section 199 - credit for Tax Deducted at Source

This query is : Resolved

Peter,A.Matthai (Querist)
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28 January 2008 as per s. 199 , credit for TDS is available only on the year in which the corresponding income is accounted.
But this is sometimes unworkable for those who maintain accounts under Mercantile system . Think about an individual contractor who follows mercantile system. He completes a work in February 2007 and issues a bill to the Contractee.Naturally he passes a journal entry in his books by crediting 'Contract Receipts A/c' and debiting ' Contractee's A/c'. But the Contractee makes payment of the said bill only in August 2007 and deducts TDS.
So the date of payment as per TDS Certificate will be August,2007. How can this individual assessee file a Return in ITR - 4 for AY 2007-08 by claiming this TDS in the Return - even that before the last date of filing Return ie 31.7.07 supposing that he is not coming under 44AB?

Late CA Sampat Jain

Late CA Sampat Jain (Expert)
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28 January 2008 Law is very clear .......TDS follows the income .....that is TDS is allowable in the year in which the related income is recognised by the assesee.....but unfortunately the computer system of the department allows TDS for the year for which it is deducted by the deductor .......there is mismatch in law and computer programming of the department........needs to be addressed by proper amendment in law.......issue needs to be raised at higher levels

IN THE MEANTIME IF IT IS NOT ALLOWED AS PER SECTION 199 THAT IS AS PER LAW .......IT IS A MISTAKE OF LAW RECTIFIABLE U/S 154.....GO FOR 154 PROCEEDINGS