SANJEEV RAJENDRA PANDIT, MUMBAI V. THE ASSISTANT DIRECTOR OF INCOME TAX (CPC), MUMBAI

ITA 3004/MUM/2022

AI Insights

The case involves appeals by Sanjeev Rajendra Pandit against the orders of the Commissioner of Income-tax (Appeals) - National Faceless Appeal Centre, which confirmed the actions of the Assessing Officer in restricting the credit for TDS on rental and dividend incomes. The primary contention was regarding the non-granting of TDS credits which the assessee argued were deducted at source but not fully credited in his tax assessments. The Tribunal examined the provisions of the Income Tax Act, particularly sections 199 and 206AA, and relevant rules, along with the judicial precedents cited by the assessee.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123557 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: G
• Next Hearing Date: 17-01-2023
• Assessment Year: 2020-2021
• Appeal Filed On: 24-11-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: TDS
• Section: 206AA; 143(1); 205; 192

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “G” MUMBAI BEFORE SHRI ABY T VARKEY (JUDICIAL MEMBER) AND SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) ITA No. 3004/MUM/2022 Assessment Year: 2020-21 & ITA No. 3005/MUM/2022 Assessment Year: 2021-22 Sanjeev Rajendra Pandit, Top floor Madhav Vilas, 8 Setalwad Road, Off Neapean Sea Road, Cumballa Hill, S.O., Mumbai-400026. Vs. The Assistant Director of Income Tax (CPC), Post Bag No.2, Electronic City Post Office, Bangalore-560500. PAN No. AGYPP 4026 D Appellant Respondent Assessee by : Mr. Milin Dattani, AR Revenue by : Mr. Aditya M. Rai, DR Date of Hearing : 18/01/2023 Date of pronouncement : 24/01/2023 ORDER PER OM PRAKASH KANT, AM Bothe these appeals by the assessee are directed against two separate orders, both dated 29.09.2022, passed by the Ld. Commissioner of Income-tax (Appeals)-National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’]. Being common ground of TDS credits involved in both these appeals together and disposed off convenience. 2. The Parties agreed to take up 22 for adjudication. The ground reproduced as under: On the facts and circumstances of the case: 1. The learned CIT(A) erred in confirming the action of the Assessing officer (CPC) restricting credit for the TDS to Rs. 1,63,196 as against credit of Rs. 1,78,032 return of income in respect to rent income from property at Navprabhat Chambers thereby not granting credit for TDS of Rs. 14,836. 2. The learned CIT(A) erred in confirming the action of the Assessing officer (CPC) of not granting credit of Rs. 64,458 being tax deducted at source u/s 206AA in respect to dividend income from Tata Steel Ltd. 3. The learned CIT(A) erred in not appreciating that the appellant was entitled to credit of TDS as per the provisions of section 199 of the Income Tax Act, 1961. 4. The learne appreciating that the tax on the rent and dividend had already been deducted at source and that the ts involved in both these appeals, same were heard together and disposed off by way of this consolidated order for The Parties agreed to take up, firstly the appeal for AY 2021 22 for adjudication. The grounds raised in said appeal are oduced as under: On the facts and circumstances of the case: 1. The learned CIT(A) erred in confirming the action of the Assessing officer (CPC) restricting credit for the TDS to Rs. 1,63,196 as against credit of Rs. 1,78,032 claimed in the income in respect to rent income from property at Navprabhat Chambers thereby not granting credit for TDS of 2. The learned CIT(A) erred in confirming the action of the Assessing officer (CPC) of not granting credit of Rs. 64,458 deducted at source u/s 206AA in respect to dividend income from Tata Steel Ltd. 3. The learned CIT(A) erred in not appreciating that the appellant was entitled to credit of TDS as per the provisions of section 199 of the Income Tax Act, 1961. 4. The learned CIT(A) erred in dismissing the appeal without appreciating that the tax on the rent and dividend had already been deducted at source and that the Sanjeev Rajendra Pandit ITA Nos. 3004 & 3005/M/22 2 same were heard this consolidated order for the appeal for AY 2021- raised in said appeal are 1. The learned CIT(A) erred in confirming the action of the Assessing officer (CPC) restricting credit for the TDS to Rs. claimed in the income in respect to rent income from property at Navprabhat Chambers thereby not granting credit for TDS of 2. The learned CIT(A) erred in confirming the action of the Assessing officer (CPC) of not granting credit of Rs. 64,458 deducted at source u/s 206AA in respect to 3. The learned CIT(A) erred in not appreciating that the appellant was entitled to credit of TDS as per the provisions d CIT(A) erred in dismissing the appeal without appreciating that the tax on the rent and dividend had already been deducted at source and that the appellant cannot be called upon to pay the tax on such income in view of the provisions of Section 205 of th Relief Sought: Your appellant prays that: 1. The learned Assessing officer be directed to grant full TDS credit of Rs. 3,93,891 as claimed by the appellant in the return. 2. Your appellant craves leave to add, to amend or delete the above ground on The learned AO be directed not to recover the demand in respect of TDS deducted. 