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TMI Blog2021 (12) TMI 1181X X X X Extracts X X X X X X X X Extracts X X X X ..... revious year. In view of the above and in the light of provisions contained in Section 199 of the I.T. Act, 1961, the A.O. disallowed the claim of assessee in respect of TDS amounting to Rs. 1,00,081/-. 2.1. In appeal, the Ld. CIT(A) directed the A.O. to give credit of the proportionate TDS of Rs. 1,00,081/- in the year under consideration by observing as under : "4.3.4. In this light, the claim of the appellant that the credit of entire TDS of Rs. 1,00,081/- should be given to the appellant deserves to be rejected. In this light, the Assessing Officer is correct in treating the TDS deducted and deposited in the Government account as deemed to be the income received by the appellant in the light of provisions of section 198 of the Act. However, the Assessing Officer is not right in not allowing the credit of corresponding proportionate TDS on the income of Rs. 1,00,081/-. During the appellate proceedings the appellant has also submitted that a copy of 154 petition is filed before Assessing Officer for the claim of TDS in the assessment years, where income had been offered to Tax and such application is pending before the Assessing Officer. In this light the Assessing Officer is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the assessee in the instant case is a partnership firm of Chartered Accountants which accounts for its income on cash basis. We find during the course of assessment proceedings the A.O. disallowed the claim of TDS credit amounting to Rs. 1,00,081/- on the ground that the corresponding income of these TDS has not been offered to tax as it was not received by the assessee in the previous year. We find the Ld. CIT(A) directed the A.O. to give credit of the proportionate TDS of Rs. 1,00,081/- in the year under consideration as well as to give credit of TDS as per the provisions of Section 199 to be read with Rule 37BA of the I.T. Act, 1961. It is the submission of the Learned Counsel for the Assessee that credit for the entire TDS of Rs. 1,00,081/- should be given in the year itself in view of decision of the Coordinate Bench of the Tribunal in the case of Chander Shekhar Aggarwal vs., ACIT (supra) wherein it was held that where assessee following cash system of accounting would be entitled to credit of entire amount of TDS being offered as income in the year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... poses of computing the income of an assessee be deemed to be income received. Thus, section 198 of the Act specifically provides that tax deducted at source shall for the purpose of computing income of an assessee will be deemed to be income received by the assessee. Thus, there is no justification not to grant credit of tax deducted and deposited to the account of Central Government by the deductor to the assessee from whose income, such tax has been deducted by the deductor, more particularly when such TDS stands duly declared as income by the assessee. The conclusion of the CIT(A) to grant proportionate credit is also not in accordance with the cash system of accounting followed by the assessee. The CIT(A) in her order has laid much emphasis on Rule 37BA of the Rules. Rule 37BA as inserted w.e.f. 1.4.2009 reads as under:- "Credit for tax deducted at source for the purposes of section 199: 37BA.(1) Credit for tax deducted at source and paid to the Central Government in accordance with the provisions of Chapter XVII, shall be given to the person to whom payment has been made or credit has been given (hereinafter referred to as deductee) on the basis of information relating t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ource and credited to the account of Central Government shall be given for the assessment year for which, such income is assessable. Thus, if the said rule is read, it is clear that the assessee is entitled to get credit of the tax deducted at source once such income is included in his income. The admitted facts of the case of the appellant is that the tax deducted at source has been offered as income by the appellant in his return of income and therefore, having regard to even the rules, the assessee is entitled to credit of the tax deducted at source. The assessee before the CIT(A) had provided an illustration whereby it was submitted that assuming an assessee follows cash system of accounting and raises an invoice of Rs. 100/- for the services rendered in financial year 2010-11 on his client and the said client deposits TDS of Rs. 10/- to the credit of the account of the assessee and issued a certificate of TDS to the assessee and thus, it was submitted that an amount of Rs. 10/- was since deducted in respect of the assessee, the said sum is income of the assessee which is assessable to tax. It was submitted that once an income is assessable to tax, the assessee is eligible for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Peddu Srinivasa Rao (supra) has held as under : "8. We have carefully perused the provisions of section 199 of the Act and according to the preamended provisions of section 199, the credit of deduction made in accordance with the relevant provisions of this chapter and paid to the Central Government, shall be given for the amount so deducted on the production of the certificate furnished u/s 203 for the assessment made under this Act for the assessment year for which such income is assessable. But in the amended provisions the words "for the assessment year for which such income is assessable" has been omitted. Meaning thereby, that the legislature was quite conscious about the facts and hardships faced by some assessees, while making the amendments in section 199 and in amended provisions nothing has been stated about the year in which the credit of TDS is to be claimed. As per amended provisions of section 199, in sub-section 1, it has been stated that any deductions made in accordance with the foregoing provisions of this chapter and paid to the Central Government shall be treated as a payment of tax on behalf of the person from whose income the deduction was made. Therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow credit for the TDS to the assessee. Thus, the ground of appeal of the assessee is allowed." 12. For the reasons stated above, the claim of the assessee is allowed in as much as it is 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 grounds raised are therefore, allowed. 13. Ground Nos.2, 3 and 5 of the Grounds of Appeal essentially are regarding restriction of credit of TDS. The learned counsel for the assessee submitted that the authorities below has restricted credit of TDS despite the fact that TDS certificates were furnished by the assessee and such credit was also reflected in 26AS statement prepared by the revenue except to the sum of Rs. 4,10,870/- for which, confirmations have been furnished by the assessee. Having regard to the above submission, we feel it appropriate that the issue be restored to the file of the Assessing Officer with a direction that the credit be allowed to the assessee of the entire TDS in respect of which, TDS certificate has been furnished by the assessee in accordance with section 198 read with section 199 of the Act. Thus the grounds are therefore, allowed f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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