TDS Credit in case of cash system of accounting is allowed in the year when receipts are offered to tax: ITAT

The brief facts of the case is that the assessee is a firm of Chartered Accountant and follows cash system of accounting. Upon perusal of intimation issued by CPC, it could be gathered that the assessee has been allowed TDS credit of Rs.46,11,838/- as against the claim of Rs.50,60,077/-. The difference of Rs.4,48,239/- represent TDS brought forward from earlier years which has been claimed in this year.

During appellate proceedings, the assessee submitted that the receipts have been offered on cash basis and therefore, TDS credit would be available as per Sec.199 of the Income Tax Act (The Act) i.e., in the year in which the respective receipts are offered to tax. In support, the assessee also filed statement showing TDS credit available from AYs 2014-15 to 2018-19. However, Ld. CIT(A) held that TDS credit could be given only to the extent of TDS as available in Form 26AS of the relevant year. Aggrieved, the assessee filed appeal before the tribunal.

ITAT observed that Ld. CIT(A) has completely overlooked the fact that the assessee was following the cash system of accounting and the TDS credit would be available in accordance with the provisions of Sec. 199 of the Act i.e., in the year in which the respective receipts are offered to tax. In support of the claim, the assessee has filed complete statement showing TDS credit available from AYs 2014-15 to 2018-19. The assessee has to be allowed unclaimed TDS of earlier years and there is no justification to restrict the credit only to the extent to which it is available in Form 26AS of this year. Therefore, Ld. CIT(A) is directed to verify the statement and allow TDS credit in accordance with law.

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