3. Briefly stated, facts of the case are that the assesse is an individual and filed his return of income on 28.01.2022 declaring total income of ₹87,26,230/ assessee claimed credit of tax deducted at source (TDS) of ₹3,93,891/- which included TDS credit of rental income from property at Navbharat Chambers and TDS of ₹64,458/- in respect of dividend income disbursed by M/s Tata Steel Ltd. In processing order passed u/s 143(1) of the Income Act, 1961 (in short ‘the Act’) dated 28.03.2022, the Assessing Officer of Central Processing Centre, Bangalore restricted the TDS credit to ₹1,63,196/ property at Navbharat Chambers cannot be called upon to pay the tax on such income in view of the provisions of Section 205 of the Act. Relief Sought: Your appellant prays that: 1. The learned Assessing officer be directed to grant full TDS Rs. 3,93,891 as claimed by the appellant in the 2. Your appellant craves leave to add, to amend or delete the above ground on or before the final date of hearing. The learned AO be directed not to recover the demand in respect of TDS deducted. Briefly stated, facts of the case are that the assesse is an and filed his return of income on 28.01.2022 declaring 87,26,230/-. In the return of income filed, the assessee claimed credit of tax deducted at source (TDS) of which included TDS credit of ₹1,78,032/ rental income from property at Navbharat Chambers and TDS of respect of dividend income disbursed by M/s Tata Steel Ltd. In processing order passed u/s 143(1) of the Income Act, 1961 (in short ‘the Act’) dated 28.03.2022, the Assessing Officer of Central Processing Centre, Bangalore restricted the TDS /- in respect of TDS on rental income from property at Navbharat Chambers as against credit of Sanjeev Rajendra Pandit ITA Nos. 3004 & 3005/M/22 3 cannot be called upon to pay the tax on such income in view 1. The learned Assessing officer be directed to grant full TDS Rs. 3,93,891 as claimed by the appellant in the 2. Your appellant craves leave to add, to amend or delete the or before the final date of hearing. The learned AO be directed not to recover the demand in Briefly stated, facts of the case are that the assesse is an and filed his return of income on 28.01.2022 declaring . In the return of income filed, the assessee claimed credit of tax deducted at source (TDS) of 1,78,032/- in respect of rental income from property at Navbharat Chambers and TDS of respect of dividend income disbursed by M/s Tata Steel Ltd. In processing order passed u/s 143(1) of the Income-tax Act, 1961 (in short ‘the Act’) dated 28.03.2022, the Assessing Officer of Central Processing Centre, Bangalore restricted the TDS in respect of TDS on rental income from as against credit of ₹1,78,032/- claimed in the return of income. The Ld. Assessing Officer also did not allow credit of the TDS of income offered to tax under the head ‘income from other sources. 3.1 Aggrieved with the denial of credit of TDS of assessee filed appeal succeed. 4. Aggrieved with the order of the Ld. CIT(A), the appeal before the Tribunal by way of raising grounds as reproduced above. 5. Before us, the assessee has filed intimation for payment of dividend issued by Tata Steel Ltd along with case laws relied upon by the assessee. 6. We have heard r dispute and perused the relevant material on record. In the grounds raised, the assessee is aggrieved with restricting of the TDS credit by the Assessing Officer/Ld. CIT(A) in respect of the income form house property and income from dividend. In respect of income from house property, the assessee has provided breakup of receipt of rental income from Navbharat Property as under: Month of which the rental income pertains April 20 to November 20 December 20 & January 21 claimed in the return of income. The Ld. Assessing Officer also did not allow credit of the TDS of ₹64,458/- in respect of income offered to tax under the head ‘income from other sources. Aggrieved with the denial of credit of TDS of appeal before the Ld. CIT(A), however, could not Aggrieved with the order of the Ld. CIT(A), the appeal before the Tribunal by way of raising grounds as reproduced Before us, the assessee has filed intimation for payment of dividend issued by Tata Steel Ltd along with case laws relied upon We have heard rival submission of the parties on the issue dispute and perused the relevant material on record. In the grounds raised, the assessee is aggrieved with restricting of the TDS credit by the Assessing Officer/Ld. CIT(A) in respect of the income form property and income from dividend. In respect of income from house property, the assessee has provided breakup of receipt of rental income from Navbharat Property as under: Month of which the Amount of rent received (₹) Financial yea rent is received April 20 to November 20 12,58,056 December 20 & January 3,14,514 Sanjeev Rajendra Pandit ITA Nos. 3004 & 3005/M/22 4 claimed in the return of income. The Ld. Assessing Officer also did in respect of “dividend” income offered to tax under the head ‘income from other sources. Aggrieved with the denial of credit of TDS of ₹92,792/-, the before the Ld. CIT(A), however, could not Aggrieved with the order of the Ld. CIT(A), the assessee is in appeal before the Tribunal by way of raising grounds as reproduced Before us, the assessee has filed intimation for payment of dividend issued by Tata Steel Ltd along with case laws relied upon ival submission of the parties on the issue-in- dispute and perused the relevant material on record. In the grounds raised, the assessee is aggrieved with restricting of the TDS credit by the Assessing Officer/Ld. CIT(A) in respect of the income form property and income from dividend. In respect of income from house property, the assessee has provided breakup of receipt Financial year in which rent is received FY 2020-21 FY 2021-22 February 21 & March 21 6.1 The contention of the assessee that for the rental income ₹3,14,515/- in respect of received by the assessee in the month of April, 2022, deduction at source by the deductor in April 2022, which is reflected in subsequent year year 2023-24. The contention of the assessee is that though tax in respect of this part of rental income has been deducted and deposited in subsequent assessment year, accrual system has declared the corresponding income in the year under consideration and therefore, credit of TDS to be allowed to the assessee against income declared in the year under consideration. 