The payer deducted and reported my TDS one year early, so it sits in the previous year's 26AS. CPC disallowed the credit in the year I offered the income, and the CIT(A) said 26AS is 26AS. What is the answer?
Rule 37BA(3)(i) gives credit for the assessment year for which the income is assessable, so credit belongs to the year in which the income was offered, not the year in which the deductor happened to report it. The Tribunal held that where there is no double claim the assessee is entitled to credit in the year the corresponding income was offered and the invoices were raised, and restored the matter to the Assessing Officer to verify that the same credit had not been claimed in another year.
Decided by the ITAT (Waseem Ahmed AM and Siddhartha Nautiyal JM, Ahmedabad 'B' Bench) on 2023-12-20, reported as I.T.A. No. 494/Ahd/2023, assessment year 2020-21. It bears on section 199, section 143(1), section 37BA of the Income Tax Act 1961, in TDS Defaults, Assessment & Scrutiny and Refunds, Interest & Condonation matters.
This is the everyday version of the year-of-credit problem: the deductor books the expense on one side of 31 March and you book the income on the other. CPC's software matches on the 26AS year and disallows, and the first appellate authority frequently does no more than repeat that the amount is not in 26AS. The order is worth having for three things - that Rule 37BA(3)(i) governs and not the portal, that the mismatch is the deductor's error and the deductee is not to be penalised for it, and that the price of the relief is a verifiable undertaking that you have not claimed the same credit twice. The relief given was a remand for that verification, not an outright allowance, so pre-empt the point by producing the other year's computation yourself. Note also that the delay of 189 days in appealing was condoned on the footing that the assessee wrongly believed no appeal lay against denial of TDS credit.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The assessee, a construction contractor working at sites across India, filed its return for AY 2020-21 on 1 January 2021 declaring income of Rs.5,72,97,190. Processing the return under s.143(1), CPC disallowed TDS credit of Rs.14,38,505 because it was not reflected in Form 26AS for that year. The explanation was that the payer, Jones Lang Lasalle Property Consultants (India) Pvt. Ltd., had deducted the tax in the earlier year in accordance with its own accounting policy, while the services were rendered and the invoices raised only in the year under appeal, so the assessee had offered the income and claimed the credit in the later year. The invoices, dated 1 May, 24 May and 4 June 2019, carried TDS of exactly Rs.14,38,505, and the difference between the 26AS total of Rs.1,26,19,719 for the earlier year and the Rs.1,11,81,214 claimed in that year was the same figure. The CIT(A) (NFAC) dismissed the ground in a single sentence: as the TDS was not reflected in Form 26AS, CPC had rightly not given credit. The appeal to the Tribunal was 189 days late.
Delay condoned. Where the assessee has not claimed double credit, it is entitled to credit for the TDS in the year in which the corresponding income has been offered to tax and the invoices were raised on the payer. The matter was restored to the Assessing Officer to verify whether the same TDS had been claimed in any other assessment year, relief to be granted accordingly; the appeal was allowed for statistical purposes (paras 10 and 11).
The Tribunal relied on Bhura Mal Raj Mal v. CIT, 220 ITR 636 (Rajasthan), for the proposition that credit is not to be denied because the payer's assessment year of deduction differs from the recipient's, and on a line of Tribunal decisions applying Rule 37BA(3)(i) - that the benefit of TDS is to be given for the assessment year for which the corresponding income is assessable - to cases where the deductor reported the deduction in a different year from the year in which the income accrued. On the facts, the services and invoices fell in the year under appeal, the income was offered in that year, and the Department did not allege that the credit had been claimed twice; the only obstacle was the 26AS year, which is the deductor's doing.
In view of the facts noted above and the judicial precedents on the subject, we are of the considered view that in case the assessee has not claimed double deduction of credit of TDS, then the assessee is entitled to claim deduction of TDS in the year in which the corresponding income has been offered to tax by the assessee and the assessee has raised invoices on the payer.
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Handle my notice → Ask a CA on WhatsAppRule 37BA(3)(i) gives credit for the assessment year for which the income is assessable, so credit belongs to the year in which the income was offered, not the year in which the deductor happened to report it. The Tribunal held that where there is no double claim the assessee is entitled to credit in the year the corresponding income was offered and the invoices were raised, and restored the matter to the Assessing Officer to verify that the same credit had not been claimed in another year. This was decided by the ITAT (Waseem Ahmed AM and Siddhartha Nautiyal JM, Ahmedabad 'B' Bench) and bears on section 199, section 143(1), section 37BA of the Income Tax Act 1961. It is reported as I.T.A. No. 494/Ahd/2023, assessment year 2020-21. This is the everyday version of the year-of-credit problem: the deductor books the expense on one side of 31 March and you book the income on the other. CPC's software matches on the 26AS year and disallows, and the first appellate authority frequently does no more than repeat that the amount is not in 26AS. The order is worth having for three things - that Rule 37BA(3)(i) governs and not the portal, that the mismatch is the deductor's error and the deductee is not to be penalised for it, and that the price of the relief is a verifiable undertaking that you have not claimed the same credit twice. The relief given was a remand for that verification, not an outright allowance, so pre-empt the point by producing the other year's computation yourself. Note also that the delay of 189 days in appealing was condoned on the footing that the assessee wrongly believed no appeal lay against denial of TDS credit. If it applies to you, the first step is this: Produce the invoices and the revenue recognition for the year in which you claim the credit, and tie them rupee for rupee to the disputed TDS.
