Whether Revenue is under obligation to allow TDS Credit even if deductors have not issued TDS Certificates nor properly uploaded details in Form 26AS - YES: ITAT

THE issue before the Bench is - Whether Revenue is under obligation to allow TDS Credit even if deductors have not issued TDS Certificates nor properly uploaded details in Form 26AS. And the verdict goes in favour of the assessee.

Facts of the case

Assessee, a company, had claimed TDS of Rs. 215163912, out of which claim of Rs. 1,65,20,93,44/- was made in the original return and further claim of Rs.14,271,296 was made in the revised return filed on 13.4.2009. Thereafter during assessment, assessee had made further claim of Rs. 35,683,272/- vide letter dated 28.12.2010. AO however gave TDS credit only to the tune of Rs 118,960,393/-. On appeal, CIT(A) directed the assessee to furnish all TDS certificates in original before AO, who was directed to verify the claim of credit of TDS and to allow TDS as per original challans available on record or as per details of such TDS available on computer system of the department.

On appeal before the Tribunal, the AR submitted that the AO disallowed the TDS credit because of the discrepancy with respect to the credit shown in the Form No. 26AS which was not correct. It was argued that credit of TDS had to be given on the basis of TDS certificates and in case TDS certificates were not available, on the basis of details and evidence furnished by the assessee regarding deduction of tax at source. Reference was made to the recent judgment of Delhi HC in case of Court On Its Own Motion Vs. CIT, in which the HC directed the department to ensure that the credit was given to the assessee on the basis of details and evidences furnished, where the deductor did not upload the correct details in Form 26AS. It was further pointed out that new system of Form 26AS was applicable only from AY 2009-10 and was not applicable in the case of the assessee. Therefore, it was requested that the Department might be directed to allow TDS credit on the basis of TDS certificate or indemnity bond and on the basis of credit shown in the form 26AS.

Having heard the parties, the Tribunal held that,

++ difficulty faced by the tax payer in the matter of credit of TDS had been considered by the High Court of Bombay in case of Yashpal Sahwney Vs. DCIT in which it was held that even if the deductor had not issued TDS certificate, the claim of the assessee has to be considered on the basis of evidence produced for deduction of tax at source as the Revenue was empowered to recover the tax from the person responsible if he had not deducted tax at source or after deducting failed to deposit with Central Government. High Court of Delhi in case of Court On Its Own Motion Vs. CIT have also directed the department to ensure that credit is given to the assessee, where deductor had failed to upload the correct details in Form 26AS on the basis of evidence produced before the department. Therefore, the department was required to give credit for TDS once valid TDS certificate had been produced or even where the deductor had not issued TDS certificates on the basis of evidence produced by assessee regarding deduction of tax at source and on the basis of indemnity bond. We, therefore modify the order passed by CIT(A) on this point and direct the AO to proceed in the manner discussed above to give the credit of tax deducted at source to the assessee;

++ second dispute is regarding grant of interest on interest. It has been submitted by AR that the assessee was entitled for interest on the excess tax paid which had not been given to assessee and, therefore, from the due date of interest, further interest had to be allowed on the interest due. Reliance has been placed on the judgment of SC in case of Sandvik Asia Ltd. Vs. CIT And Others. In case the assessee has paid excess advance tax or excess TDS, the assessee is liable for refund with interest and in case the interest is not granted on the due date, the assessee is liable for further interest on interest, in view of the Judgment of Supreme Court in case of Sandvik Asia Ltd. Vs. CIT and others. We, therefore, direct the AO to allow the assessee interest on interest if due as per law in the light of Judgment of Supreme Court in case of Sandvik Asia Ltd.