6.1.1 Similarly, provided before the Ld. CIT(A) as under: Sr. No. Folio No. 1. S1S0061657 2. S1S0036608 3. S1S0035964 Total 6.2 In respect of dividend income due to non the deductor, the deductor has deducted tax @ 20% u/s 206AS amounting to ₹64,458/ to non-providing of the PAN in Form No. 26AS February 21 & March 21 3,14,514 The contention of the assessee that for the rental income in respect of month of February and March received by the assessee in the month of April, 2022, at source by the deductor in April 2022, which is in subsequent year in Form No. 26AS for the assessment 24. The contention of the assessee is that though tax in respect of this part of rental income has been deducted and d in subsequent assessment year, the assessee following accrual system has declared the corresponding income in the year under consideration and therefore, credit of TDS to be allowed to the assessee against income declared in the year under Similarly, details of income from dividend has been before the Ld. CIT(A) as under: Folio No. Gross dividend income TDS @ 20% S1S0061657 ₹10,290 ₹2,058 S1S0036608 ₹3,04,820 60,964 S1S0035964 ₹7,180 1,436 3,22,290 ₹64,458 In respect of dividend income due to non-providing of PAN to he deductor has deducted tax @ 20% u/s 206AS 64,458/-. The contention of the assessee ding of the PAN in Form No. 26AS, the Assessing Officer Sanjeev Rajendra Pandit ITA Nos. 3004 & 3005/M/22 5 FY 2022-23 The contention of the assessee that for the rental income of month of February and March, which was received by the assessee in the month of April, 2022, the tax was at source by the deductor in April 2022, which is in Form No. 26AS for the assessment 24. The contention of the assessee is that though tax in respect of this part of rental income has been deducted and he assessee following accrual system has declared the corresponding income in the year under consideration and therefore, credit of TDS to be allowed to the assessee against income declared in the year under from dividend has been TDS @ 20% 2,058 60,964 1,436 64,458 roviding of PAN to he deductor has deducted tax @ 20% u/s 206AS . The contention of the assessee is that due the Assessing Officer has not allowed credit of TDS deductor M/s Tata Steel Ltd. as per the table above. 6.3 Before us, the Ld. Counsel of the assessee has filed a letter from the deductor M/s Tata Steel Ltd. deducted at source on the payment of 6.4 We find that the Ld. CIT(A) has the facts of the case of the assessee as well as the relevant provisions of the Act and Income Rules’). The relevant part of the sa “5.5 Section 199 of the Income Tax Act, 1961 deals with the credit of tax deducted. As per sub section (1), if any deduction is made as per the chapter XVII and paid to the Central Government, same shall be considered as payment of tax on behalf of the person from whose income the deduction was made. Sub section (3) further explains that CBDT may frame Rules in facilitating credit to be given in respect of Tax 199(3). As per clause (4) of Ru deducted and paid to the Central Government shall be allowed on the basis of the information relating to deduction of tax furnished by the deductor to the income or the person authorised by such authority and the information in the return of income in respect of the claim for the credit, subject to verification in accordance with the risk management strategy formulated by the Board from time to has not allowed credit of TDS, though same was deducted by the deductor M/s Tata Steel Ltd. as per the table above. Before us, the Ld. Counsel of the assessee has filed a letter from the deductor M/s Tata Steel Ltd. and provided details of tax deducted at source on the payment of dividend to the assessee. We find that the Ld. CIT(A) has, on both the issues reproduced the facts of the case of the assessee as well as the relevant provisions of the Act and Income-tax Rules, 1962 (in short ‘the Rules’). The relevant part of the same is reproduced as under: Section 199 of the Income Tax Act, 1961 deals with the credit of tax deducted. As per sub section (1), if any deduction is made as per the chapter XVII and paid to the Central Government, same shall be considered as payment of tax on behalf of the person from whose income the deduction was made. Sub section (3) further explains that CBDT may frame Rules in facilitating credit to be given in respect of Tax deducted. CBDT has framed Rule 37BA u/s 199(3). As per clause (4) of Rule 37BA, the credit of tax deducted and paid to the Central Government shall be allowed on the basis of the information relating to deduction of tax furnished by the deductor to the income-tax authority or the person authorised by such authority and the formation in the return of income in respect of the claim for the credit, subject to verification in accordance with the risk management strategy formulated by the Board from time to Sanjeev Rajendra Pandit ITA Nos. 3004 & 3005/M/22 6 though same was deducted by the deductor M/s Tata Steel Ltd. as per the table above. Before us, the Ld. Counsel of the assessee has filed a letter provided details of tax dividend to the assessee. both the issues reproduced the facts of the case of the assessee as well as the relevant tax Rules, 1962 (in short ‘the me is reproduced as under: Section 199 of the Income Tax Act, 1961 deals with the credit of tax deducted. As per sub section (1), if any deduction is made as per the chapter XVII and paid to the Central Government, same shall be considered as payment of tax on behalf of the person from whose income the deduction was made. Sub section (3) further explains that CBDT may frame Rules in facilitating credit to be given in deducted. CBDT has framed Rule 37BA u/s le 37BA, the credit of tax deducted and paid to the Central Government shall be allowed on the basis of the information relating to deduction tax authority or the person authorised by such authority and the formation in the return of income in respect of the claim for the credit, subject to verification in accordance with the risk management strategy formulated by the Board from time to time. As per section 203 of the Income Tax Act, every person deducting th tax has been deducted specifying the amount of tax so deducted, rate at which tax has been deducted and other particulars that may be prescribed. Rule 31 framed under section 203, ordains that certificate Form 16 in case of deduction u/s 192 annually or in Form 16A in case of deduction of tax under any other section quarterly. Thus, from above it is evident that each deductor will issue Form 16/16A to every payee individually. It is to be noted that the conclusive proof regarding deduction of tax available with the assessee is Form 16/16A. Form 26AS compiled by the Department is based on the data uploaded by the deductors and then reconciled with challans by the Department. in the instant of processing ng proof of tax deduction of