2024 (11) TMI 1377 - AT - Income Tax

Credit of TDS - no credit of the TDS had been given in the order u/s 154 r.w.s. 143(1) - HELD THAT - In the instant case, the assessee has declared capital gain in FY.2017-18 (AY.2018-19). Though the payments were received in three years, but credit for the TDS u/s 194IA deducted by the purchaser, M/s Happy Home Infra Tech, can be allowed only in AY.2018-19. Therefore, claim to allow credit of TDS of Rs. 4,50,000/- in AY.2016-17 is not in accordance with the clear provisions of the Act. CIT(A) has rightly rejected the ground of the assessee for AY.2016-17. However, he has directed AO to allow credit of such TDS amount in AY.2018-19, which is correct. We direct the AO to withdraw credit of TDS from AY.2016-17, if the same has been allowed, after due verification by AO. AO is further directed to allow credit of TDS in AY.2018-19. This ground is allowed for statistical purpose.

Summary

Issues:
- Disallowance of TDS credit by CPC
- Rectification of mistake apparent from record u/s 154
- Interpretation of Rule 37BA(3) of the Income-tax Rules

Analysis:
The appeal before the Appellate Tribunal ITAT Surat stemmed from an order under section 250 of the Income-tax Act, 1961, for the assessment year 2016-17. The appellant raised three inter-related grounds challenging the decision of the Commissioner of Income Tax (Appeals) regarding the disallowance of TDS credit and rectification of a mistake apparent from the record u/s 154. The appellant had filed her return of income, claiming a refund after credit of TDS, which was not allowed by the CPC despite being reflected in Form 26AS. Additionally, the appellant had declared long-term capital gains from the sale of an immovable property, with TDS deductions not being allowed for the assessment year 2016-17, leading to the appeal before the CIT(A).

The CIT(A) partially allowed the appeal, directing the Assessing Officer (AO) to allow credit for certain TDS amounts in the subsequent assessment year. The CIT(A) based the decision on the interpretation of Rule 37BA(3) of the Income-tax Rules, emphasizing that TDS credit can only be given for receipts offered to tax in the relevant assessment year. The CIT(A) rejected the appellant's contentions regarding the timing of claiming TDS credit, directing the AO to allow credit for specific TDS amounts after verification. The Tribunal noted the detailed discussion by the CIT(A) and upheld the decision, allowing the appeal for statistical purposes.

The Tribunal found that the CIT(A) correctly applied the provisions of the Act in disallowing the TDS credit for the assessment year 2016-17, as the income to which the TDS related was assessable in a subsequent year. The Tribunal directed the AO to withdraw the TDS credit from the earlier assessment year and allow it in the appropriate year as per the clear provisions of the Act. The appeal was ultimately allowed for statistical purposes, affirming the decision of the CIT(A) and providing clarity on the interpretation of Rule 37BA(3) in the context of TDS credit allocation.