Relevance of tax credit in form 26as

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

10 April 2015 ISSUE : Where is the deductor, say bank, supposed to deposit the TDS deducted from interest on fixed deposit from its clients ? Is it with NSDL ? How is NSDL related, if at all, in this matter ?

CIRCUMSTANCES :

For the F.Y. 2010-2011 ( A.Y. 2011-2012 ) TDS on interest on fixed deposit was deducted by SBI, and Form 16A issued.

Therefore the TDS deducted was rightfully sought as deduction by the depositor in Inc Tax return for A.Y. 2011-12 ( i.e. F.Y. 2010-11).

But the said deduction was disallowed by IT authorities as Form 26ASwas not updated due to the fault of SBI.
Then Income Tax authorities put a demand claim for that amount with interest and penalty.
The above came to knowledge around Jan 2015.

Upon approach, SBI recently (i.e. around Jan 2015), updated the Form 26 AS in TRACES showing reflection of the said TDS Tax Credit.
Thus Form 26AS got rectified around Jan 2015 in TRACES and the Tax Credit is clearly reflected therein.

However,the Inc Tax Officer of local jurisdiction ( to whom it is transferred by CPC Bangalore), is not carrying out the rectification on the ground/pretext that their server is reflecting that it is NOT UPDATED in NSDL and according to him TDS should be deposited by SBI in the books of the Government with NSDL. If the amount is not updated in NSDL then it means ( according to Inc.tax officer) that SBI has not deposited the TDS in the books of the Govt (I.e. with NSDL).

However, the version of NSDL is that they are not related with this at all in any way. They are not empowered to generate any Form 26 AS from 1 Nov 2012, be the rectification relating to whatever period before or after .
In fact, the website of NSDL clearly states :
:" https://onlineservices.tin.egov-nsdl.com/TIN/JSP/security/PanLogin.jsp " , clearly states, " generation of 26AS has been discontinued through NSDL wef November 1, 2012.The taxpayersare advised to view their updated Tax Credit Statements in Form 26AS on TRACESwww.tdscpc.gov.in".

Therefore, rectification if carried out after 1 Nov 2012, which in this case is in January 2015 ( for whatever period before), it is beyond the scope of jurisdiction of NSDL as they do not have any power to generate Form 26AS at all, as from the said date it is only the exclusive jurisdiction of TRACES from 1 Nov, 2012.

As said before, the tax credit is already clearly reflected in Form 26AS on TRACESfor AY 2011-2012.
However, the Assessing officer of the Income Tax Dept is unable to view the tax credit in NSDL ( and is presently of the view that it should be reflected in NSDL ) and therefore not doing rectification.

QUESTION :

Where is the bank, supposed to deposit the TDS deducted from interest on fixed deposit from its clients ? Is it with NSDL ? How is NSDL related, if at all, in this matter ?
( or should the Tax credit in the books of govt be viewed and concluded from reflection in Form 26AS in TRACES ) ?

Given the above facts & circumstances, is the view of the Assessing Officer, IT dept, at all correct ? What should be the course of action ?

CA. SHIVA SHANKARA R. SHETTY

CA. SHIVA SHANKARA R. SHETTY (Expert)
Follow

11 April 2015 The bank should file its TDS deduction by way of quarterly return with NSDL only.

However, in your case, based on your text, AO was not correct. I don't estimate his intention. Anyway, you demand his reply in writing.

First, you file application for formal rectification and deposit in the tappal and meet the AO and ask for reply in writing.

Normally, rectification will be processed within 3 months.

You attached your itr, computation, form 26AS, form 16A with your rectification application and wait for reply.