the impugned sum was available before the A by way of Form 16A or 26AS as admittedly the deduction was made in the subsequent financial year in respect of payment of rent. With resped to the TDS of Rs. 64,458/ 3,22,290/- from 32,229 shares of Tata Steel Lt appellant has not 16A before the AO evidencing deduction of TDS. 6.5 The Ld. CIT(A) has also referred to Delhi High Court on the issue of allowing tax credit. The relevant part of the order of the Ld. CIT(A) is also reproduced as under: time. As per section 203 of the Income Tax Act, every person deducting the tax shall issue a certificate to the effect that tax has been deducted specifying the amount of tax so deducted, rate at which tax has been deducted and other particulars that may be prescribed. Rule 31 framed under section 203, ordains that certificate should be issued in Form 16 in case of deduction u/s 192 annually or in Form 16A in case of deduction of tax under any other section quarterly. Thus, from above it is evident that each deductor will issue Form 16/16A to every payee individually. It is to e noted that the conclusive proof regarding deduction of tax available with the assessee is Form 16/16A. Form 26AS compiled by the Department is based on the data uploaded by the deductors and then reconciled with challans by the Department. in the instant case, at the time of processing ng proof of tax deduction of the impugned sum was available before the A by way of Form 16A or 26AS as admittedly the deduction was made in the subsequent financial year in respect of payment of rent. With resped to of Rs. 64,458/- against dividend credit of Rs. from 32,229 shares of Tata Steel Ltd as well the appellant has not submitted any proof of production of form 16A before the AO evidencing deduction of TDS.” The Ld. CIT(A) has also referred to the decision of the Hon’ble Delhi High Court on the issue of allowing tax credit. The relevant part of the order of the Ld. CIT(A) is also reproduced as under: Sanjeev Rajendra Pandit ITA Nos. 3004 & 3005/M/22 7 time. As per section 203 of the Income Tax Act, every person e tax shall issue a certificate to the effect that tax has been deducted specifying the amount of tax so deducted, rate at which tax has been deducted and other particulars that may be prescribed. Rule 31 framed under should be issued in Form 16 in case of deduction u/s 192 annually or in Form 16A in case of deduction of tax under any other section quarterly. Thus, from above it is evident that each deductor will issue Form 16/16A to every payee individually. It is to e noted that the conclusive proof regarding deduction of tax available with the assessee is Form 16/16A. Form 26AS compiled by the Department is based on the data uploaded by the deductors and then reconciled with case, at the time of processing ng proof of tax deduction of the impugned sum was available before the A by way of Form 16A or 26AS as admittedly the deduction was made in the subsequent financial year in respect of payment of rent. With resped to against dividend credit of Rs. as well the submitted any proof of production of form the decision of the Hon’ble Delhi High Court on the issue of allowing tax credit. The relevant part of the order of the Ld. CIT(A) is also reproduced as under: “5.6 It is aloes relevant to mention here another aspect of credit of TDS when deduction has credit is not available to the deductee. Pursuant to the landmark judgement of Hon'ble Delhi High Court, the Central Board of Direct Taxes (CBDT) issued Instruction No. 5 dated July 8,2013 wherein vides paragraph 3 it has directed the A approaches AOs with requisite details and particulars in the form of TDS certificate as evidence against any mismatched TDS amount, the said officer shall, after due verification, allow the credit of the same to The relevant paragraph is reproduced for ready reference "3. In view of the order of the Hon'ble Delhi High Court (reference: paragraph 50 of the order); it has been decided by the Board that when an assessee approaches the Assessing Office the form of TDS certificate as an evidence against any mismatched amount, the said Assessing Officer will verify whether or not the deductor has made payment of the TDS in the Government Account and if the paymen made, credit of the same should be given to the assessee. However, the Assessing Officer is at liberty to ascertain and verify the true and correct position about the TDS with the relevant AO (TDS). issue a notice to the deductor to compel him to file correction statement as per the procedure laid down." The appellant's case in present appeal qua rental payment is not concerned with the subject matter of the circular as the former is about It is aloes relevant to mention here another aspect of credit of TDS when deduction has actually been made but credit is not available to the deductee. Pursuant to the landmark judgement of Hon'ble Delhi High Court, the Central Board of Direct Taxes (CBDT) issued Instruction No. 5 dated July 8,2013 wherein vides paragraph 3 it has directed the Assessing Officers that whenever an assessee approaches AOs with requisite details and particulars in the form of TDS certificate as evidence against any mismatched TDS amount, the said officer shall, after due verification, allow the credit of the same to the assessee. The relevant paragraph is reproduced for ready reference "3. In view of the order of the Hon'ble Delhi High Court (reference: paragraph 50 of the order); it has been decided by the Board that when an assessee approaches the Assessing Officer with requisite details and particulars in the form of TDS certificate as an evidence against any mismatched amount, the said Assessing Officer will verify whether or not the deductor has made payment of the TDS in the Government Account and if the payment has been made, credit of the same should be given to the assessee. However, the Assessing Officer is at liberty to ascertain and verify the true and correct position about the TDS with the relevant AO (TDS). The AO may also, if deemed necessary, notice to the deductor to compel him to file correction statement as per the procedure laid down." The appellant's case in present appeal qua rental payment is not concerned with the