Income Tax Dept shall not Deny TDS Credit to Assessee once It is Deducted by Employer/Deductor

The Income Tax Appellate Tribunal (ITAT), Surat bench comprising Shri Pawan Singh, JM & Dr. A.L.Saini, AM has allowed a claim of TDS credit to the assessee by observing that the same cannot be rejected if the deduction is already done by the employer/deductor and the income tax department can recover the same from them any time.

The assessee, Ms. Liladevi Dokania approached the Tribunal claiming that the Tenant, while paying the rent to assessee had deducted TDS from the payment, but did not deposit in the Government account. The assessee had claimed the whole of the amount of TDS as credited against the tax payable. However, since the deductor (tenant), did not deposit the TDS amount to the credit of the Government account, therefore it was not reflected in the Form 26AS of the assessee and therefore, the AO rejected the claim for TDS credit.

While granting relief to the assessee, the Tribunal observed that “the assessee received the rent income, and the Tenant (Deductor) has deducted TDS but has not deposited the TDS so deducted into the Central Government Account. Considering these facts, we note that issue under consideration is no longer res integra. The Hon`ble High Court of Gujarat in the case of Kartik Vijaysinh Sonavane, [2021] 132 taxmann.com 293 (Gujarat) held that where TDS has been deducted by employer of assessee, it will always been open for department to recover same from said employer and credit of same could not have been denied to assessee.”

Allowing the appeal, citing the High Court decision, the Tribunal observed that “Therefore, respectfully following the judgment of Hon`ble High Court of Gujarat in the case of Kartik Vijaysinh Sonavane (supra), we direct the Assessing Officer to verify the claim of the assessee and allow credit of TDS in accordance with law.”