Interglobe Enterprises Pvt. Ltd. vs ACIT: TDS Credit Dispute for AY 2016-17 – ITA 6580/DEL/2019

Case Overview: Interglobe Enterprises Pvt. Ltd. vs ACIT (ITA 6580/DEL/2019)

This case involves a dispute between the appellant, Interglobe Enterprises Pvt. Ltd., Gurgaon, and the respondent, Assistant Commissioner of Income Tax (ACIT), Circle-12(2), New Delhi. The matter pertains to the assessment year 2016-17, where the core issue was the timing of the credit for Tax Deducted at Source (TDS).

Background of the Case

Interglobe Enterprises Pvt. Ltd. filed its income tax return for the assessment year 2016-17, declaring an income of Rs. 1,66,11,872/-. The company claimed TDS credit amounting to Rs. 16,61,185/-, which had been deducted by the deductor in the subsequent assessment year, 2017-18. Interglobe Enterprises asserted that since the income related to the TDS was reported in AY 2016-17, the credit should also be granted in the same year, despite the TDS being reflected in Form 26AS for AY 2017-18.

The Assessing Officer (AO) denied the TDS credit for AY 2016-17 on the grounds that it was not reflected in Form 26AS for that particular year. Instead, the AO contended that the credit should only be given in the year it appeared in Form 26AS, which was AY 2017-18.

Appeal Before CIT(A)

Aggrieved by the AO’s decision, Interglobe Enterprises appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], seeking relief for the claimed TDS credit in AY 2016-17. However, the CIT(A) upheld the AO’s decision, instructing that the TDS credit should be allowed in AY 2017-18 based on the Form 26AS.

Appeal Before the Income Tax Appellate Tribunal (ITAT)

Unhappy with the CIT(A)’s order, Interglobe Enterprises further appealed to the Income Tax Appellate Tribunal (ITAT). The main contention from the appellant was that under Section 199(3) of the Income Tax Act, 1961, read with Rule 37BA(3) of the Income Tax Rules, the credit for TDS should be granted in the year the corresponding income is assessable, which in this case was AY 2016-17.

The appellant cited the case of Greatship India Ltd. vs. DCIT to support their argument that TDS credit cannot be postponed to a different assessment year merely because the deductor reflected it in a later year’s Form 26AS. The income had already been accounted for in AY 2016-17, and hence the TDS credit should also apply to that year.

ITAT’s Ruling

After carefully considering the submissions from both sides, the ITAT agreed with Interglobe Enterprises’ argument. The Tribunal noted that Section 199(3) read with Rule 37BA(3) clearly indicates that TDS credit should be provided in the year in which the corresponding income is reported. The Tribunal emphasized that deferring the TDS credit to a subsequent assessment year, where the income has not been reported, would go against the provisions of the law.

However, the ITAT also recognized the need for caution to avoid any potential double claims of the TDS credit. The Tribunal directed that the TDS credit for AY 2016-17 be allowed, provided Interglobe Enterprises submitted an affidavit or undertaking to the Revenue Authorities, ensuring that the credit would not be claimed again in any other assessment year, particularly in AY 2017-18, where the TDS was reflected in Form 26AS.

With this direction, the ITAT set aside the order of the CIT(A) and remanded the case back to the AO for verification and appropriate action as per the Tribunal’s observations.

Conclusion

The appeal filed by Interglobe Enterprises Pvt. Ltd. was allowed for statistical purposes, with the ITAT ruling in favor of granting the TDS credit in AY 2016-17, the year in which the corresponding income was assessable. The case underscores the importance of aligning TDS credit with the year of income assessment, in line with the Income Tax Act and related rules.

Interglobe Enterprises Pvt. Ltd. vs ACIT: TDS Credit Dispute for AY 2016-17 – ITA 6580/DEL/2019