subject matter of the circular as the former is about Sanjeev Rajendra Pandit ITA Nos. 3004 & 3005/M/22 8 It is aloes relevant to mention here another aspect of ually been made but credit is not available to the deductee. Pursuant to the landmark judgement of Hon'ble Delhi High Court, the Central Board of Direct Taxes (CBDT) issued Instruction No. 5 dated July 8,2013 wherein vides paragraph 3 it has ssessing Officers that whenever an assessee approaches AOs with requisite details and particulars in the form of TDS certificate as evidence against any mismatched TDS amount, the said officer shall, after due the assessee. The relevant paragraph is reproduced for ready reference - "3. In view of the order of the Hon'ble Delhi High Court (reference: paragraph 50 of the order); it has been decided by the Board that when an assessee approaches the r with requisite details and particulars in the form of TDS certificate as an evidence against any mismatched amount, the said Assessing Officer will verify whether or not the deductor has made payment of the TDS t has been made, credit of the same should be given to the assessee. However, the Assessing Officer is at liberty to ascertain and verify the true and correct position about the TDS with the The AO may also, if deemed necessary, notice to the deductor to compel him to file correction statement as per the procedure laid down." The appellant's case in present appeal qua rental payment is not concerned with the subject matter of the circular as the former is about seeking credit wher As far as TDS on dividend already deducted but not finding mention in 26AS due to lack of PAN data, the appellant has all the liberty to make good use of the circular by providing requisite details of TDS certificate to claim credit of the correct amount of TDS. 6.6 After referring the provisions of the law as well as judicial precedent on the issue, the Ld. CIT(A) concluded that for claiming the benefit of the TDS, the assessee was required produce TDS certificate, to TDS is disclosed in return of income of the assessment year a assessable. The relevant finding of the Ld. CIT(A) is reproduced as under: “5.7 The deduction of tax at source does not necessarily, or is not required to, match alongside the corresponding income, recognition of which by the recipient could be either on accrual or on receipt basis. The accrual of the tax liability on income would assessable. There is thus an inherent mismatch, in terms of time, between the payment of tax (per TDS) and the accrual of tax liability against the corresponding income qua the relevant provisions of law. It is in vie this mismatch in time, so that the tax stands deducted while the corresponding income, though accrued has yet to be received or though received, as by way of an advance, is yet to accrue, that the law seeking credit where tax was to be deducted subsequently. As far as TDS on dividend already deducted but not finding mention in 26AS due to lack of PAN data, the appellant has all the liberty to make good use of the circular by providing requisite details of TDS certificate in form 16A before the AO to claim credit of the correct amount of TDS.” After referring the provisions of the law as well as judicial precedent on the issue, the Ld. CIT(A) concluded that for claiming the benefit of the TDS, the assessee was required to comply certificate, secondly, to show that income subjected in return of income of the assessment year a assessable. The relevant finding of the Ld. CIT(A) is reproduced as 5.7 The deduction of tax at source does not necessarily, or is not required to, match alongside the corresponding income, recognition of which by the recipient could be either on accrual or on receipt basis. The accrual of the tax liability on income would arise only on the same being/becoming assessable. There is thus an inherent mismatch, in terms of time, between the payment of tax (per TDS) and the accrual of tax liability against the corresponding income qua the relevant provisions of law. It is in view of and to address this mismatch in time, so that the tax stands deducted while the corresponding income, though accrued has yet to be received or though received, as by way of an advance, is yet to accrue, that the law-per section 199 r/w ss. 190 & Sanjeev Rajendra Pandit ITA Nos. 3004 & 3005/M/22 9 e tax was to be deducted subsequently. As far as TDS on dividend already deducted but not finding mention in 26AS due to lack of PAN data, the appellant has all the liberty to make good use of the circular by providing in form 16A before the AO After referring the provisions of the law as well as judicial precedent on the issue, the Ld. CIT(A) concluded that for claiming to comply, firstly, , to show that income subjected in return of income of the assessment year as assessable. The relevant finding of the Ld. CIT(A) is reproduced as 5.7 The deduction of tax at source does not necessarily, or is not required to, match alongside the corresponding income, recognition of which by the recipient could be either on accrual or on receipt basis. The accrual of the tax liability arise only on the same being/becoming assessable. There is thus an inherent mismatch, in terms of time, between the payment of tax (per TDS) and the accrual of tax liability against the corresponding income qua the w of and to address this mismatch in time, so that the tax stands deducted while the corresponding income, though accrued has yet to be received or though received, as by way of an advance, is per section 199 r/w ss. 190 & 191 and Rule 37BA] clarifies that the credit for the TDS shall be available for the year for which the corresponding income is assessable. It wold be evident from plain reading of section 199 of the Act and Rule 37BA of Income Tax rules, 1962 that credit is to amount so deducted in the assessment made under this Act for the assessment year for which Such income is assessable. So important conditions for getting benefit of TDS as per section 199 of the Act are (a) the assessee sh amount of tax deducted at source (b) show that income subjected to TDS is disclosed in the return of the assessment year as 'assessable'. Thus, both the above satisfied. It is, therefore, entitled