Credit for TDS will be given in the Assessment Year for which such income is assessable, clarifies ITAT

IN THE INCOME TAX APPELLATE TRIBUNAL
“C” BENCH : BANGALORE

BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT
AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER

ITA No.547/Bang/2013
Assessment year : 2007-08

The Deputy Commissioner
of Income Tax,
Circle - 12(3), 14/3, 4th Floor, Rastrothana
Bhavan (Opp. RBI), Nrupathunga Road,
Bengaluru.
PAN : AAICS 4405 Q
APPELLANT 

Vs. 

M/s. Sasken Network Engineering Limited,
No.139/25, Amarjyothi Layout,
Ring Road, Domlur,
Bengaluru-560071.
RESPONDENT

Appellant by : Smt. R. Premi, JCIT(DR)(ITAT), Bengaluru.
Respondent by : Shri. C. Narayan, CA

Date of hearing : 07.07.2021
Date of Pronouncement : 12.07.2021

O R D E R

Per N.V. Vasudevan, Vice President

This is an appeal by the Revenue against the order dated 30.01.2013 of CIT(Appeals)-III, Bengaluru, relating to Assessment Year 2007-08.

2. The facts and circumstances under which the said appeal by the Revenue arises for consideration are the assessee is a company incorporated under the Companies Act, 1956 and engaged inter alia in the business of installation and commissioning services. The assessee filed its return of income ('Rol') under section 139(1) of the Income-tax Act, 1961 (Act') on October 31, 2007 declaring taxable income of Rs 3,05,04,940 on which taxes of Rs 1,02,67,963 were payable. On account of credit for taxes deducted at source (TDS') amounting to Rs 1,21,26,857 and self assessment tax amounting to Rs 1,60,0000 a refund of Rs 34,58,894 was claimed. The Rol was selected for scrutiny and the assessment was concluded vide assessment order under section 143(3) of the Act dated December 17, 2009 wherein income returned by the assessee in the Rol was accepted by the Deputy Commissioner of Income-tax, Circle 12(3) (A0).

3. During the course of assessment proceedings, the assessee vide letter dated August 17, 2009 had filed additional TDS certificates, amounting to Rs 1,13,86,500 issued to it by Nokia India Private Limited (Nokia India). The said certificates were not filed by it along with the RoI filed since the TDS certificates were received only after the expiry of time prescribed for filing of original as well as revised Rol for AY 2007-08. The Details of the TDS certificates and the credit for TDS claimed by the assessee vide the aforesaid letter were as follows: 

4. During the course of assessment proceedings, the AO called upon the assessee to explain as to why the corresponding income on which TDS was made was not declared in the RoI by the assessee. The assessee submitted that TDS of Rs.1,13,86,500 was deducted by Nokia India during Assessment Year 2007-08 on the basis of mere purchase orders issued to the assessee. By letter dated 11.12.2000, (Nokia Siemens Networks Private4 Limited (NSN) which had subsequently acquired the network business of Nokia India) confirmed that in the books of NSN, the said expense accruals of 1NR 20,27,96,304/- were reversed in FY 2007-08 (AY 2008-09) in accordance with NSN accounting policy and actual invoiced expenses recorded against same. Accordingly, accruals to the extent of services not fully rendered and / or are not in compliance of contractual terms get reversed in NSN’s accounting process and fresh accruals are provided for services rendered and not invoiced as at year end by vendor. In accordance with this policy, actual invoices received from Sasken amounting to 1NR 5,81,28,005 were booked for services rendered by the assessee during FY 2007-08 (AY 2008-09). Fresh accruals were provided for unbilled services as on Mar 31, 2008 for 1NR 7,41,34,119 on the basis of the above accounting policy in relation to the Assessee’s contracts and TDS deposited on same by NSN.

5. The assessment was concluded vide assessment order under section 143(3) of the Act dated December 17, 2009 wherein income returned by the assessee in the Rol was accepted by the AO. In the said assessment order, the AO did not make any addition on account of income not declared as per TDS certificate amounting to Rs. 20,27,96,304/-. By implication, the AO has accepted the plea of the assessee that income of Rs.20,27,96,304/- did not accrue to the assessee in AY 2007-08. The AO also did not give credit in respect of the aforesaid TDS claim amounting to Rs.1,13,86,500/-. 

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