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2022 (4) TMI 180 - ITAT RAIPURAccrual of income - TDS on Advance received for contract work - whether or not an amount of TDS on advance revenue receipts exigible to tax as “Income”, of the year of deduction, where the assessee follows mercantile system of accounting? - HELD THAT:- Section 198 r.w.s. 190, is an anti-tax evasion mechanism provided by the legislature to safeguard against the probable claim of non-receipt or non-materialisation of income when accounted in accordance with the method of accounting regularly employed as per section 145(1) of the Act and by no means the provisions of chapter XVII were intend to create any deeming fiction for the chargeability of income overriding the provisions of section 4 r.w.s. 28 of the Act. We do not hesitate to hold that, by no stretch of imagination, an amount of TDS as appearing in the Form No 26AS shall be brought to tax as “Income” under the head Profits and Gains of business or profession applying the provisions of section 198, without reference to the method of accounting regularly employed by the assessee in relation to such business in question. As decided in Lloyd Insulation (India) Ltd [2013 (1) TMI 35 - ITAT NEW DELHI] action of taxing the amount of TDS as income without reference to the method of accounting regularly employed by the assessee were held as contra legem. We do not subscribe the views of lower tax authorities in holding that, the amount of TDS credit as appearing in Form No 26AS can be brought to tax on the sole basis of its utilization against the present tax liability, without first disputing the method of accounting regularly employed by the assessee firm or correctness & completeness of accounts in terms of section 145 of the Act. Since the income u/s 28 is to be computed with reference to section 145 of the Act, we find no merits in the impugned assessment order, ergo we set aside the orders of the authorities below and decide the issue in favour of the assessee.
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