to have benefit or credit for the amount though mentioned in the certificate for the assessment year if income relatable to the amount is not shown and is not assessable in that assessment year. If instead of e income referable to amount of tax deducted, only a portion of income is found assessable the benefit has to be allowed only on the portion shown. If balance income, on account of system of accounting followed by the assessee or for some other reason credit for the balance TDS can be allowed only in future when income is assessable. Credit allowed on pro rata basis in the year in which the certificate is issued and also nd Rule 37BA] clarifies that the credit for the TDS shall be available for the year for which the corresponding income is assessable. It wold be evident from plain reading of section 199 of the Act and Rule 37BA of Income Tax rules, 1962 that credit is to be given to the assessee for the amount so deducted in the assessment made under this Act for the assessment year for which Such income is assessable. So important conditions for getting benefit of TDS as per section 199 of the Act are (a) the assessee should produce the certificate for the amount of tax deducted at source; (b) show that income subjected to TDS is disclosed in the return of the assessment year as 'assessable'. Thus, both the above-mentioned conditions are to be satisfied. It is, therefore, clear that the assessee will not be entitled to have benefit or credit for the amount though mentioned in the certificate for the assessment year if income relatable to the amount is not shown and is not assessable in that assessment year. If instead of e income referable to amount of tax deducted, only a portion of income is found assessable the benefit has to be allowed only on the portion shown. If balance income, on account of system of accounting followed by the assessee or for some other reason is found to be assessable in future, then the credit for the balance TDS can be allowed only in future when income is assessable. Credit allowed on pro rata basis in the year in which the certificate is issued and also Sanjeev Rajendra Pandit ITA Nos. 3004 & 3005/M/22 10 nd Rule 37BA] clarifies that the credit for the TDS shall be available for the year for which the corresponding income is assessable. It wold be evident from plain reading of section 199 of the Act and Rule 37BA of Income Tax be given to the assessee for the amount so deducted in the assessment made under this Act for the assessment year for which Such income is assessable. So important conditions for getting benefit of ould produce the certificate for the (b) show that income subjected to TDS is disclosed in the mentioned conditions are to be clear that the assessee will not be entitled to have benefit or credit for the amount though mentioned in the certificate for the assessment year if income relatable to the amount is not shown and is not assessable in that assessment year. If instead of entire income referable to amount of tax deducted, only a portion of income is found assessable the benefit has to be allowed only on the portion shown. If balance income, on account of system of accounting followed by the assessee or for some is found to be assessable in future, then the credit for the balance TDS can be allowed only in future when income is assessable. Credit allowed on pro rata basis in the year in which the certificate is issued and also in future where balance or assessable is as per the mandate of provision of section 199 of the Act. Any amount which has not been assessed in any year but referred in the TDS certificate, cannot be claimed under section 199 of the Act. 5.8 Section 199 of the Act has declare the TDS as payment of tax on behalf of the person on whose behalf the deduction was made and to give credit for the amount so deducted on the production of the certificate in the assessment made for the assessment year for which such income is assessable. The second objective mentioned in section 199 is only to answer the question as to the year in which the credit for TDS shall be given. It links up the credit with assessment year in which such income is assessable. In othe is bound to give credit in the year in which the income is offered to tax. This section 199 does not empower the Assessing Officer to determine the year of assessability of the income itself but it only mandates the year in w credit is to be given on the basis of the certificate furnished. In other words, when the assessee produces the certificates of TDS, the Assessing Officer is req the assessee has offered the income pertained to the certificate before giving credit. If he finds that the income of the certificate is not shown, the Assessing Officer has not only to give the credit for TDS in that assessment year and has to defer the credit being given to the year in which the income to be assess in future where balance or such income is found to be assessable is as per the mandate of provision of section 199 of the Act. Any amount which has not been assessed in any year but referred in the TDS certificate, cannot be claimed under section 199 of the Act. 5.8 Section 199 of the Act has two objectives declare the TDS as payment of tax on behalf of the person on whose behalf the deduction was made and to give credit for the amount so deducted on the production of the certificate in the assessment made for the assessment year which such income is assessable. The second objective mentioned in section 199 is only to answer the question as to the year in which the credit for TDS shall be given. It links up the credit with assessment year in which such income is assessable. In other words, the Assessing Officer is bound to give credit in the year in which the income is offered to tax. This section 199 does not empower the Assessing Officer to determine the year of assessability of the income itself but it only mandates the year in w credit is to be given on the basis of the certificate furnished. In other words, when the assessee produces the certificates DS, the Assessing Officer is required to verify whether the assessee has offered the income pertained to the te before giving credit. If he finds that the income of the