Assessee following cash system of accounting had reflected tds as income u/s 198 is entitled to claim full credit of tds in the year of deduction itself although corresponding income not reflected in the year of deduction.

Issue of allowing TDS to assesses following cash system of accounting: As per section 198, sum deducted is deemed to be income received. Further Rule 37BA(3)(ii) allowing tds credit in the proportion of income assessable is applicable where income is received over number of years. However, if income is not received at all, Rule 37BA(3)(ii) shall not apply. Again Rule 37BA(i) allowing credit of TDS in the assessment year for which tax is assessable shall have effect of not at all allowing the credit of TDS if no amount is received. Hence Rule 37BA (3) is not applicable to cash system of accounting. Hence where assessee following cash system of accounting had reflected tds as income u/s 198 is entitled to claim full credit of tds in the year of deduction itself although corresponding income not reflected in the year of deduction. Held by ITAT Delhi in Chander Shekhar Aggarwal [2016] 67 taxmann.com 62 (Delhi – Trib.) pronounced on 11-01-2016 following Sadhbhav Engineering (Ahd Trib) and Vishakhapatnam Trib in Peddu Srinivasa Rao

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