subject to the assessee producing the necessary supporting to show that corresponding income has been offered in tax either during the current year or any of the earlier previous years. The buyer/purchase of property deducted tax only at the time of execution of sale deed, while the corresponding income has been offered to tax by the assessee either during the current year or in any of the prior years by the assessee following the percentage completion method. Accordingly, in the above facts, the matter is being restored to the file of AO to carry out the necessary verification in respect of income offered to tax and the corresponding TDS for which credit is being claimed and TDS credit may be allowed after carrying out the necessary verification in the year when TDS has been deducted - subject to the assessee producing the correlation that such income has been offered to tax either during the current year or any of the earlier previous years. Appeal of the assessee is allowed for statistical purposes.
Issues:
- Disallowed TDS credit for assessment years 2018-19 and 2019-20 - Confirmation of order u/s 143(1) disallowing TDS credit - Correlation between income offered for tax and TDS credit - Confirmation of interest charged under sections 234B and 234C - Non-credit of IDS in the order passed u/s 143(1) Analysis: Disallowed TDS Credit: The appeals were against the order of National Faceless Appeal Centre regarding disallowed TDS credit for the assessment years 2018-19 and 2019-20. The assessee contended that the TDS credit claimed was in line with the income offered for tax and had been previously accounted for. The Tribunal observed that if the income had been offered for tax in the current or earlier years and TDS was deducted subsequently, the assessee should be eligible for the credit. Citing judicial precedents, the Tribunal emphasized that the correlation between income offered for tax and TDS deducted should entitle the assessee to claim the credit. The matter was remanded to the AO for verification, with directions to allow the TDS credit if the correlation was established. Confirmation of Order u/s 143(1) Disallowing TDS Credit: The Tribunal considered the contention that the order disallowing TDS credit was erroneous. It was argued that the TDS was deducted by the purchaser at the time of execution of sale deeds, and the income had been offered for tax following the percentage completion method. The Tribunal held that if the income had been offered for tax in the current or earlier years, and the TDS was deducted subsequently, the assessee should be entitled to the credit. The Tribunal referred to various case laws supporting the allowance of TDS credit under similar circumstances. Correlation Between Income Offered for Tax and TDS Credit: The Tribunal emphasized the importance of establishing a correlation between the income offered for tax and the TDS credit claimed. It noted that if the income had been offered for tax in the current or earlier years and TDS was deducted subsequently, the assessee should be eligible for the credit. The Tribunal referred to specific cases where credit for TDS was allowed even if the income was not directly offered for tax in the same year. Confirmation of Interest Charged under Sections 234B and 234C: The Tribunal addressed the issue of interest charged under sections 234B and 234C. It considered the circumstances under which the interest was imposed and concluded that if the TDS credit was allowed, the interest charged should be reconsidered accordingly. Non-Credit of IDS in the Order Passed u/s 143(1): The Tribunal noted the contention regarding the non-credit of IDS in the order passed u/s 143(1). While specific details were not provided, the Tribunal acknowledged the issue and directed the AO to review the matter in conjunction with the overall decision on TDS credit. Conclusion: The Tribunal allowed the appeals for statistical purposes, emphasizing the need for verifying the correlation between income offered for tax and TDS credit claimed. The decisions for assessment year 2018-19 were deemed applicable to assessment year 2019-20. The Tribunal directed the AO to reevaluate the TDS credit claims in light of the established correlation between income and TDS deductions.
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