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2023 (2) TMI 261 - AT - Income TaxIntimation issued by the Central Processing unit u/s.143(1) - Disallowing credit for tax deducted at source by the employer that was not deposited with the exchequer - HELD THAT:- Important thing to be borne in mind in this regard is that though the word `paid’ has been used after the words `advance tax’, but it is absent in the context of `tax deducted at source’. The effect of this is that unlike advance tax, the credit for tax deducted at source is to be allowed only when it is deducted and there is no further stipulation of the same having been paid also as a condition precedent. As a sequitur, credit for the amount of tax deducted at source is not dependent upon its subsequent deposit by the deductor. Once there is deduction of tax at source, the benefit of such tax deduction has to be allowed in the hands of deductee u/s 143(1) of the Act irrespective of its subsequent deposit or non-deposit by the deductor. Our view is fortified by section 234B dealing with interest for default in payment of advance tax. This section provides that where an assessee fails to pay due advance tax etc., he shall be liable to pay simple interest at the specified rate on the amount of `assessed tax’ - if there is an income on which tax is deductible at source, then such income will be reduced for determining the advance tax liability and the consequential interest liability u/s 234B of the Act, even if no tax was actually deducted at source. The Finance Act, 2012 inserted a proviso to section 209(1) nullifying the above position of deducting income on which tax is deductible but not actually deducted. Instantly, we are confronted with a situation in which the deductor has duly deducted tax at source but not paid the same to the exchequer. Albeit gap between `tax which would be deductible’ as per section 209(1)(d) and `tax deducted at source’ has been abridged by insertion of proviso to section 209(1), but the open space between the ‘tax deducted at source’ as per section 143(1)(c) and `tax deducted at source and deposited’ still persists. We find that the requirement for allowing credit is only of the amount of tax deducted at source and not the amount eventually getting deposited with the Government after deduction. Since a sum was duly deducted at source by the employer from the salaries credited/paid to the assessee for the year under consideration, we hold that benefit of such tax deducted at source has to be allowed in Intimation u/s 143(1) of the Act notwithstanding the fact that it was not deposited. The impugned order is overturned pro tanto. Assessee appeal is allowed.
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