certificate is not shown, the Assessing Officer has not only to give the credit for TDS in that assessment year and has to defer the credit being given to the year in which the to be assessed. It does not have any mandate to Sanjeev Rajendra Pandit ITA Nos. 3004 & 3005/M/22 11 e is found to be assessable is as per the mandate of provision of section 199 of the Act. Any amount which has not been assessed in any year but referred in the TDS certificate, cannot be two objectives - one to declare the TDS as payment of tax on behalf of the person on whose behalf the deduction was made and to give credit for the amount so deducted on the production of the certificate in the assessment made for the assessment year which such income is assessable. The second objective mentioned in section 199 is only to answer the question as to the year in which the credit for TDS shall be given. It links up the credit with assessment year in which such r words, the Assessing Officer is bound to give credit in the year in which the income is offered to tax. This section 199 does not empower the Assessing Officer to determine the year of assessability of the income itself but it only mandates the year in which the credit is to be given on the basis of the certificate furnished. In other words, when the assessee produces the certificates uired to verify whether the assessee has offered the income pertained to the te before giving credit. If he finds that the income of the certificate is not shown, the Assessing Officer has not only to give the credit for TDS in that assessment year and has to defer the credit being given to the year in which the ed. It does not have any mandate to allow credit even where TDS is not deducted but to be deducted in future. 6.7 We find that though the Ld. CIT(A) has referred to the provisions of the law and Rules thereon, however, he did not considered the request of in the year under consideration or in the subsequent assessment year. We are of the opinion that the deductor has been authorized by the Department to deduct tax at source on the income of the assessee and deposit has to be allowed to and the Rules made thereunder and the Department cannot simply deny that no credit shall be granted because in the year in which assessee offered income appearing Form No. 26AS TDS is appearing in Form No. 26AS not reflecting there. The Department cannot assessee and deny credit assessee. In the instant case, the assessee has offered the income following the accrual system if tax has been deducted and deposited in subsequent year, the assessee should be consideration of tax which has been deducted subsequent However, the assessee on refund which arise if any on account of credit of tax allow credit even where TDS is not deducted but to be deducted in future.” We find that though the Ld. CIT(A) has referred to the provisions of the law and Rules thereon, however, he did not considered the request of the assessee for allowing credit that in the year under consideration or in the subsequent assessment year. We are of the opinion that the deductor has been authorized by the Department to deduct tax at source on the income of the assessee and deposit into Government account. The credit of same to the assessee as per the provisions of the law and the Rules made thereunder and the Department cannot simply deny that no credit shall be granted because in the year in which assessee offered income, tax has not been deducted and not appearing Form No. 26AS, whereas in subsequent assessment year TDS is appearing in Form No. 26AS, but corresponding income is not reflecting there. The Department cannot swallow credit of tax deducted, which pertains to the . In the instant case, the assessee has offered the income following the accrual system. As far as rental income is concerned if tax has been deducted and deposited in subsequent year, the assessee should be allowed credit of same in the year under consideration of tax which has been deducted subsequent However, the assessee could not be allowed the benefit of the interest which arise if any on account of credit of tax Sanjeev Rajendra Pandit ITA Nos. 3004 & 3005/M/22 12 allow credit even where TDS is not deducted but to be We find that though the Ld. CIT(A) has referred to the provisions of the law and Rules thereon, however, he did not the assessee for allowing credit that either in the year under consideration or in the subsequent assessment year. We are of the opinion that the deductor has been authorized by the Department to deduct tax at source on the income of the . The credit of same the assessee as per the provisions of the law and the Rules made thereunder and the Department cannot simply deny that no credit shall be granted because in the year in which tax has not been deducted and not whereas in subsequent assessment year but corresponding income is swallow tax paid by the of tax deducted, which pertains to the . In the instant case, the assessee has offered the income as rental income is concerned, if tax has been deducted and deposited in subsequent year, the in the year under consideration of tax which has been deducted subsequently. d the benefit of the interest which arise if any on account of credit of tax deducted and deposit in the sub aside the finding of the Ld. CIT(A) on the issue the Ld. Assessing Officer to verify the amount of tax deducted and deposited in respect of income from rental property which has been shown by the assessee in the year under consideration and allow the credit as directed above. As far as TDS credit in respect of divided income is concerned the assessee is directed to furnish TDS certificate issued by the deductor and the Ld. Assessing Officer i directed to allow the credit of the said TDS after due verification The Assessing Officer cannot simply decline he is bound to verify TDS certificate issue in accordance with provisions of law. Further, the Assessing Officer is verify if any relief has already been gran application filed by the assessee credit may not be allowed grounds of appeal of the assessee a statistical purposes. 