2016 (8) TMI 1575 - AT - Income Tax

Rectification u/s 154 - credit for TDS - whether the credit for TDS was available for AY 2004-05 or 2005-06 was a debatable issue? - HELD THAT - As submitted that even though the TDS amount in question was pertaining to the commission income accrued to the assessee in financial year 2003-04 relevant to assessment year 2004-05 as mentioned in the relevant TDS certificate, the said commission income was actually offered by the assessee in the year under consideration, i.e. AY 2005-06 on receipt basis and the assessee, therefore, was entitled to claim credit for the same in AY 2005-06. In support of this contention, he has relied, inter alia, on the Third Member decision of Chandigarh Bench of this ITAT in the case of Shri Pardeep Kumar Dhir 2007 (4) TMI 294 - ITAT CHANDIGARH-B - In the said case, the issue referred to Third member under section 255(4) was whether the credit for the tax deducted at source in the previous year is to be allowed in the assessment year relevant to the year in which deduction has been made or in the year in which the income is assessable to tax. It is thus clear that the similar issue as involved in the present case was referred to Third Member in the case of Shri Pardeep Kumar Dhir (supra) as there was a difference of opinion between the two Members of the Division Bench of the Tribunal on this issue and the fact that there was such a difference of opinion between the two Members of the Tribunal is sufficient to show that this issue was highly debatable on which two opinions were possible. Therefore, find myself in agreement with the CIT(Appeals) that the rectification on such debatable issue as sought by the assessee by way of application for rectification was beyond the scope of section 154. The impugned order of the id. CIT(Appeals) on this issue is, therefore, upheld dismissing the appeal of the assessee.

Summary

Issues:
1. Credit for TDS claimed by the assessee.
2. Scope of rectification under section 154 regarding TDS credit for a debatable issue.

Analysis:
1. The appeal was filed by the assessee against the order of the Commissioner of Income Tax (Appeals) upholding the Assessing Officer's decision to reject the application for credit of TDS amounting to Rs.3,61,059 under section 154. The Assessing Officer allowed credit for advance tax and self-assessment tax but denied TDS credit as the certificate filed related to a different assessment year. The Commissioner held that the issue of TDS credit availability for the relevant assessment year was debatable, falling outside the scope of section 154. The Tribunal heard arguments and upheld the Commissioner's decision, citing a Third Member decision from the Chandigarh Bench on a similar issue, emphasizing the debatable nature of the matter.

2. The assessee, an Insurance Agent, declared commission income on a cash basis consistently. The TDS amount in question related to commission income accrued in a previous financial year but offered in the current assessment year on a receipt basis. The assessee claimed entitlement to TDS credit for the current assessment year. The Tribunal considered the Third Member decision from the Chandigarh Bench, highlighting the debate on whether TDS credit should be allowed in the year of deduction or when the income is assessable to tax. The Tribunal agreed with the Commissioner that rectification on such a debatable issue exceeded the scope of section 154. Consequently, the Tribunal upheld the Commissioner's decision, dismissing the appeal and affirming the denial of TDS credit to the assessee.

In conclusion, the Tribunal dismissed the appeal, affirming the decision to reject the application for credit of TDS amounting to Rs.3,61,059 by the assessee. The judgment highlighted the debatable nature of the issue regarding TDS credit availability for the relevant assessment year and upheld the decision that rectification under section 154 was not applicable in such cases.