The assessee, a construction contractor working at sites across India, filed its return for AY 2020-21 on 1 January 2021 declaring income of Rs.5,72,97,190. Processing the return under s.143(1), CPC disallowed TDS credit of Rs.14,38,505 because it was not reflected in Form 26AS for that year. The explanation was that the payer, Jones Lang Lasalle Property Consultants (India) Pvt. Ltd., had deducted the tax in the earlier year in accordance with its own accounting policy, while the services were rendered and the invoices raised only in the year under appeal, so the assessee had offered the income and claimed the credit in the later year. The invoices, dated 1 May, 24 May and 4 June 2019, carried TDS of exactly Rs.14,38,505, and the difference between the 26AS total of Rs.1,26,19,719 for the earlier year and the Rs.1,11,81,214 claimed in that year was the same figure. The CIT(A) (NFAC) dismissed the ground in a single sentence: as the TDS was not reflected in Form 26AS, CPC had rightly not given credit. The appeal to the Tribunal was 189 days late. The matter was decided on 2023-12-20 by the ITAT (Waseem Ahmed AM and Siddhartha Nautiyal JM, Ahmedabad 'B' Bench). On those facts the ITAT held as follows. Delay condoned. Where the assessee has not claimed double credit, it is entitled to credit for the TDS in the year in which the corresponding income has been offered to tax and the invoices were raised on the payer. The matter was restored to the Assessing Officer to verify whether the same TDS had been claimed in any other assessment year, relief to be granted accordingly; the appeal was allowed for statistical purposes (paras 10 and 11).
The Tribunal relied on Bhura Mal Raj Mal v. CIT, 220 ITR 636 (Rajasthan), for the proposition that credit is not to be denied because the payer's assessment year of deduction differs from the recipient's, and on a line of Tribunal decisions applying Rule 37BA(3)(i) - that the benefit of TDS is to be given for the assessment year for which the corresponding income is assessable - to cases where the deductor reported the deduction in a different year from the year in which the income accrued. On the facts, the services and invoices fell in the year under appeal, the income was offered in that year, and the Department did not allege that the credit had been claimed twice; the only obstacle was the 26AS year, which is the deductor's doing. In the words reproduced by the source cited on this page: "In view of the facts noted above and the judicial precedents on the subject, we are of the considered view that in case the assessee has not claimed double deduction of credit of TDS, then the assessee is entitled to claim deduction of TDS in the year in which the corresponding income has been offered to tax by the assessee and the assessee has raised invoices on the payer." The decision followed or applied Bhura Mal Raj Mal v. CIT [1996] 220 ITR 636 (Raj) - relied on; Ignitive Digitech (P.) Ltd. (Mumbai Trib.), Mahesh Software Systems (P.) Ltd. and Anup Rajendra Tapadia (Pune Trib.) - cited in the order for Rule 37BA(3)(i); not independently retrieved.
It was decided by the ITAT on 2023-12-20 and is reported as I.T.A. No. 494/Ahd/2023, assessment year 2020-21. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 199, section 143(1), section 37BA, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. Delay condoned. Where the assessee has not claimed double credit, it is entitled to credit for the TDS in the year in which the corresponding income has been offered to tax and the invoices were raised on the payer. The matter was restored to the Assessing Officer to verify whether the same TDS had been claimed in any other assessment year, relief to be granted accordingly; the appeal was allowed for statistical purposes (paras 10 and 11). It arises in TDS Defaults, Assessment & Scrutiny and Refunds, Interest & Condonation matters, on section 199, section 143(1), section 37BA of the Income Tax Act 1961, and was decided by Waseem Ahmed AM and Siddhartha Nautiyal JM, Ahmedabad 'B' Bench. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Produce the OTHER year's return, computation and 26AS to show the same credit was not claimed there - the difference between the 26AS total and the amount claimed is the arithmetic the Tribunal worked with. Plead Rule 37BA(3)(i) expressly rather than s.199 alone; the sub-rule is the provision that decides the year and CPC's matching logic is not a legal answer to it. Ask the deductor to file a correction statement moving the deduction to the right quarter - that removes the problem at source and is worth doing even while the appeal runs. Do not assume no appeal lies against a s.143(1) intimation denying TDS credit; it does, and a mistaken belief that it does not is at best a ground for condonation.
Validity check could not be completed. Validity check could not be completed. This is a Tribunal order and no search was run for any appeal against it or for contrary benches. Its statement of Rule 37BA(3)(i) matches the sub-rule as currently published by the department, which was separately checked. Note that the relief actually granted was a remand for verification against other years, not an unconditional allowance. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The order as printed has internal slips. Paragraph 7 twice refers to 'the impugned assessment year i.e. A.Y. 2019-20' when the year under appeal is AY 2020-21, and once refers to the return 'filed for A.Y. 2013-14'. It also cites Ignitive Digitech (P.) Ltd. and Mahesh Software Systems (P.) Ltd. with the same citation, 154 taxmann.com 664, which cannot both be right; the case names and propositions are reproduced here as printed and neither of those orders was retrieved or read. There is no paragraph numbered 4 in the order. The Bhura Mal Raj Mal citation given in para 9 (220 ITR 636, Rajasthan) is correct and that judgment was separately retrieved and read. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
Delay condoned. Where the assessee has not claimed double credit, it is entitled to credit for the TDS in the year in which the corresponding income has been offered to tax and the invoices were raised on the payer. The matter was restored to the Assessing Officer to verify whether the same TDS had been claimed in any other assessment year, relief to be granted accordingly; the appeal was allowed for statistical purposes (paras 10 and 11).
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