7. The grounds raised by the assessee in assessment year 2020 21 in ITA No. 3004 is reproduced as under: On the facts and circumstances of the case : 1. The learned CIT(A) erred in confirming the action of Assessing officer (CPC) restricting credit for the TDS to Rs. 2,83,928 as against credit of Rs. 3,13,600 and deposit in the subsequent assessment year. We accordingly set aside the finding of the Ld. CIT(A) on the issue-in-dispute and direct the Ld. Assessing Officer to verify the amount of tax deducted and deposited in respect of income from rental property which has been y the assessee in the year under consideration and allow the credit as directed above. As far as TDS credit in respect of divided income is concerned the assessee is directed to furnish TDS certificate issued by the deductor and the Ld. Assessing Officer i directed to allow the credit of the said TDS after due verification g Officer cannot simply decline the credit of TDS he is bound to verify TDS certificate issue in accordance with provisions of law. Further, the Assessing Officer is verify if any relief has already been granted in the rectification application filed by the assessee. If so then further benefit of TDS credit may not be allowed. In view of the our direction grounds of appeal of the assessee are accordingly allowed for The grounds raised by the assessee in assessment year 2020 21 in ITA No. 3004 is reproduced as under: On the facts and circumstances of the case : The learned CIT(A) erred in confirming the action of Assessing officer (CPC) restricting credit for the TDS to Rs. 2,83,928 as against credit of Rs. 3,13,600 claimed in the Sanjeev Rajendra Pandit ITA Nos. 3004 & 3005/M/22 13 We accordingly set dispute and direct the Ld. Assessing Officer to verify the amount of tax deducted and deposited in respect of income from rental property which has been y the assessee in the year under consideration and allow the credit as directed above. As far as TDS credit in respect of divided income is concerned the assessee is directed to furnish TDS certificate issued by the deductor and the Ld. Assessing Officer is directed to allow the credit of the said TDS after due verification. the credit of TDS and he is bound to verify TDS certificate issue in accordance with provisions of law. Further, the Assessing Officer is also directed to ted in the rectification . If so then further benefit of TDS our direction above, the re accordingly allowed for The grounds raised by the assessee in assessment year 2020- The learned CIT(A) erred in confirming the action of the Assessing officer (CPC) restricting credit for the TDS to Rs. claimed in the return of income in respect to rent income from property at Navprabhat Chambers thereby not granting credit for TDS of Rs. 29,672. 2. The learned CIT(A) erred in not appreciating that the appellant was entitled to credit of TDS as per the provisions of section 199 of the Income Tax Act, 1961. Relief Sought: Your appellant prays that: The learned Assessing officer be directed to grant credit of Rs. 3,13,600 as claimed by the appellant in the return. Your appellant craves leave to add, to amend or delete the above ground on or before the final date of hearing. The learned AO be directed not to recover the demand in respect of TD 8. We find that issue involved in ground No.1 is identical to TDS credit in respect of rental property which we have adjudicated in assessment year 2021 assessment year 2021 to the file of the Assessing Office for deciding after due verification and allow the credit accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes. return of income in respect to rent income from property at Navprabhat Chambers thereby not granting credit for TDS of Rs. 29,672. The learned CIT(A) erred in not appreciating that the appellant was entitled to credit of TDS as per the provisions of section 199 of the Income Tax Act, 1961. Relief Sought: Your appellant prays that: The learned Assessing officer be directed to grant credit of Rs. 3,13,600 as claimed by the appellant in the Your appellant craves leave to add, to amend or delete the above ground on or before the final date of hearing. The learned AO be directed not to recover the demand in respect of TDS deducted. We find that issue involved in ground No.1 is identical to TDS credit in respect of rental property which we have adjudicated in assessment year 2021-22. Therefore, following our finding in assessment year 2021-22 this ground of the appeal i to the file of the Assessing Office for deciding after due verification and allow the credit accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes. Sanjeev Rajendra Pandit ITA Nos. 3004 & 3005/M/22 14 return of income in respect to rent income from property at Navprabhat Chambers thereby not granting credit for TDS The learned CIT(A) erred in not appreciating that the appellant was entitled to credit of TDS as per the provisions The learned Assessing officer be directed to grant full TDS credit of Rs. 3,13,600 as claimed by the appellant in the Your appellant craves leave to add, to amend or delete the above ground on or before the final date of hearing. The learned AO be directed not to recover the demand in We find that issue involved in ground No.1 is identical to TDS credit in respect of rental property which we have adjudicated in 22. Therefore, following our finding in 22 this ground of the appeal is also restored to the file of the Assessing Office for deciding after due verification and allow the credit accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes. 9. In the result, both these appeals are allowed purposes. Order pronounced in the open Court/under Rule 34(4) of the ITAT Rules, 1963 on Sd/- (ABY T VARKEY JUDICIAL MEMBER Mumbai; Dated: 24/01/2023 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// In the result, both these appeals are allowed Order pronounced in the open Court/under Rule 34(4) of the ITAT Rules, 1963 on 24/01/2023. Sd/- ABY T VARKEY) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER the Order forwarded to : BY ORDER, (Sr. Private Secretary) ITAT, Mumbai Sanjeev Rajendra Pandit ITA Nos. 3004 & 3005/M/22 15 In the result, both these appeals are allowed for statistical Order pronounced in the open Court/under Rule 34(4) of - OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Sr. Private Secretary) ITAT, Mumbai