| The Tax Publishers2023 TaxPub(DT) 853 (Pune-Trib) : (2023) 200 ITD 0104 INCOME TAX ACT, 1961
Section 199 Section 143(1)
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 tax was duly deducted by the employer from salaries credited/paid to assessee for the year under consideration, benefit of such tax deducted at source had to be allowed in Intimation under section 143(1) notwithstanding the fact that it was not deposited.
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Assessment - AO disallowed credit of tax deudcted by employer from salary paid to assessee - Reason, TDS not deposited with Government -
Assessee was an employee of M/s. Earth Water Limited (in short, 'EWL') working as Chief Operating Officer. Return was furnished declaring total income under the head 'Salaries' at Rs.38,57,500 and also claiming credit for deduction of tax at source amounting to Rs.9,04,632 on such salary income. The return was processed under section 143(1) allowing credit for tax deducted at source from salary only to the tune of Rs.83,483. The remaining amount of tax deducted at source by the employer at Rs.8,21,149 (Rs.9,04,632 (total deduction of tax at source) minus (-) Rs.83,484 (credit allowed)) was not allowed credit on account of 'Mismatch'. Assessee argued that the employer company deducted tax at source from the salary but failed to deposit the same from May, 2018 onwards. Further, employer had not paid salary from October, 2018. Held: On going through section 143(1), it becomes ostensible that the total income as computed under its clause (a) is considered for computing the amount of tax, etc., payable on it as per clause (b). Clause (c) then comes into operation, which provides for determining the amount payable or refundable to the assessee after adjusting the amount of any tax deducted at source, any tax collected at source, any advance tax paid, any relief allowable under section 89, etc., from the amount of tax determined under clause (b). Essence of clause (c) of section 143(1) is to allow adjustment of tax deducted or collected at source or advance tax etc. against the tax liability on total income. Important thing 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 under section 143(1) irrespective of its subsequent deposit or non-deposit by the deductor.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2019-20
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